“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.

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