Have you ever wanted an investment that pays for itself? Many people invest in dividend stocks, business ventures, or real estate to earn a revenue stream, but those investments take a lot of money upfront to make money for an investor every month. Lending Club is a simple peer to peer lending investment that has the potential to generate passive income for you very quickly. The investment can quickly begin to pay for itself.
You may remember me writing about Lending Club’s wonderfully high interest rates a few weeks ago. I have been using the service for over four months now and have been earning an average of 13% annual return on my investments with them. I think that they provide a great service to both lenders and borrowers in our troubled credit crisis.
So, what is Lending Club? Great question! Lending Club is one of the premier peer to peer lending services. You are the bank! You loan money to people that you screen, and they pay you interest on the loans like they would a bank. And, they pay a lot! Where can you earn 13% in today’s market? Not too many places. And, the company is registered with the Security and Exchange Commission (SEC). For as little as $25 a month, you can invest in micro loans that people need for things like a new car, a business expansion, credit card debt consolidation, a wedding, medical expenses, etc.
The Passive Income Part. The definition of passive income is revenue that is received on a regular basis, with little effort required to maintain it. Passive income (such as investment income) is revenue that does not come from active participation in a business.
Let me describe what I am doing with Lending Club. Every month, I invest $50 from my personal checking account to my Lending Club investment account and make a loan to a deserving individual who will pay me a high rate of interest in return. Every month, the loan recipient makes a payment to me and the other investors participating in funding the loan like he or she would if it was a car loan with a bank. So, for my one-time $50 investment, I receive approximately $1.93 in principle and interest every month for the next three years (36 months). If you keep making $50 loans every month that pay you an average of 13% annually, it will take you 13 months to earn $25 in income every month from your investments. When that happens, you can then make loans every month from your interest payments alone. And, after 26 months, you can stop adding your $50 a month to your investment pool altogether and invest solely from your income stream. See how it will quickly become passive income after a few months of disciplined investing?
Over the next week, I will add an MS Excel spreadsheet to the Resource Page of the blog that should help you visualize earning passive income from Lending Club.
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