The Most Simple Yet Legit Way To Become A Millionaire. It is actually alot more easy than the world makes you think it is, most people want to make millions for themselves but could care less if anyone else out there earns a dime.
Right now I am 23 years old and I have my eyes set on a million dollars or more. I really do not have tons of knowledge with investing but it is actually simple. Another lie the world will tell you is that you can only invest and make money if you have million to start with, THAT IS FALSE! In these days investing has actually been made even more simple, and you can earn a decent amount with it if you really want it and you are patient. This article is not going to help you make a million dollars overnight, but I will tell you that no matter where you are in live right now, you can invest with small amount of money and make a pretty good profit doing so.
Now you may be thinking, wait you say “small amounts of money” but what do you mean by that you may be asking yourself? I am talking about $25.00 dollars which is a pretty small amount you can invest with and I am going to share with you how it is possible. Now I am not a millionaire yet, but I have plans to be. Having big dreams is not enough, you must make plans and set goals to make it happen, and that is exactly what I am doing.
There is a newer way out there where you can invest small amounts money and it is called “Peer to Peer” lending, you may have actually heard of it and blew it off because you are not sure what it is. Peer to Peer lending (P2P) is a form of investment where you are your own bank no matter how much money you have, and you help fund other people’s loans. There are many companies here in the USA that function online and that are very trusted such as:
- Lending Club
those 3 sites are a few of the top P2P lending sites. Now these sites do work both ways, you can go there and apply for a loan, or you can be an investor and help fund other people’s loans. This way there are no banks technically involved, people are the banks and we come together to help fund the amount of money people need for their loans, and we make interest on those loans! It is very simple if you can understand money management and risk management, you are set!
Basically what you would do is sign up for whichever peer to peer lending site you choose to deal with and apply for an account with them, once you are approved for an investor account, you then fund your account and start investing! Pretty simple! There are many kinds of loans such as debt consolidation, person loans and more that you could choose to fund.
Everyone that has submitted and been approved by the peer to peer lending site, their loan will then go live on the site for us investors to see and pick and choose. There are those that have good credit and good history of paying back loans, so you will earn a lower percentage of interest from those folks, then on the other extreme there are those that do not have such a good history, low credit score or high debt to income ratio where you will earn much higher interest but then there is the chance they will stop paying the loan and you will lose out on the rest of your money, so that part depends on how risky you choose to be!
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Loans are in categories from AA, A, B, C, D, E, & HR – basically A is the most trusted to pay back the loan, but you will make little interest, and then all the way to HR which is high interest you would gain but have a high chance of them ending up not paying back the full loan, that risk is on you to decide.
Now I started using “Prosper.com” last month because it looked most appealing to me and has very good reviews, and thus far I have to say I give it 5/5 stats in my humble opinion. The interface is good, the support is good, and it is all is very easy to use. You can fund as LITTLE as $25.00 dollars per note, which is the best way to go! Spread out your investments on many different notes (loans) so when it happens where someone defaults on a loan and stops paying it back, then you will not have all your eggs in one basket and lose 100% of your investment from one loan!
I would rather use $100.00 dollars in four different loans, than $100.00 dollars in ONE loan, if that one loan defaults then your $100 bucks is gone, but if you used that 100 dollars in four loans and one defaults, you lost $25 instead of $100 dollars! That is the main idea of proper money risk management, DO NOT KEEP ALL YOUR EGGS IN ONE BASKET! (do not put all your money into one note!)
The images I am going to show you are from my new account using prosper.com I just started with $50 dollars, my plan is to be able to invest $200.00 dollars per month of new money in loans, and then of course compound what I earn back each time my earning balance hits twenty-five dollars then i can put that money into another loan!
Now, what you see in the image above is after my first month of notes have given my first months return, I have one loan in the AA category and another loan in the D category, D will earn me more interest but a bit more risky, and AA is the safest loans you can invest in but the lowest interest because you are very safe knowing those people will 99% + chance of paying you back. I have $25.00 in each note. My total value of my account went from 50 dollars to 50.41 in the first month, which can be laughable, but you have to look at this over a 20-50 year time period, depending on what you can afford to invest and how long you do not mind waiting. So the 41 cents that my account went up was the month 1 payment from both loans with the interest included into it, pretty simple right? Now my goal is to get around $200.00 dollars in per month or whatever I can afford, but the more I can put in earlier, the better. But each time the money in my available cash balance goes up and hits at least 25 dollars, I will be looking through the current open loans, those people’s credit scores, how much they make per year, the debt to income ratio they have and much more just like a bank does before giving you a loan, only you are the bank this time with whatever money you can afford! Even if someone wants a loan of $3,000 dollars, you can still only fund $25.00 dollars into that note and let others fund the rest of the $2,975 dollars left, so your risk is small, but you will still gain your respective % payment + interest each month determined on how much you have funded that specific loan!
In the image above you can see just a few, of thousands of loans I am able to choose from, and I can click them and get about all the info I needed about that person to determine If I want to trust them to pay back my money or not, remember A, B, C and sometimes D are the most safe ones to fund, slower interest over all, but you have a very low chance of losing money when you let them borrow from you!
NOW FOR THE FUN PART, like I mentioned, we are in this for around 40 years is my goal, I am 23 now and when I am 63 years old, I will be a millionaire just because I was smart with my money and prepared for the future, It does not matter how much money you have now, it matters how you use the money you have now.
the numbers below I am not making up, I am using a compound interest calculator which is exactly what you are doing when using a site like prosper, each time you have earned 25 dollars in your balance, you will add that into a new note to make your account gain even more interest! There are many apps and free calculators online that will give you these numbers but here is some math done for you.
Now I am going to base the APR at 7 to 10% which is ABOUT the average for prosper… between 6% and 12% is the average I am seeing from many others that use prosper!
All of these examples are for a 40 year period, using compounding at 10% APR per year
(UPDATE: As of right now, June, 4th 2017 – I am earning over 13% APR!)
Fund $50.00 a month and after 40 years you will have $282,202.44
Fund $100.00 a month and after 40 years you will have $564,404.88
MY GOAL = Fund $200.00 a month and after 40 years you will have $1,128,809.76
Fund $500.00 a month and after 40 years you will have $2,822,024.41
Fund $1,000.00 a month and after 40 years you will have $5,644,048.82
hopefully you could gain something from this article, I am well on my way to a decent chunk of money as long as I stick to it, I want it bad so I am sure I can do it! Enjoy!
IF YOU WOULD LIKE TO SEE MY CURRENT PROGRESS WITH PROSPER.COM PLEASE CLICK HERE!
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