If you have any money sitting in cash today, you’re well aware of the ridiculously low interest rates being applied to your balances. It is not uncommon to see .1% or even .01%, resulting in just pennies earned each month. There’s no way that you could grow your savings or investments at such low rates, so what should you do with your cash?
Even though the S & P and Dow Jones indices have been reaching all-time highs every couple of days this year, investors are still weary of the stock market. Who could blame them after recent events like the financial crisis, the flash crash, the Facebook IPO debacle and other high-frequency trading spurred events?
Fixed income products are a terrible choice as well. Rates are practically at zero, so the only place they can go is up. When rates move upwards, the prices will fall causing your holdings to lose value. If you hold the product until maturity, you will lose out on higher rates and possibly better returns.
If savings rates are low, you’re scared of the stock market and fixed income products are positioned to decline in value, what are some other alternatives? A very popular choice for the last few years has been peer-to-peer lending with companies such as Prosper or LendingClub. Today’s infographic takes a look at several facts and key advantages that P2P lending has held over more traditional investments.
This infographic has been prepared by LendingClub, but the numbers are very similar to that of Prosper. Each company has seen incredible growth because of the wonderful returns that most investors are experiencing.
I have personally invested a small amount into Prosper and I’ve been very happy with the results. Next week, I will greatly increase my investment with both companies by lending $40,000 total. I will disclose my loan choices and periodically post updates on how the loan portfolio is performing.
READERS: Have you tried peer-to-peer lending? Which company have you decided to invest with and how have your experiences been?