My spouse and I are saving up for a house down payment but have accepted it’ll be a while before we can actually purchase a house. We currently have $80K and I’m looking for a good place to invest it while waiting for the right house. Anyone have thoughts regarding where to invest? It needs to be liquidable so that when we’re ready we can just pull it out. Nb if I do lending club, was planning on selling in secondary market to cash out. Also, betterment currently has 3months to a year of no fees. Thanks.
Some of these lenders hide how they work. First come the hedge funds and the investment banks who get their pick of the litter of the best loans. Heck the bank can create a security out of some of the mid tier loans too. What’s left is exactly what they didn’t want. So even the highest rated loans available are their sloppy seconds. Now a lot do perform well, but not as well as the ones that were sold off earlier.
I put 3k in lending club a few years ago with all the hype around LC/Prosper. To this day, after 3-4yrs, I still only have 3k remaining in my account (actually slightly less). So many loans have defaulted. I used their automatic investment tool and got this bad results. Now to stave off my remaining balance from disappearing, I've moved to manual investments and only picking A and B grade notes so even though I may earn 1%, at least I won't be negative. Planning to sell my notes off to a 3rd party once I'm a bit back above 3k. Very bad experience, wouldn't do it again. I could have put this 3k anywhere else in the past 3yrs and seen much better growth.
Sorry but none of those. Have had bad experiences. Recommend Vanguard or Fidelity.
Mind sharing your bad experience with WF or Betterment?
I used Prosper 6+ years ago and had great results on second time borrowers with high rates. Last I heard - those loans are rare now and get bought out quick. Index funds are probably the way to go now - especially if you need the money at some point.
Generally you shouldn't invest in the Index if you need the money in less than 5 years.
I have money in both Betterment and LC. For sure Betterment is the way to go. There’s risk in everything but return on Betterment is greater and you’re in the S&P which most hedge funds can’t even beat.
Thanks! I think I’m going to go for betterment, since I’m getting fees waved for a while. Any tips on that?
Betterment is awesome. I have many hundreds of thousands invested with them. In your case, since you need the money somewhat soon, you'll want to go pretty conservative - like 30 to 40% in stocks, 60-70% bonds.
I use wealthfront and I don’t have any issues with it, my plan is to transfer money from wealthfront to betterment once it’s more than 100k for reduction in fees
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Had really bad experience with Prosper. Few of their highest rated loans defaulted. I understand that it is a probabilistic model and there is risk involved. But I think there are better investment opportunity available.
Thanks for the comment. For prosper, were you picking loans yourself or using their auto investment tool?
auto invest. and only tried a conservative portfolio. down 23%. but didn't invest much. so didn't bother