“The rich ruleth over the poor, and the borrower is servant to the lender.”

The rich ruleth over the poor, and the bor­rower is ser­vant to the lender. –Proverbs 22:7

Most finan­cial blogs focus on the evils of credit. How­ever, these blog­gers are only writ­ing from the per­spec­tive of the bor­rower. As long as you are hon­est in your lend­ing and do not try to take advan­tage of oth­ers, then there is a lot of hon­est money to be made in lending.

One of the ways I’ve started to gen­er­ate pas­sive income is by loan­ing out my money on Pros­per. With $1000 diver­si­fied into 20 $50 loans, I’m earn­ing an aver­age of 18.55% on my invest­ment. This comes out to about $0.51/day in profit for a fairly safe invest­ment. Even if one loan defaults, I’m still com­ing out way fur­ther ahead than hav­ing my money in a sav­ings account.

This is the basics of how it works:

1. Put money in your Pros­per account.
2. Browse list­ings.
3. Bid on the list­ings you want to fund.
4. Sit back and wait for the money to come in!

Pretty sim­ple, eh? You can even set up an auto­matic bid­der that will bid on loans that meet cri­te­ria the you specify.

I wouldn’t rec­om­mend loan­ing out your life sav­ings, but I think Pros­per should be a part of everyone’s diver­si­fied invest­ment portfolio.