How To Avoid The 3 Biggest Risks In Peer Lending

How To Avoid The 3 Biggest Risks In Peer LendingHello! Here is a post from a blogger friend. Peer lending is something I have been interested in learning more about, so I thought this topic would be perfect for my readers. Enjoy! 

If you haven’t heard about the peer lending revolution yet, you soon will. Both companies in the space, Prosper and Lending Club, are issuing more than $100 million in new loans every month.

The revolution in peer lending is opening a new world to investors but many are being caught off guard. Know the risks and resources before investing in online loans and you might just find one of your favorite investments.

If you are interested in joining Lending Club, here is the link.


Peer lending is taking the power from big banks

The first peer loans were made on Prosper nearly a decade ago but the movement has only just begun to gain momentum over the last year. It took Prosper over eight years to originate a billion dollars in loans. It took the loan platform just six months this year to originate its second billion.

Peer lending is the coming together of the online world and traditional lending. Borrowers fill out an application for up to $35,000 on a lending website, either Prosper or Lending Club in the United States. After a credit check and review, the application is assigned a credit rating and an interest rate.

The loan request then goes live on the website for investors to fund. Investors decide how much they want to fund in a particular loan, as low as $25, and in how many loans they want to invest. Once enough people choose to invest in a loan and it reaches its requested amount, the money is deposited in the borrower’s bank account.

The borrower makes regular payments to the lending website, as with any loan, and the website passes payments on to investors. The concept is nothing new, people have been investing in bank loans for ages but they’ve always had to go through the bank or a brokerage firm.

Peer lending is changing all that and connecting borrowers with investors directly. [Read more…]

How I Maxed Out my Roth IRA On a $28K Salary

How I Maxed Out my Roth IRA On a $28K Salary

Hello! Today I have a post written from a blog friend of mine. I was able to meet her at FinCon and talk to her quite a bit. She has a great blog and I definitely recommend that you check it out. This post goes along well with my recent post Why You Should Invest and Save For Retirement – Plus a Personal Finance Confession Fail. Also, if you are new here, check out my latest online income report – $14,136 in October Income.

There’s a myth out there that you need to be rich to get started investing for retirement.

You may think that first you have to pay off all of your student loans. Then you need to squirrel away $25,000 in savings. Maybe buy a house. Start earning an income of $100,000 each year. Only THEN would you consider yourself “qualified” enough to become a Capital-I Investor.

The problem is: waiting too long can threaten your ability to retire at all.

Because here’s the deal—the math is in your favor to start as early as possible. Even if that means starting with a measly $100 or so. (Seriously!)

If you need a refresher, here’s why, in math terms. [Read more…]

Why You Should Invest and Save For Retirement – Plus a Personal Finance Confession Fail

Why You Should Invest and Save For Retirement Plus a Personal Finance Confession FailThere is one topic here on Making Sense of Cents that I hardly ever talk about. That topic is investing.

Investing is something I have never really gotten too deep into in my personal life. I know, personal finance blogger fail right here.

It’s an area in my life that I have been too embarrassed to really talk about. We’ve always had some money in a retirement fund, but nothing to be proud of. My main excuses in the past were always that I was paying off my student loans, saving for something, or preoccupied with things going on in my life.

We do have other money saved as well, but I’ve made a huge mistake of letting it sit in accounts that earn hardly anything in interest.

However, I plan on changing that now.

To make a long story short, I took a leap and bought a few hundred shares of Vanguard Total Stock Market Index Fund Admiral Shares and put it into my SEP IRA. Yes, I’ve finally joined the Vanguard bandwagon thanks to Holly at ClubThrifty and J. Money at BudgetsAreSexy (among several other bloggers!). It is cheap to invest in VTSAX, and their diversified holdings definitely had my interest. [Read more…]

Investing for Beginners

Investing for BeginnersSome of you have asked me to make a post about investing for beginners. I’ve decided to make this sort of like a series because of course it’s way too hard to sum everything about investing into one blog post.

P.S. I am not an investing genius. I almost have my Finance MBA and I work in the financial field, but I am not an investment/financial advisor, so if you don’t agree with any of this, then speak up :) All advice is wanted.

I don’t do a whole lot of investing, mainly because we are so focused on paying off debt. However, once my student loans are done (hopefully next summer), then I do plan on heavily investing. Right now we invest around 10% of our after-tax pay every month, but this isn’t very much.


What is investing?

Investing is putting your money somewhere in expectation of some sort of return (hopefully a monetary return!). You want your money to grow for you

Warren Buffet is a great investor. I’ve had lots of classes on his investment strategies. He only invests in things he knows. If he doesn’t understand the company or the business entirely then he doesn’t invest in it. So for example, if you don’t know a ton about the oil business, then you probably won’t want to be investing heavily in it until you understand.

Now, of course I’m not saying that we can all be the next Warren Buffet, but I do believe that only (or mainly) investing in what you know can be extremely helpful and beneficial. This is something that I’m working on right now.

Side note: I highly recommend that you check out Personal Capital if you are interested in gaining control of your financial situation. Personal Capital is very similar to, but 100 times better. Personal Capital allows you to aggregate your financial accounts so that you can easily see your financial situation. You can connect accounts such as your mortgage, bank accounts, credit card accounts, investment accounts, retirement accounts, and more, and it is FREE.
I’ve also heard of people saying that they don’t invest because they say it’s gambling. It would be extremely hard to prepare for your future and your retirement without investing.

As long as you put enough effort into it and aren’t just investing in anything you see, then you should see some sort of positive return.

I’ve talked about our retirement plan (well, a rough draft), and without compounding and returns, it would most likely be impossible to reach this amount unless we won the lottery.

Different styles for different people
There are many different methods for investing as well. You can invest in individual stocks and try to determine the risk you want to engage in.

Or you could invest in funds so that you are more diversified. It all depends on your individual risk tolerance and how risky you really want to be.

It also depends on when you plan on retiring. If you plan on retiring soon, then you most likely want to minimize your risk in your investments so that nothing bad happens. However, if you’re young, then you can ride the fluctuations in the market without it hurting as much.

Eventually in this series, I’d like to talk about everything that comes along with investing: more in depth about compounding, stocks, funds, bonds, options, and so on.  Hopefully I don’t bore you too much, but I think it would be helpful!

P.S. If anyone wants to guest post on their investment strategies, please e-mail me or leave a comment below! I’d love to hear from others and I’m sure others would want to read it. And even if you have no experience, I would still love for you to guest post on your thoughts and why you haven’t started investing yet.

What are your investment strategies, thoughts, etc?
Share any tips!
Also, what do you not understand about investing? I’ll try and include it in my series!

Do I need a financial advisor?

rp_100.jpgI’m off today (and tomorrow), so this will be a nice, long weekend. I’m not sure what I’m doing today, probably just going to bum around.  And I’m sure most of you noticed, but I changed my blog up a bit, how does it look? I’m still making changes, but I got tired last night and stopped. Let me know about any opinions you have! As I always say, any comments, good or bad, are always welcome.

Anyways, to get to the topic of this post, I’ve been thinking about getting a financial adviser. I recently received a pretty big bonus, and I also just realized that I got an extra $630 as well (I forgot to read a page that I got which explained my bonus), so my bonus amount is actually around $6,730. Also, I’m getting a big tax refund this year, so that will be another windfall in another couple of months.

So because of all of this money that’s pretty much landing in my lap, I would like to start investing more, as I have barely done this (because I have been paying down debts), and also to do other things with this money, but I’m not really sure what I should do.

Some of you are probably wondering, “Aren’t you in the financial services industry?” Yes I am, but I don’t handle these type of investments, just mainly large portfolios (lots of money and/or companies that people own). We don’t actually advise on how you should invest or spend money. It’s tough to explain what I do, one day I will make a post on it.

Anyways, I don’t have the slightest clue as to where to start with getting an adviser. I plan on eventually just doing all of this on my own, but for the beginning, I’d like to get at least some expert help to help me in a direction.

I do know that most of them get paid commission based on certain things though, so I think this is swaying my decision. I am not good with investing, I’ve thought about reading books, but honestly, I just don’t have a lot of time right now.

I know that financial advisers are trained and have great expertise with financial matters.  They can help you with investing, retirement and anything financial related.

Where do I start though? Can anyone tell me what exact type of things they tend to help with?

Do you have an adviser? Or have you thought about it?

Are your investments “socially good”?

What are your investment strategies? Do you strictly invest in just good paying stocks or do you care about who the individual company is also and what they engage in? Check out this article, Would You Invest in a Tobacco Company?

Socially responsible mutual funds typically use social screens to help select investments. They often look for companies with positive attributes, like those with a good environmental track record. Some also avoid certain industries, like those that make alcoholic drinks, weapons, or cigarettes.

Socially responsible mutual funds typically use social screens to help select investments. They often look for companies with positive attributes, like those with a good environmental track record. Some also avoid certain industries, like those that make alcoholic drinks, weapons, or cigarettes.

How do you invest? Have you ever considered this?