One of the ways you can improve your financial stability and freedom is by cultivating income diversity. Income diversity means that, rather than relying on a single source of income, you actually develop different income streams. One way that you can increase your income streams is through income investing.
Prosper.com is a personal loan and investing site with over one million members and over two hundred fifteen million dollars in personal loans funded since 2006. Using a unique person to person lending model, prosper.com connects borrowers and lenders and allows them to establish a mutually beneficial financial relationship. Prosper offers borrowers rates as low as 5.9% and lender returns as high as 10.1% (this varies, of course based on your borrowing and lending situation).
What is Person to Person or Peer Lending?
What Are Dividends?
Dividends are a portion of a company’s earnings that is returned to shareholders. When a public company is profitable, they primarily have seven methods to invest their profits:
1. Hire new employees
2. Pay existing employees a higher salary
3. Purchase equipment and/or services
4. Merge or acquire another company
5. Purchase stock shares on the open market (otherwise known stock buyback)
6. Distribute the profit to shareholders (otherwise known as dividends)
7. Do nothing and save it for a rainy day.
This article discusses primarily number six.
Stocks provide great returns. There’s really only one thing wrong with this investment class. It’s the risk! Lots of middle-class people feel that they must invest in stocks to have any realistic hope of attaining a good retirement but live in fear of the stock crashes that can wipe out the accumulated savings of a lifetime in a few years. If only there were a better way!
Like all of the most powerful ideas, the new way of stock investing that I will describe here is rooted in something so simple that it will amaze you that you and thousands of others did not think of it before. Please don’t let that sway you. This checks out. I’ve been studying the new approach (Valuation-Informed Indexing) for nine years and I have put it before tens of thousands of people, both experts in the field and regular people. None has yet identified a significant flaw.
Lending Club is an online website that offers a unique borrowing and investing model to individuals who need funds and those who are looking to make some money.
Credit-worthy, pre-screened borrowers are paired up with savvy investors in what Lending Club calls a win win situation for all. Peer to Peer or Person to Person lending is the basis of the site. Investors sign up to make money and borrowers sign up to reduce their cost of paying back debt. In summary, investors fund loans for approved borrowers. Borrowers save over bank interest rates and investors profit with returns as high at 9% annually (about the average).
Information for Investors
Investors make their money from Lending Club when they invest in 3 to 5 year notes. Investors get to choose which notes they want to purchase by looking through selection criteria. Once you purchase a note you will then begin to receive monthly payments directly from Lending Club as the note is being paid back by the borrower. Lending Club will take 1% of each payment for their fee and you get to keep the rest. You make your money on the interest collected. Since 2007, when Lending Club was launched, investors have earned, on average, a net annualized return of 9.5%.
You know I love ING Direct products. I have both the Orange savings account for online savings and their Electric Orange checking account. What I also have is a brokerage account with ShareBuilder (owned by ING Direct). This is where I buy stocks outside of my IRA accounts.
ShareBuilder is offering a promotion where new customers get a $50 bonus for opening a new ShareBuilder account. The offer is in effect until 6/30/12. In order to receive the bonus you need to fund your account with $2,000. And most important – make sure to enter the code 50LS12 when you sign up to make sure your account gets credited with the $50 bonus!
There has been a lot said about peer to peer (P2P) lending lately. With the economy and credit market crunch making it difficult to get more traditional loans, “alternative” lending opportunities are arising. Peer to peer lending is a way for those who might be turned down by a bank to get the loans that they want/need, while providing an opportunity for investors to make some money by lending to others.