I would stick with the lower amount per loan until you have enough to invest in at least 100 loans

Hi Cherie. So until your investments reach at least $2,500 then invest $25 per loan. The interest rate you earn and how fast your money grows doesn’t depend on how much you put in each loan, you’ll get a certain interest rate on each loan.

More loans will be better starting out, than confining to fewer loans- which could leave me vulnerable to defaults

Okay, Thanks for clarifying that for me, I have a better understanding now of how the interest rates work, and that is what I initially thought to do.

The important point is to spread your money out over at least 100 to 200 loans so a couple of defaults won’t matter as much

Are there any options for me to invest? I am a Washington state resident but do not meet their requirements – “an Annual Gross Income of at least $70,000; AND (ii) a Net Worth of at least $70,000; OR I have a Net Worth of at least $250,000.” I don’t foresee myself meeting that anytime in the near future (if ever).

Are you sure you’re looking at Washington state’s Lending Club requirements? I see that California has a suitability requirement of $70,000 income or net worth for investing in p2p loans but I couldn’t find any for Washington. If you aren’t able to invest on Lending Club, you might try Folio which is just a secondary market for Lending Club loans (where people buy and sell their Lending Club loans).

Hi Sidney, I would go with Lending Club. I haven’t invested on Prosper for a while but it was starting to fall behind badly last year. They do not have the loan growth needed for investors and I like the Lending Club platform better.

I’m considering getting into P2P and I see a lot of people are starting with small investments of $1,000 to $2,500. Would you argue for or against starting off with a bigger investment of say $5,000 right off the bat?

Thanks Montana, How much you invest really depends on your total portfolio in stocks, bonds and other investments. I wouldn’t put more than 25% or so in peer to peer loan investing. That just helps diversify your risks and make your overall wealth less risky when it’s spread out among stocks, bonds, real estate and p2p. For example, if you have a total of $50,000 to invest in all assets you might consider $10K or so in p2p.

I’m trying to begin in investing and I like the idea of P2P. Help me understand the short and long terms benefits of this? Canyou actually make revenue on an annual basis?

Hi Chase. I like p2p investing for two reasons, diversification and the returns. 1) Since it’s debt, it will be less volatile than stocks so will help protect wealth during a stock crash. There will be defaults but you’ll never lose the kind of money like when stocks fall 20% to 50% 2) I’ve booked solid returns around double-digits since starting on Lending Club. Even on a little higher defaults, you can easily book 7% to 8% returns every year.

Joseph, if you are reinvesting every cent you make off of P2P then when do you spend the passive income. Is this strictly to build up for when you retire or to have money each month to spend?

Yep. I treat my p2p account like any other investing account, for those long-term gains. It can be a source of passive income if you withdraw the earnings.