I have been investing in p2p lending on Prosper since July 06. I consider it an alternative asset class and orthgonal to the stock market.  I am regularly asked if someone should invest in p2p lending… I think the answer is a loud and clear yes!

But before you rush off and invest your entire allocation of p2p lending funds in one fell swoop, head a word of caution.  20+% returns are not possible.  Scale back your expectations. 8-12% is attainable.  High risk means high risk — avoid high risk.

Also start lending money on p2p networks slowly. Get a feel for the process before committing large sums.

For example you could use a fibonacci sequence to scale up your commitment.  Fibonacci starts: 1, 1, 2, 3, 5, 8, 13, 21.  This could translate into a $50 transfer into a p2p network to start.  A second $50 transfer; then a $100 transfer, $150 transfer, $250 transfer, $400 transfer, a $650 transfer, and a $1050 transfer.  Depending on how often you are transferring funds and how large a commitment you want to make you could adjust the size of the initial transfer.

By taking your time to get started you are giving yourself a margin of error in your initial investments.  Getting your feet wet if you will.

Everyone makes mistakes.  The trick is to limit your mistakes to small amounts. 

P2P lending is the future.  Banks make too much money.

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