Pros of Lending Club Investing
Before, consumers would need to go to the bank just for them to apply on a loan. People who have plans to invest should will have to stick to the traditional bonds, stocks or money market accounts.
This however had all changed today. Lending club today now allows consumers in getting loans directly from people who have the cash to invest. Such platform actually offers it through the peer-to-peer lending.
How it Works
Lending club is a type of peer-to-peer lending platform. In such case, the borrower will be able to acquire loans directly on site with an interest rate that’s lower than the bank. The investor also could invest on their peers and be able to earn returns after the loan has been paid back.
This all happens online and there is no need for face-to-face meetings. A borrower also could upload documents directly towards lending club and investors then could transfer funds from linked checking account. To simplify this, lending club is actually putting a new spin on lending to where both borrowers and investors are in control.
A benefit that you could get is that you have a hedge with the volatility of the stock market. Bad markets could affect the willingness of people in borrowing or lending. However, the performance of lending club loans is not correlated directly with stock market. If you are going to diversify the investment towards a p2p lending investing, you would get a kind of protection against the stock market issues.
Investing Returns are Automatic
Lending club actually reinvest your returns directly when you will consider the auto-invest option. You may also reinvest to others and that you can continue to build your portfolio.
Risks are Diversified
As long as you are going to invest in a minimum of $25 for every note, you have the opportunity to invest more. You also could allocate the investment to every note which vary in grades so you will be able to reach a good balance of risk and lending club returns.
If you want to borrow money and comes with a good credit and also have low debt ratio, you may actually bypass banks and acquire money from individual investors.
If in case you have good net worth and you wish to consider something other than stocks and bonds, you can get good returns with your investment through lending club investing.
Just like other loans or investments, it’s essential that you see to it to first read and understand the risks and to also have a lending club strategy. Peer to peer lending investing tend to have a solid platform, but it is very important that you will weigh on the situation first and follow investing tips in order to end up making a wise decision.