"It is impossible for a man to be cheated by anyone but himself, as for a thing to be, and not to be, at the same time"
-Ralph Waldo Emerson
Welcome to The Golden Sense! I came across a video of a guy who was attempting to use a selfie stick to take a video of himself while going gator hunting in the Everglades. The problem for him was that while gazing into his phone to take the video, he drove his Jeep into the back of another vehicle carrying a canoe. It blasted out his windshield before ever getting anywhere near any gators. It’s hard not to notice that with the advancement of technology, there has been a large increase in the number of efforts to capture adventure footage in circumstances of questionable wisdom. As new products and services get developed it becomes quite interesting to see how they are tested by the mainstream public.
A relatively new service that has been making headways is the online credit market place of Lending Club. This company has created a market place where investors can lend money in the form of consumer loans to borrowers. The result is that investors can make high yield returns while borrowers can arguably get lower cost loans than traditional bank lending programs.
As an investing tool, Lending Club offers something unique, it is a place where someone who doesn't have very much money can invest and get fixed income high yield returns. If you are new to investing or simply looking for high yield returns, Lending Club is the place to go.
Instead of investing in an entire loan, you can invest in fractions of loans in $25 increments. Each fraction of a loan is called a Note. Notes come in 36- or 60-month terms, depending on the term of the corresponding loan. Having the ability to invest in portions of loans with as little as $25 allows people with little money to become a full-fledged investor. In addition, having the ability to invest small amounts into different loans allows you to offset the risk to any singular loan that goes bad.
Lending Club assigns a grade (from A to G) to each loan based on borrower credit quality and underlying risk. Lending Club Notes have Historical Returns (including loan losses and fees) by Grade A-C of 5.19% to 8.88%. You can choose the grade or grades that fit your investment goals.
Having the ability to invest in high yield loans creates an interesting opportunity. The opportunity is that you can take out a loan at a low interest rate and then turn around and use those funds to invest in higher yielding opportunities at the Lending Club. When you do this, it is important to factor in the default rate of the loans you invest in. By using this strategy, you are actually doing exactly what a bank does.
If you have a good credit score and healthy income, you can take out a loan at Lending Club and potentially invest it in the higher rate loans. This may or may not work as the Lending Club takes fees out and your net interest margin could get crushed. In this scenario, everything depends upon the borrowing rate you receive.
A better idea is to use a chunk of money to invest in gold at www.silverbullion.com.sg and take out a loan against your securely invested funds and invest the borrowed funds at Lending Club.
As Simon Black explains:
The Silver Bullion platform provides a marketplace for people who own precious metals to borrow money from other people using their gold and silver as collateral.
This is what’s known as a ‘peer to peer’ or P2P lending platform, because it effectively eliminates the bank as a middleman.
1) the lenders,
2) and the borrowers.
In order to borrow money, you’ll first need to have gold or silver on deposit with Silver Bullion (you can buy it directly with them, or have your existing gold transferred in).
Afterwards, you can post a loan request on the platform.
All loan requests conform to contract specifications; they are for fixed terms (i.e. 1-year, or 2-year loans), and backed by your gold at a 2:1 ratio.
So, if you have $10,000 worth of gold and silver on deposit, you can borrow $5,000.
The interest rate on the loan, however, is set by the market. Borrowers and lenders themselves find a common price for which they’re willing to participate in the transaction.
There’s no centrally managed authority that dictates what the interest rate should be. This is true free market for money in the works.
By borrowing money at a cheap rate and then turning around and investing it at a higher rate, you can make a healthy low risk spread.
There are other ways to get cheap loans by posting collateral. You can get a certificate of deposit loan at a bank. Basically you get a certificate of deposit (time deposit) at the bank and the bank will turn around and loan you the same amount usually at a minimal 2-3% rate.
Whether you feel safer with cash or gold as your base investment, the rates on loans you can get are cheap. By being patient and diversifying the loans you invest in, you can essentially turn your own finances into your own banking system.
There are so many new gadgets, services, and technologies in the world today. With some you will find great success, while with others you may find yourself with broken windshield next to a swamp. All these new inventions can bring success or sorrow. Whether you use a selfie stick or a financial loan, you have to be careful.
Over and Out
T. Norman
