I was reading the Wall Street Journal over the weekend and an article titled Six Ways to Boost Your Investment Income caught my eye. Of course, I wondered if peer to peer lending was going to be part of the article – it wasn’t. The article gave some fairly typical fixed income ideas such as CD ladders, bonds, TIPS, and MLP’s. It was a decent article and it may have even given some investors new ideas.
No Mention of Peer to Peer Lending
Then I was tooling around on the CNNMoney site (the online home of Money Magazine) yesterday when I came across this article from last month: Where can I get am 8% return on my investment? Of course, I thought about p2p lending as well, where the average investor (at least in the last two years) is earning returns around this number. But once again, there was no mention of it whatsoever.
So, here we have two widely read personal finance publications with major articles on investing and not a word about peer to peer lending. Clearly there is much work that still needs to be done. Now, if you are reading this blog post then no doubt you have at least a moderate interest in and understanding of p2p lending. But unfortunately you are in a very small minority. The majority of the population, including financial journalists, are either ignorant of p2p lending or have dismissed the concept for whatever reason. In fact, I did a little digging on Google and on CNNMoney the only mention of p2p lending whatsoever in the past year has to do with funding for small business. There are precisely zero articles on p2p lending as an investment. In the Wall Street Journal there was one short article about investing in p2p lending in September last year.
Having said all that I know both Prosper and Lending Club are working hard to try and change this. There has been some great publicity on p2p lending so far this year. I covered some of the best publicity from last month in this blog post, and this month there has been this great article on AOL Daily Finance and a more reserved piece in the New York Times. But there is obviously more work to be done.
Spread the Word
I have three goals with this blog. One is to keep everyone informed about developments in p2p lending for both borrowers and investors. The second is to cut through the marketing hype and bring investors the truth about p2p lending and how they can maximize their returns. The third is more general, and that is just to spread the word about p2p lending. All three goals are important but I think the industry as a whole, myself included, are falling short in spreading the word.
Now, I am still very bullish on the concept of peer to peer lending. I will continue to put new money to work here as well as reinvest all my earnings. But until we see peer to peer lending appear as a viable investment alternative in major financial publications it will remain on the fringe of the investment world.
What do others think? All p2p investors have a somewhat vested interest in seeing p2p lending grow because both Lending Club and Prosper need to be far bigger than they are now in order to be a sustainable business. Are you telling your friends and family or are you happy keeping this great investment opportunity to yourself? Be interested to hear your thoughts.