On average my dividend paying stocks return a yield of around 6%. In plain English, that means for every dollar I invest in, I earn $0.06 per year. Sounds like a lot, but there are a few things you don’t think of. First and foremost, stock price changes. So if price goes up, value goes up, if price goes down, value goes down, so I never know exactly what the return is, unless I want to sit down and do the math.
I’ve started looking out for different ways to invest my hard earned cash. First I swung by the race track, and quickly realized that doesn’t work. The next step was a guy named Tony out behind a bar, but his eyes were just a bit too red and twitchy for me to trust my cash with him.
Then I looked at Kiva, again. Kiva is a great program, and if you’re the altruistic type, like I am, you should sign up and join the Capitalist Cares Kiva Team. Together we can help many, many, people. But the thing is, you won’t be making a return on your investment. So, it’s more of a donation that you end up getting paid back. Which is great, don’t get me wrong, because I can drop some spare cash into the account, send it out into the world, help people out, and get it back to help someone else. That’s fine.
But I want investments. But looking at Kiva, I knew I had Microplace that I could fall back on. Or, so I thought. Turns out Microplace stopped doing new investments in January.
So what was I supposed to do? No interest from Kiva, no Microplace to fall back on…of course I went to Google. You know me too well, digital reader. You little scamp.
So I hit Google with the very narrow search “microlending platforms” and, of course, it returned a gazillion results that meant absolutely nothing to me. So I hit it again with the better term “microlending platforms that will make me a millionare” and Google laughed at me. Audibly. Through the speakers. (This may be an exaggeration.)
I eventually stumbled across LendingClub.com, which, obviously I wouldn’t be allowed to join, because Maine is run by a fucking idiot. But when I stumbled across that, I also found Prosper.com[?], which I did a little research on, and it is a microlending platform that allows you to purchase portions of debt, or notes, from borrowers. They even have a trading platform which lets you trade said notes with other lenders. All this for the minimum investment of $25. Sounds a lot like Kiva to me.
So I’ve got an account all setup now, and I’m waiting to get my account verified so I can deposit some cash and get to investing. I’ll let you know how it works. If it does work, though, the yields are promising. They narrow down each account type by it’s risk, with the lowest risk having lowest reward, highest risking having highest reward. Lowest risk also has the lowest rate of default, with highest risk obviously having the highest rate of default.
I think I’ve found the sweet spot right in the middle, though. Their yield after expenses and defaults for their C rating (ratings are AA, A, B, C, D, E, and HR) was around 11%. Which is much higher than that money would be making in dividend paying stocks. Don’t get me wrong, I’m not replacing my stocks with this, but I might use it as an alternative, possibly take a portion of the money that I would be investing and deposit it to my Prosper account, and see how that works.
For now, though, I’m risking $25, and seeing how the entire process works from start to finish.
Another note, just for some transparency, I’ve also signed up to become a Prosper affiliate. I’ve not yet been approved, but if I do get approved, and I fall in love with the service, you can be sure that there will be a link to click, a link that will let you sign up for them, and give me some money for the trouble. Don’t worry, if I don’t care for the system, or find it too risky to suggest, you will not see that link. That is my promise to you.