Peer to peer lending

[Grieve]

I just initiated the transfer of funds from my Roth IRA to Lending Club, although it will take a couple of weeks. I decided to use IRA funds instead of cash because the taxes can get complicated with this sort of investment. You have to pay taxes on the interest you earn, but you also need to claim losses on any "chargeoffs" (bad loans). There is max per year on the latter of $2000, I believe. So rather than deal with the hassle, I'm going to use IRA funds where it doesn't matter.

If you want to learn more, there are a couple of guys who have been documenting their experiences (and gains) with LC for the last few years. First is here:

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With his annual returns here:

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As you can see, he's been getting annualized return of 11.32%, although closer to 9% over last two years. That's still pretty good, and is entirely using the LC "automated investing" approach. That's where they pick out the best loans for you to invest in, rather than you scoring through the loans and picking them out yourself. Kind of like an ETF vs stock picking.

And another (more technical) guy documenting his experience is here:

<!-- m --><a class="postlink" href="http://www.lendacademy.com/my-returns-at-lending-club-and-prosper/">http://www.lendacademy.com/my-returns-a ... d-prosper/</a><!-- m -->