Brendan Ross interviews Brendan Ross on how to invest in P2P lending like a millionaire

The whole process can be tedious if you’re serious about investing.

A person with a large amount of money does not want to pick individual loans any more than most investors do not want to choose individual stocks.

Brendan Ross, President of Direct Lending Investments, LLC, says that most millionaires do not invest in individual loans.

Invest in People and Stories

Ross says that millionaires know you can’t be successful unless you dedicate yourself to a particular craft. If you want someone else to put your money into work and make you money passively, then you should let them do it. If you’re interested in P2P lending you can’t pick loans on an individual basis.

Ross says that millionaires instead look for someone they think will be successful and who is in a good position to succeed. “A millionaire will look for someone with fair fees and the connections to get them the best loan for their goals. They also want someone smart. Millionaires are usually business owners and have a lot of experience with delegation. It has worked well for them. They also know they can delegate their investment to others.”

Ross continues, “Think about that.” Even a mutual funds is a delegation. When you invest in mutual funds, you hire Vanguard as a delegate to pick stocks for you. You don’t want to invest in stocks and you don’t pick individual stocks. Why would you choose individual loans?”

If you’re interested in investing as a full-time occupation, that’s another thing. You can do it if you’re willing to invest the time and effort and think it will be a good way to make money. Ross suggests that delegation is the key to growing your money without much effort.

Delegate Your P2P Lending

Ross works primarily with accredited millionaires. Direct Lending Investments require a minimum investment of $100,000 in order to benefit from professional fund management. According to Ross between 95 to 98 percent use hedge funds with professional management for P2P lending.

It doesn’t necessarily mean you are doomed to fail if you can’t invest $100,000 in peer-to-peer lending. Ross says, “See what millionaires are doing and learn how you can be as hands-off.” Ross says you have options for this type of investment.

Lending Club Prosper and Third-Parties

[insert a disclaimer] Please note that Lending Club will no longer accept new investors on its notes platform. It will retire the notes by December 31, 2020. ** [end disclaimer]

Both Lending Club and offer programs that let you delegate how you invest in peer-to-peer loans. Ross says that both companies have accounts in which you can set your own investing criteria. You can create a pie chart and they will help you determine your risk profile. Lending Club or Prosper will fill your orders, matching loans to your goals and risk profile.

Lending Club offers a service called PRIME, while Prosper offers Premier. This type of account management is only available to those who have a minimum balance of $25,000. You simply pay a percentage of your account’s management each year and then forget about it.

Quick Invest is a way to reinvest earnings if you do not have the $25,000 required to open a managed account. However, it’s not the same thing as the managed accounts. Lending Club does not have an automatic reinvestment feature. If you do not use PRIME, you cannot delegate any of your efforts.

You can also use third-party investment software. Ross says that some people believe they can beat Premier and Prime. They have programs that go through the options and choose them for you based on what your profile is.

It is important to note that a third party software program will make a much more informed choice than Lending Club and Prosper. Ross says that instead of randomly choosing B-rated loan, which is what you would get from Lending Club or Prosper, the software program will choose B-rated loans based on statistical criteria. These are meant to be more beneficial overall.

Ross says that Lending Club and Prosper essentially randomly select loans based on your profile. They just grab any loan that matches the category. Third-party programs allow you to find the loans that are closer to the “A” end of the spectrum, when the platforms’ processes might result in a loan that is closer to the “C”.

Despite the fact that programs such as P2P Picks.com help you to make the right choice of loans, the investment is still your responsibility. There is a chance that as P2P lends become more popular, more services will be available to automate the process.

Ross says that it doesn’t matter what you do, as long as you reduce the work you have to do to invest in these loan. Most millionaires would not pay attention to each loan, look over them or buy them. It’s an insane amount of work.”