Roth TSP vs. Roth IRA

A buddy of mine recently asked: Can you double dip Roth TSP and Roth IRA? (Contribute the maximum to both plans in one year) YES! Technically, I wouldn’t call it …


Lending Club Review – 1.5 years, 8.35% return, 2 Defaults

Check out my latest update after 2 years of investing in Lending Club. may sound like a too good to be true scam when you first read about it. 9% average return? 100% positive returns for investors with 800+ notes? Isn't this exactly what Berni Madoff was promising his investors in his Ponzi scheme? Lending Club is certainly not a scam, and the risks are as real as the rewards. After over 18 months of investing through Lending Club, I have seen returns 8 times better than any bank account or CD, with a better cash flow than the stock market.  Let's start with how I got involved in the LC.

My Story

Back in January 2011, I was frustrated with the returns I was getting in the stock market. I was looking to diversify my investments and I also wanted to increase my monthly cash flow. I looked at various options, such as stocks, bonds, CDs and other investment vehicles. None of them really provided the returns I wanted while also spinning off monthly dividends. Then I found Lending Club.

The peer-to-peer lending concept was familiar to me from Kiva. People who need loans but can't get them from banks or can't get a reasonable interest rate apply for loans that are funded by small time investors. Most investors have only $25 in each loan, meaning that they have very little to lose on each defaulted loan. I knew the default rate for Kiva was as low as 1.04%. Could Lending Club provide similar low risk with high return potential?

Getting Started

At first, I was apprehensive. The returns seemed too good to be true. Who was borrowing money at such a high interest rate? What was the default rate like? How much data did the company have to backup that people would actually repay the loans? All of the questions and more were clearly explained on the website. The transparency of the lending process and the amount of data available to the lender is fantastic. You can find lots of stats here. There's even more data once you sign up for the service.

I decided to put $1000 into LC to test it out. Over the next few months, as I started to see excellent results, I put a few more dollars in there. The results continued to be great. So how does Lending Club work? And, how can you get it to work for you?