Cash is king right now. With people losing their jobs and the markets in negative territory, everyone is loading up on cash
and I think that is the right thing to do. If the roof leaks, or the car needs repair, you will not have to use a credit card to pay for it, you can use your cash. But what if your cash is only getting- like mine-1-2%?
Yikes! As I have said before, cash needs to keep up with taxes and inflation or else you are guaranteed to lose money. Why? ? Because your cash will lose its ability to pay for items like bread, gas, etc. that keep going up in price.
After reviewing www.bankrate.com
, I realized that I wasn’t doing any worse than the national average on my cash which is 1-3% depending on how you have spread out the maturities. So what else can I do? Peer-to-peer lending websites such as the ones below are gaining in popularity as a place to put short term cash at work. Let’s be clear-this is extra cash that you hold -not emergency cash savings.
They work in two ways- either direct person to person lending or a pool of lenders buying into a pool of borrowers. In the past 20 months, Lending Club investors have earned an average annual return of 9.05% according to their website. Please read the prospectus for detailed information about the process, risk, and fees before purchasing.
I know many Financial Advisors who have used VirginMoneyUS to help families and friends provide loans for college education, or to start businesses.
If you are concerned about the low rates on your cash, think about putting a small portion into one of these online social networks that connect borrowers with lenders. I think it is going to be the wave of the future as credit and capital become hard to get.