My normal business is energy consulting related to new home construction. However, I do have investments such as rental properties in Texas and mutual funds. These investments I've had for over 25 years. Six months ago I started adding more funds to a site I had been studying that does peer-to-peer lending. Where else could I sit at my computer, review and make loan decisions for potential returns far greater than my money market yields?

I've been a long time student of the financial markets since my teen years and the experience I've gained investing and studying such cause and effects has allowed me many comforts I don't think I would have otherwise been allowed to enjoy.

Keep this quick rule of thumb in mind when looking at different investments or when you wonder how well some particular investment may fare. It is the rule of 72. Divide the interest rate the investment is expected to yield into 72 and it gives you the number of years it will take to double your money. For instance, a yield of 12% will take close to 6 years to double your money. 72 divided by 12 equals 6.

Peer-to-peer lending is an interesting idea and one whose time has come especially with a large community of computer savvy individuals. It allows you to "tell your story" and have your loan bid on by Lenders, such as myself, in an e Bay type of scenario.

The one thing I can see happening is the same with all unsecured loans. There is always the possibility of someone being able to "play the system" and get his or her loan approved, then default. There are lots of safeguards in place to avoid such scams but there is still the chance some will slip through the net.

Some who honestly intend to repay may have emergencies enter their lives or other occurrences of bad luck and cause them to default on their loans.

What I do predict, however, is once someone defaults on a peer-to-peer loan and this is reported on his or her credit fileit will be a huge "black mark". By this, I mean any future credit grantors looking at your credit file and seeing a default like this will immediately pull back. This kind of default, unlike bankruptcy, may never be forgivenor it will be a long, long time before someone with credit granting authority will trust you for another chance to borrow money.

This lending site was started in San Francisco. If you have an interest in applying for a loan up to $25,000.00, please visit my web site and go to my Links section. You may also be interested is signing up as a Lender and bid on loans with as little as $50.00 invested. It is a concept that deserves investigation. Hey, while at my site, learn how to build your next home more energy efficient, cut your utility costs and contribute to saving the planet. That will put money in your pocket tax free.

Learn more about this author, Charlie Smith.
Click here to send this author comments or questions.

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