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It's a -- shaking up the financial world it's peer to peer lending talk about alternative investing.
More investors chasing higher yields offering loans to folks turned down by traditional banks.
But is this risky investment -- Smart one joining me now -- Coleman.
He's a financial advisor for Coleman financial and the publisher of money QNA dot com he has invested in over a 140.
Of these kinds of loans so far.
-- tell me I got involved and why you were motivated to do it.
Well just like you said I I was motivated by the financial crisis 2008.
You know I start investing -- your peers loans right at the beginning of 2009 just like you said searching for that higher.
Higher rate of return for my investments you know so many people even now are looking at the returns and bonds -- thinking what else can -- -- this is one thing they're considering out there.
What percentage of -- money have you been putting towards this.
I've been -- in about 10% of my total investment portfolio in alternative investments like peer to peer lending.
Now what are the problems with this is there's a lot of the faults with these loans because I mean after all -- -- people who can't get loans from regular banks.
Is that a problem for you.
This is it has been you know I I start off in 2009 in the you know I saw the the the great possibilities of it's huge rate of return and I kind of got a little greedy and so I have had you know quite a few defaults in the beginning.
Things are looking up now though.
So what they do is they rank these loans whose potential loans to the even see what the potential of the poll this.
And lending club for example has a 3% annual default rate and and they give you all kinds of clues about what's happening but here's what I wanna know Hank.
How much do you know about the person that you're lending to I mean you have any idea that you know it's -- first time mocked her for -- hoping to open a pretzel store I mean you have details.
You have a few details I mean -- it's is shielded so you can't see exactly who you know personal identifying features.
But I mean you know things like their occupation.
-- -- things from their credit reports how much.
Income they earn.
You -- know quite a bit about it and there's a dialogue.
That the borrowers and the investors can have in the comments section.
By these peer to peer lending web sites where you can ask questions you can did that feedback I think what they want that and loan for.
Well what kind of attorney is saying it and what kind of default rate had you experienced.
Well like you said I have right now -- and about a 140 loans and I keep adding to own but I've seen about twenty default on me so that's -- rate of of what does a little over 10% you're going on.
50% but those you know taken in context those are.
Loans from -- the beginning of when I started investing and now I've kind of changed my best team strategy.
-- been a lot more conservative learning curve.
So I so I see it you know I see a lot of it's getting better but you know what right now marina rate of return right around 5%.
5% return I can't tell you if you had your money in the stock market sense that time.
S&P 500 is up 75%.
20% do you regret putting your money in these loans or do you think you -- -- decision.
No I still think -- -- the right decision because like I said.
This is such a small portion of my portfolio it's only 10% you know I still have.
-- retirement funds you know I still fully fund a Roth IRA I still fully fund.
My 401K -- my work this is money on the side above my retirement above the money that I'm setting aside from my kids' college education this is.
You're just a small portion of my total portfolio.
And so you.
It's got an inverse you know -- when the stock -- is going up.
You know maybe -- clubs maybe it's not the best time to invest in -- clover or other peer peer.
-- services but when the market is going down and there's a demand for these types of loans did it's kind of -- related -- it's a great time especially when the markets are you know taking cooling off period.
And kissing -- Hank thanks for coming on tonight appreciate it thanks for having me -- appreciate it.
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