I thoroughly like investing in Lending Club and peer-to-peer lending where I can earn a higher rate of return than many other investing options and definitely higher than a savings account or money market fund.
I have been investing with Lending Club for almost four years now, and it has truly been a great experience that I would highly recommend to others who are looking for a greater rate of return on their investments than others.
Lending Club is a great way to earn a passive income that will supplement and diversify your investments. And, it’s easy to earn passive income from Lending Club and earn a great rate of return on your investments.
Lending Club Makes A Great Diversified Investment
One of the greatest advantages of Lending Club and peer-to-peer lending is that it allows you to be incredibly diversified in your investments. You have the option of investing in risky loans as well as a host of safe loans earning a good rate of return from people who have good credit scores, have been employed by the current employer for decades, have a mortgage, and even people who have not been delinquent on loan payments in the past two years.
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Additionally, by only having to invest a minimum of $25 in a single loan, you share only a very minor portion of the risk. There are a group of investors who pool their money together in each loan. Some investors risk more money, but quite a few like me only invest $25 at a time in any one loan. This significantly reduces your risk of default by spreading your money around to many loans throughout the Peer to Peer lending investing portal.
How To Earn Passive Income From Lending Club
As I mentioned earlier, you only need $25 to invest in a new loan with Lending Club. And with that $25, you will continue to earn an income stream each and every month as that borrower continues to repay his or her loan to you and the other investors through Lending Club.
Even if you never reinvest a single payment that you receive from a borrower, you will continue to receive between $0.50 and about $2.00 per month per loan you invest in depending on the interest rate that is being charged to the borrowers. The interest rate is based on a host of factors such as the reason for the loan, length of their loan, and of course their credit score.
These payments are in the form of both principle and interest payments like any other loan that we are used to paying ourselves. This time the only difference is that you are the bank with Peer to Peer lending. So, in order to earn a passive income, you simply have to collect the payments, and then you can decide either to cash out, let your cash build in your Lending Club account, or reinvest those funds into new Lending Club loans, which are what I do in order to continue building my portfolio, diversify risk, and earn a passive income stream.
An Example Of Earning A Passive Income From Lending Club
You only need $25 to invest in a new loan with Lending Club. So, in order to earn a passive income and continue reinvesting in new loans, you simply have to have enough loans generating monthly income that produce $25 per month. For example, an ultra safe A4 rated loan charging a 7.9% interest rate to the borrower returns $0.50 in principle and interest to me each month.
Remember that I only invested $25 and 181 other people invested in the $15,300 loan as well. So, if you had 50 loans exactly like this one, your peer-to-peer lending investment account would generate that $25 per month needed to reinvest in another Lending Club loan. Reinvesting your investment proceeds will continue to let your investments grow with compounding interest.
Compounding Interest And Passive Income Over Time With Lending Club
Of course, the power of compounding interest continues to work its magic with peer-to-peer lending as well. With the same 50 loan example above earning enough passive income to generate one new peer-to-peer lending loan per month to invest in, you will end the year with 62 loans.
Those 62 loans would generate $31 per month in passive income by the end of the next year instead of the original $25 thanks to those 12 additional loans from the previous year. Those 62 loans could generate the capital to invest in 15 or more new Peer to Peer lending loans the next year increasing your total loans to over 77. Over the following year, you could see an increase of 19 more loans if you didn’t add a single new loan with your own money and simply reinvested loan proceeds.
Lending Club is a great way to earn a passive income that will supplement and diversify your investments. It is easy to earn passive income from Lending Club.