hide

Read Next

One Year In: Lending Money to Complete Strangers via an API... And Why You Should Try It

On DROdio

About a year ago, I wrote a blog called "Show Me the Money: Six Strategies to Put Your Cash to Work," where I talked about two new(ish) investment strategies my wife and I were using. I wrote a followup blog about the first strategy, Electronically Traded Funds (ETFs), where I compared Betterment vs. Wealthfront. Now here is a followup on the second newish strategy that you're probably not yet trying out, but absolutely should be: Peer to Peer lending... or put another way: Lending money to complete strangers as an investment strategy.

I'm going to write this blog as a step-by-step how-to guide on trying P2P lending. Don't think you have enough money to become an investor? Wrong. Just set aside $25 to invest in each of the 2 biggest platforms. Seriously, who can't part with $50 to try something that will change your perspective on lending?

First, more on what P2P lending is:

Alternative Investments: Peer-to-Peer Lending

On Minimalist Wealth

Key Points:

+P2P Lending has a history of high returns and low volatility, particularly for larger investors.

+The time and skill requirement is low, making it great for passive investors.

-It is tax-inefficient, particularly for investors of high risk loans

A unique way of investing that has been around for less than a decade is Peer-to-Peer Lending. In P2P lending, loan-seekers seek loans directly from individuals rather than banks (who loan money using deposits from individuals). This is how the process works:

Rendering New Theme...