You have a little money saved up.
But its just sitting in a bank account earning between 1 and 2% interest.
At that rate, your money is going to grow at a snails pace.
Peer-to-peer lending is a system that matches people who need loans with private investors who are willing to lend money.
You know you could invest in the stock market, but what if it crashes?
What Is Peer-to-Peer Lending?
(You may also hear it referred to as crowdfunding.)
Loans can be for anything from debt consolidation to payday loans or even small business loans.
To become an investor in P2P lending, you would first set up an account with a P2P website.
Youll likely be required to make a minimum deposit of at least $1,000.
You dont have to invest all of it at once, but you oughta have that much money available.
This minimizes your risk.
Once you sign up, it’s possible for you to choose your investments.
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Who Can Invest in P2P Lending?
Heres where it gets tricky: Peer-to-peer lending isnt open to everyone.
If you dont know your net worth, use anet worth calculatorto figure it out.
The SEC also cautions investors to understand the risks of P2P lending.
For that reason, some of the pros and cons are still being discovered.
You may want to start out with one of these tried-and-true P2P sites.
Another of Upstarts perks is the investors ability to open an IRA.
That comes withsome tax benefitsfor your investments.
Prosper Marketplace
Prosperis the original peer-to-peer lending site.
Started in 2005, it was the first one to hit the market and its still going strong today.
Prosper has a user-friendly phone app to keep on top of your investments.
One major perk of Prosper is that it’s possible for you to get started with just $25.
Peerform allows you to diversify using16 categories.
Funding Circle
If you have a passion for small business,Funding Circleis your stop.
The platforms owners tried to get funding for their own small business but were shot down repeatedly.
By repeatedly, we mean 96 times.
No bad debt consolidation loans here.
Tyler Omothis a freelance writer covering topics from personal finance to career advice and even lawn care.
His work has been featured on TopResume.com, Writersweekly.com and more.
He is also the author of over 70 educational books for children and a proud parent of twin toddlers.
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