Comments on: A (post)Vacation Question – Part III

By: What should you invest in first?- 7million7years

What should you invest in first?- 7million7years — Thu, 21 Jan 2010 08:03:04 +0000

[...] wife just got back (well, just before our Noosa trip) from a trip overseas to attend her nephew’s wedding; and, the young happily married couple [...]

By: Peer to Peer Lending. A 7m7y tool?- 7million7years

Peer to Peer Lending. A 7m7y tool?- 7million7years — Wed, 13 Jan 2010 07:53:48 +0000

[...] my last post, I suggested that banks are profitable businesses because they have such a large mark-up. If [...]

By: Rick Francis

Rick Francis — Tue, 12 Jan 2010 15:55:34 +0000

Adrian,

Lending Club categorizes lenders by FICO score- higher scores get lower rates.

@Neil

Their interface allows you to put in a amount to invest, adjust the % return (assuming no defaults) and it will pick a set of loans from the different categories that gives you that average return. Of course if you want to pick loans one by one and read over all available loans it could take a long time to invest a large sum.

-Rick Francis

By: Neil

Neil — Tue, 12 Jan 2010 04:15:36 +0000

Yeah, I thought of P2P as well, but the model doesn’t easily scale well enough to be worth my time.

Beautiful location. Maybe my next trip down under I’ll get to visit Queensland.

By: Steve

Steve — Tue, 12 Jan 2010 03:02:40 +0000

Look forward to this next post on how to become the bank(without the risk ). My girl and I are sort of Banks in The Philippines , as we do lend money out .

By: Adrian

Adrian — Tue, 12 Jan 2010 01:39:49 +0000

@ Rick – Yep, P2P certainly helps to spread risk, just like the banks … but, is there a P2P version of FICO and the banks’ other risk-assessment tools?

By: Jake @ CareerAde

Jake @ CareerAde — Mon, 11 Jan 2010 16:58:58 +0000

Rick, Adrian, if you find out a way to invest in peer to peer lending at a reasonable scale let us know.

P2P lending requires you to pick through hundreds of loan apps, and filter it to the set that you believe has the best risk / return ratio.

Then you have to diversify – invest in many loans so that a single default will not wipe you out. I think that you should invest no more than 1% of your portfolio into a given loan – so lets say you need to invest in at least 100 loans. Unfortunately, that requires you to pick through probably 1,000 applications hand-by-hand (you already discard the vast majority based on search criteria).

Thats frankly just too much work to be worth it, no?

By: Rick Francis

Rick Francis — Mon, 11 Jan 2010 16:07:57 +0000

There is a fairly easy way to become the bank- peer to peer lending. It doesn’t remove the risk of default but does allow for diversification and there is a framework to asses the risk. They break loans into many small pieces that different individuals fund, so you don’t risk too much on any one loan.

I’ve been experimenting with the lending club- so far no defaults and I’ve earned a bit over 10% interest on a conservative loan. I like their interface and it seems like a viable way to invest.

BTW there is a promo offer you can invite friends to try it they get $40 to start investing. Leave a comment on my web page http://www.ponderingmoney.com if you want an invite.

-Rick