Lending Club Investing

Lending Club out performs most investments and at a risk less than traditional investments (not including CDs, Savings Accounts and Money Market). Diversification, however, is the key to maintaining low risk. Never invest large amounts in one loan, split it in $25 increments and you should be fine.

Yes lending is risky, but banks have been lending forever. If you qualify your risk properly you won’t have any problems. I'm currently looking at no defaults and net annualized return of 9.7%. Granted your results may vary, but why not play around with it for a while?

www.lendingclub.com

Investing in the Stock Market

Seeing as how the stock market has been taking a hit lately, I bet a lot of you are considering picking up some stocks that have gone down. I personally do not see this as a terrible idea, but I think it is a serious decision and you should watch out for a couple of things:

Stocks go Up and Down
This is an easy thing to acknowledge when the market is pretty flat, but when it becomes more volatile people tend to panic. This is exactly what a lot of people are doing now. The thing is even if you buy stocks for cheap now, they make go down even more before they go up. Does that mean you shouldn't buy them? Well not necessarily, but you need to be patient and control your reactions.


Balance is Key
By having a diverse stock portfolio you can rest assured that even if some of them are going down, the loss is minimized because it stretches across the boards. Since most companies are not planning on going out of business, it is a safe bet that your stocks will level out EVENTUALLY

Do not "Hope and Pray"
The biggest mistake people can make is just blindly putting money into any stock. You want to do your research about a company to make sure it is in financial shape. An easy way to track general info. is through news sites like Yahoo Financial.

There are a lot of other things I could mention, but these are a good place to start. Remember to ask any questions you may have.

Paying Down Debt vs Investing

I think a very common quandary that people end up in is deciding whether they should pay down their debt or invest in their future (typically retirement accounts like 401(k)s. Although I intend to address this topic more thoroughly later I think there are some specific situations that have easier answers and I will attempt to sift through the main ones.

The Credit Card Rule: Alright, first and foremost you always want to pay your credit cards down. Having high revolving balances on credit cards is the most damaging to your credit score and usually your wallet (credit cards typically have higher interest rates).

The Private Loan Rule: Private college loans do not have nearly as many benefits in terms of taxes and interest rates as due federal loans. Because of this it makes sense to pay them down as much as possible. Ideally you don't want any debt, but private loans are generally worse than federal.

Always Plan Ahead: In general it is a good idea to at least invest some portion into an IRA, 401(k), etc. Even if it is only $50, for most people this is the easiest way to invest. Since it is pre-taxed dollars you save double time. Once your cashflow starts to really improve you may look into real estate investing or some other method where you have more direct control over your money (instead of leaving it up to the company and its management). You may even be interested in starting your own business!

Like I said, I will attempt to explain more of your options in future posts, but for now hopefully this helps you out!