Wednesday, August 26, 2009

Shooting For The Moon

I was talking to someone today who is putting a large amount of money in to peer to peer lending. He is very excited and sure that he will double his money in 5 years with a 12-14% interest rate. He is so sure about this plan that he is using most of his retirement money in the hopes that he can re-coup the recent losses and put his 10 year retirement plan back on track. I sure do hope it works out for him. That is more risk than I am willing to take although he doesn't admit there is much risk at all.

My retirement plans are much shorter. I would like to have the option to retire in 2 years with any additional work time padding my bank account. I'm not willing to try any risky investments for such a short period of time. Perhaps after I have reached my retirement goal, I will have extra money to use for creative investing. But even then, it will be small sums that won't derail my life if I lose them.

8 comments:

Over the Cubicle Wall said...

Does he have a backup plan at all? I am more like you. Too much on the line for anything really risky.

Daizy said...

I believe the backup plan would be to work longer. There could be inheritance possibilities but I don't know if that is already accounted for or not. And then there is having the wife work longer too. He does have many avenues I was just amazed that he jumped in so, um, generously.

Over the Cubicle Wall said...

Big return usually means big risk, but I must admit, I don't know anything about peer to peer lending. Maybe he has done his homework.

Daizy said...

I could comment on that...but I won't.

bugbear said...

Poor guy. He's taking a high risk for a relatively small return.

In peer to peer lending, you have little of the oversight that traditional lenders do over your lendee's actual financial situation, and the loan is not collateralized.
And, basically, you can for all intents and purposes be lending to the people all the banks and lending institutions turned down. Not a good risk profile as far as I'm concerned.

Stephanie said...

I agree with you, Daizy. I do have $50 invested in a peer loan right now, and the person has paid on time and as agreed, but I would not invest my retirement money or a large portion of other savings that way. That said, I find peer lending interesting, and I chose a person with a high credit rating to loan to.

Anonymous said...

Hey I saw this while surfing for deals...and thought it might be something that you might like to get involved in!

http://www.weusecoupons.com/index.php?pageid=cdbn

Keep up the great work, I love your posts!!

Hannah

Daizy said...

bugbear, definitely too risky for me at that level of cash. I don't think he even considered why the people can't get a bank loan.

Stephanie, $50 is more my speed. I would try it out for that. Good luck!

Hannah, thanks, I'll look in to that. I started reading but want to read it again to understand all of the details.