Lco's with money, earn more Interest on your savings.

Discussion in 'General Industry Discussions' started by topsites, Oct 22, 2006.

  1. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    For those of you like myself who like to stash it away, surely you have found it blows to have several thousand (or more) sitting in a Business Checking account earning no interest.

    Of course, an electronic money market account is a great plus, one can transfer funds back and forth as needed, and earn around 5% APR all the while. Although it may seem trivial, every $3,000 earns me $11 / month, so once there is nearly $10,000 in an MMA, one earns the equivalent of one grass cut / month without doing any work.

    It does add up and it's better than nothing, but it still frustrates me some.

    Recently, while enjoying a copy of Reader's Digest I found this Web site made by the makers of Ebay that is all about Person-to-person borrowing and lending, with interest rates typical in the 8.5% - 14.9% range. Much like Ebay connects vendors and buyers, this site connects Lenders and Borrowers.

    Now before I give you the web address, you already know you have to be careful and read the instructions and learn how it works before you go off giving your savings to someone who later defaults, but I think several small, diversified investments here could really pay off.

    Anyway, the address is Prosper
     
  2. brinlee lawn

    brinlee lawn LawnSite Senior Member
    Posts: 273

    that is very interesting
     
  3. scraper69

    scraper69 LawnSite Senior Member
    from mi
    Posts: 477

    hmmmm, be a banker!
     
  4. willretire@40

    willretire@40 LawnSite Bronze Member
    from VA
    Posts: 1,387

    Yeah i have been looking at that site for the past week. I think it is an awesome idea. It also has low risk if you only loan small amounts out to many people. Then you can just keep reinvesting it including the interest that you made. Just dont tie all your money up in it b.c you cant get it out right when you want it.
     
  5. firefightergw

    firefightergw LawnSite Gold Member
    from Texas
    Posts: 3,340

    Very interesting. Signed up and was going to loan some money but you have to give your SS#, Driver's license#, and your bank account and routing number. With all that information, it would be very easy for someone to still your identity or get into areas of your finances you don't want them. The idea is good but IMO the risks outweigh the benefits.
     
  6. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    No absolutely do NOT put more in there than you are willing to risk, and don't cry if they default, you have been warned lol.

    One can approach the place with many different views, myself I am looking to make money and for this to work one needs to consider the risk / default %, so in the end to make any money (over leaving it in my bank), I think I'd have to earn around 15% upfront with credit ratings of B and better... Mind you, after the default %'s kick in, it's down to 10-12% and I'm looking at spending an hour or two of my time there for a return of 100-120 dollars per thousand, I'm only getting 50-70 dollars over top of my bank's rate and it takes a year to get it.

    It's not easy money, it's not better than grass cutting, it is merely an alternative way.

    But it is cool, it gives those of us with some extra money the chance to invest it without the usual overhead (borrowers pay the 1% fee, which is how prosper stays afloat).

    It also appears at this time there are more borrowers than lenders, which further affects the ROI.

    Takes some time and studying, don't go plopping down money in a rush (thou the fact that it takes days in real time to get funded helps as well). You can then even auto-fund direct from your business account LOL thou hopefully by that time you've had a chance to review the site some and you will see that too much excitement could be detrimental to your financial health.
     

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