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Investing with Little Money

This post is a “Getting out of Poverty” offshoot.

What do when you want to start investing, but don’t have a lot of money?

Stocks and Trade!

I tried Sharebuilder, and still have investments in some stocks – about $100.  This showed me that if you don’t have a lot of money to invest, then it is not really worthwhile.  It also showed me that investing in stocks is VERY risky.  I chose to invest in interesting companies that were on the cutting edge of new, green technology.  Most have lost a LOT of value since I invested – at what I thought was a low-point.  I only have one stock that is doing somewhat decently – Ford.  I knew that the companies I wanted to invest in were risky and I still have hopes that some will pay off in the end.  They are poised to become very prosperous with the right marketing.  My only advice would be to trade with no less than $100 at a time and buy at least 10 stocks each time.  This is just to help overcome the $9.00 trading fee.  Anyway – stocks are risky and should only be an investment option for money that you could comfortably loose.  ( Click here to get $50 free to start your investing! … and get me some free trades! )

Right now, when the market is low, is a good time to invest.  It may go lower, but when it goes back up, so will your profits.

Less risk, more return and 99% friendly?

As a supporter of Occupy and an entrenched member of the 99% and the 56%, I can say that I am not happy handing big corporations even more profits just to try and earn a little for myself.  With Prosper, I am lending money to People and reaping most of the rewards from doing so.  I am sure that some big business somewhere – WebBank perhaps – is reaping some rewards, but it is only a 1% servicing fee that goes to Prosper and WebBank (from what I can tell from disclosures I skimmed through).  Then again, neither of those are your standard “Mega Bank.”  So, helping people get loans and get back on their feet while avoiding standard mega-banks is a huge plus.  Getting a fantastic return on my investment is a big draw as well.

All it takes to start investing is $25.00 to get around 10.69% Returns With Prosper. You can also get a Prosper loan, but we’re talking investing!

I am a jump in and learn to swim kind of person – maybe because that is how my dad taught me to swim ( he asked if we knew how to swim and when we said no, he threw us into the cold, mountain creek ). So, I have started investing already and am now looking at strategy.  At the moment I have $75 invested in three different loans, $25 in each.  The basic strategy for investing in People is to diversify.  Make investments in AA, A, B, C and if you are comfortable, in D, E and HR rated loans of various terms (1,3,5 years).  There is also a “follow the leader” strategy you can use and Prosper has a general strategy guide and some stuff on their blog (scroll down to “related” entries for all 5 parts!).

For me, I am a “Social Lender” and am looking for people in my tri-state area of Mississippi, Louisiana and Alabama who have verification stage 2 or 3 and actually have something in the description and on their profile.  The last two are future standards as I just starting considering them.  I also look for loans that are already invested in – anything funded above 50% with above 70% being prime targets.  I also look for a big-sum investment – like someone investing $1000 or more in one loan.  I call that one the “follow the money” strategy.

Of course, as with any non-deposit investment, the returns are higher, but so are the risks – people you loan to could default.  Still, with Prosper, I believe the risks are more easily managed and even avoided.

So far I have helped people consolidate credit card debt, buy a motorcycle, do home repairs and (still pending) start a plumbing business (franchise).  You know the plumber will need helpers, so I am now officially a Job Creator. 🙂

I will keep posting updates on my adventure with Prosper.

For some further reading, check out “Is Prosper a Good Investment?” – the article is a bit old and Prosper has changed, but the article and comments should provide some insight.  I’ll share a couple excerpts here :

“I had put $1000 in ten $100 loan slices.” “I will have received a grand total of $1029.50 over three years.” – article

“You took $1000 and instead of diversifying over 40 loans at $25 per loan, you invested in 10 loans at $100 per loan????? You weren’t investing. You were speculating and you got burned. That’s not Prosper’s fault… ” – comment on article.

“March 7, 2011: I have been investing with prosper for 2.5 years. I have made over $3K in loans over that time. 5 loan have defaulted and 16 are paid in full out of ~100 total loans and 2 additional loans that will likely default in the next 90 days. Proper has my ROI as >%10 for the first 2 years. I expect that when is all said in done I will have an overall APR about 6-8%. This is a real investment you and you can sustain real loses. 1 loan default can make the difference between making and losing money. Like any investment you need to be careful and understand the risk vs. the rewards.” – comment on article.


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  • BobbyKearan

    One of the loans I had invested in was canceled in review because the applicant’s income could not be verified. Time to pick another one.
    Also, there is a prime loan that will help start a business, start some jobs and is very likely to be repaid – but people are not investing in it. Its the plumbing business franchise license startup I talked about above. So, if you are interested, check out

    • Filuy

      I have been investing with them for a few months. Have, overtime invested 300.00, 25.00 at a time rolling the proceeds back in. So far so good I am up to owning 20 loans. A few in each category the only one to have a problem was 30 days late on a double A rating, go figure.