Have you ever wished you could make and invest in your own mutual fund, based on your personal selection criteria? With Prosper.com, you can. Prosper is a peer-to-peer lending site that matches prospective borrowers with lenders. Lenders can bid as low as $50 on borrower listings, and you can pick and choose based on your preferences.
Determine your loan selection criteria. Consider your values, beliefs, and causes you currently support. For example, are you an advocate of the green movement? Then you may wish to bid on alternative energy business loan requests. Are you a vegetarian? Then you may choose not to bid on loan requests for restaurants that serve meat.
Review loan listings. Besides fitting your socially responsible investing standards, you may want to consider the borrower's ability to repay the loan, the borrower's credit history, the borrower's income and employment history, the borrower's description of the loan purpose, whether or not the borrower will have the monthly payment amounts automatically deducted from the borrower's bank account, etc.
Bid on loans. Diversification helps spread the risk of any one borrower defaulting, so you may want to start small (bidding the minimum $50 for any one loan) and bid on several loans. Two $50 loans to different borrowers may have a lower risk of default than a $100 loan to a single borrower. Select a high enough rate of return to compensate for the potential risk of default.
Be patient. If you are committed to certain selection criteria, then be wary of loosening your standards in order to bid on loan listings. If there are no loan listings that meet your selection criteria, you may want to wait until you find those that do. Be careful not to make your selection criteria too narrow, else no one will fit.
- Invest in what is important to you. If you would not buy a product, frequent an establishment, or support a certain cause, then you may not want to bid on loans that would promote such items.
- Invest in what you know. If it sounds too good to be true, it probably is.
- Diversify, if possible. Try to spread the risk of default and possible losses among many loans/borrowers.
- Be careful that your selection criteria is not too narrow.
By ehow.com
1 comment:
Just came across you site and its emphasis on investing news.
Anyone interested in socially responsible investing might want to go to my site. It's one of the most popular sites on the web on the subject. It also uniquely covers the latest related global news and research as well. It's at www.investingforthesoul.com
Best wishes, Ron Robins
Post a Comment