re: Tell me about lendingclub.com - pretend I'm a 4-year old child

quote:

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You let someone borrow your piggy bank and IF they give it back, they will give you some extra coins to put in it

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Nicely played.

I looked into it briefly, if you have the time and inclination to actively manage a large number of notes (several hundred) you can supposedly get a nice return. Keep in mind that the income you get will be considered ordinary income by the IRS, not capital gains.

The guys who have been doing this for awhile seem to be getting around 10% pretax overall even including defaults, which isn't a bad number at all these days. Just make sure it's worth your time to spend on it. If you invest $25k then you're only making about $2.5k in taxable income for the year. It might be worth it if you invest more than that though. Or maybe just invest in a decent corporate bond ETF - you won't get as high a return but then you can watch TV instead.