July 25, 2016

Benefits of Investing in Marketplace Lending

By Remi Harrad

In today’s volatile economy, people are increasingly shying away from the stock market and seeking safe investments that provide positive interest income over a shorter duration. Many are discovering that marketplace loans represent a significant opportunity to generate an attractive level of income.

Whether you’re a sophisticated investor, registered investment advisor (RIA) or just a hobbyist, marketplace lending may be the investment option that you have been looking for to diversity your portfolio.

The benefits of investing in marketplace loans include:

Proven Solid Returns

Individuals who invest in marketplace lending loans can earn an estimated 5-9% net return (after adjusting for fees and defaults). These loans tend to perform better than more traditional types of fixed-income products such as corporate government and emerging market bonds.

Reduced Risk

Marketplace lenders make it easy to diversify across many loans to reduce risk and drive solid returns. In increments of $25 of more, people can invest in a number of loans (or portions of loans).

Short Duration

Typical marketplace lending loans are offered in terms of 3 to 5 years. With no pre-payment penalties for the borrower, the effective duration of the loans could be less.

Simplicity

Investing in marketplace loans is easy. Investors can choose to use an automated tool, which runs a search for specific types of loans, or manually find loans that match a desired risk tolerance.

Low Volatility

Well diversified portfolios of marketplace loans have consistently performed during times of stock market volatility and rising interest rate environments. These loans have also performed well during times of both high and low unemployment rates.

 

 

Neither Prosper Marketplace, Inc. nor Prosper Funding LLC are registered as an investment advisor with any federal or state regulatory agency. The information contained in this blog post is for information purposes, and should not be construed as individually tailored investment advice or as a recommendation with respect to any security or investment approach. 

For more information or to start investing in marketplace loans, visit www.prosper.com.