How Do I Double My Money - Putting Your Money to Work on Prosper
When most people try to figure out, "how do I double my money?" they often don't consider the option to engage in micro-loan activities as a private lender.
You will soon see that while nontraditional, this form of private lending can offer a higher interest yield in a relatively safe lending environment.
Before beginning, you must first understand the basic premise behind Prosper.
com.
The site is set up as a way to conduct person to person (P2P) loans as a result of banks tightening and restricting their lending practices.
In a time of high debts and low savings, many are no longer able to access a bank backed loan for personal or business reasons.
Some of these borrowers may be relatively safe, but the fact that they can't get a loan through a bank allows for the P2P lending process to result in a higher yield of interest from those that you choose to lend funds to via the site.
With that knowledge, approach Prosper.
com and the process as someone with healthy skepticism.
The internet, while a wonderful tool, can add anonymity to those with ill intentions.
Read through several of the ads placed on Prosper to see if the site is one you can work within as well as if the risk is such that you can tolerate it.
Next, decide on a few potential borrowers.
Look at what they say on the site and how they say it- this can tell you a lot about a person and their intent.
Be sure to check the borrower's credit ratings, which can range from AA to HR.
The HR (High Risk) can yield the greatest return on your investment, but do carry the most risk.
Also, check each potential borrower's DTI (Debt to Income ration.
) This number tells you about the level of debt they are carrying divided by their total income.
Obviously, a lower DTI will convey less risk and thus, less return.
Take an honest look at how each potential borrower intends to invest the loan.
There are individuals who clearly have a history of making bad investment choices or business choices and they should be avoided.
A good potential borrower could be an individual who is looking to consolidate credit card debt.
This is because interest rates on Prosper are lower than those paid to a credit card company.
Clearly, this potential borrower has a good grasp of finance and is trying to save themselves money.
Finally, it is strongly advised that you not put much credibility in the personal story.
The site allows each potential borrower to write a brief narrative as to why they are a good candidate for a loan.
Some can read in a very emotional manner and any financial advisor worth their salt will tell you that emotions have no place when deciding to lend a person money.
Don't allow yourself to get sucked in to a story such as a minister or activist hoping to change the world.
As with any investment, the key is diversification.
Don't simply loan to new business owners.
Take on several types of loans at different risk levels.
This insures a bit more security and often a better rate of return.
More borrowers lower your overall risk because if one person doesn't repay, your investment isn't totally wiped out.
Use good judgment, do your research and stay current and Prosper.
com could be a great place for you to double your investment in no time.
You will soon see that while nontraditional, this form of private lending can offer a higher interest yield in a relatively safe lending environment.
Before beginning, you must first understand the basic premise behind Prosper.
com.
The site is set up as a way to conduct person to person (P2P) loans as a result of banks tightening and restricting their lending practices.
In a time of high debts and low savings, many are no longer able to access a bank backed loan for personal or business reasons.
Some of these borrowers may be relatively safe, but the fact that they can't get a loan through a bank allows for the P2P lending process to result in a higher yield of interest from those that you choose to lend funds to via the site.
With that knowledge, approach Prosper.
com and the process as someone with healthy skepticism.
The internet, while a wonderful tool, can add anonymity to those with ill intentions.
Read through several of the ads placed on Prosper to see if the site is one you can work within as well as if the risk is such that you can tolerate it.
Next, decide on a few potential borrowers.
Look at what they say on the site and how they say it- this can tell you a lot about a person and their intent.
Be sure to check the borrower's credit ratings, which can range from AA to HR.
The HR (High Risk) can yield the greatest return on your investment, but do carry the most risk.
Also, check each potential borrower's DTI (Debt to Income ration.
) This number tells you about the level of debt they are carrying divided by their total income.
Obviously, a lower DTI will convey less risk and thus, less return.
Take an honest look at how each potential borrower intends to invest the loan.
There are individuals who clearly have a history of making bad investment choices or business choices and they should be avoided.
A good potential borrower could be an individual who is looking to consolidate credit card debt.
This is because interest rates on Prosper are lower than those paid to a credit card company.
Clearly, this potential borrower has a good grasp of finance and is trying to save themselves money.
Finally, it is strongly advised that you not put much credibility in the personal story.
The site allows each potential borrower to write a brief narrative as to why they are a good candidate for a loan.
Some can read in a very emotional manner and any financial advisor worth their salt will tell you that emotions have no place when deciding to lend a person money.
Don't allow yourself to get sucked in to a story such as a minister or activist hoping to change the world.
As with any investment, the key is diversification.
Don't simply loan to new business owners.
Take on several types of loans at different risk levels.
This insures a bit more security and often a better rate of return.
More borrowers lower your overall risk because if one person doesn't repay, your investment isn't totally wiped out.
Use good judgment, do your research and stay current and Prosper.
com could be a great place for you to double your investment in no time.
