Many convenience stores use drop safes to prevent burglaries. A drop safe allows money to easily be deposited, but not easily withdrawn. A cashier might deposit a set amount of cash into the drop safe once the register hits a certain limit. Doing so keeps the unprotected amount (in the register) small while allowing the protected amount (in the drop safe) to grow. Applying the concept of a drop safe to your financial plan can help you to save.

The idea of a drop safe is useful, but as we rarely want our savings to be sitting in cash, a “virtual” drop safe is more appropriate. Just like it’s real world counterpart, we want it to be easy to put money into and hard to get it out of. As in the convenience store case, the reason to use a drop safe is to protect your money from being stolen. In the case of your personal finances, you are trying to protect your money from yourself

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There’s no doubt that social lending is gaining in popularity and growing in numbers every day. More and more you hear of P2P lending being described as an investment because of the sizable returns that are often possible. Opinions vary about whether or not it is a good investment, but I’d like to consider whether it’s a socially responsible investment.

For anyone who hasn’t heard of socially responsible investing, here’s an excerpt from a post I wrote on the subject:

“The practice involves trying to maximize financial return while investing in companies that are deemed socially good. Such companies tend to favor policies of environmental friendliness, workplace diversity, fair treatment of workers, etc. Many socially responsible investors also avoid companies involved with alcohol, tobacco, and gambling as well as big oil or military contractors.”

The difficulty in determining whether social lending is socially responsible is the fact

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I keenly remember the excitement that surrounded my first read of a book that has become a financal classic: Rich Dad, Poor Dad by Robert T. Kiyosaki. It wasn’t just the philosophical difference in how assets are traditionally defined (things you own with perceived value) versus the author’s new definition (things that put money into your pocket each month.) No, the real excitement came from the practical application that accompanied that definition: investing in rental property.

For all of the benefits that come along with finding a rental property with positive cash flow, the downsides (even if only perceived to be so) hold people back from such an investment. Even though the author provided many solutions (such as hiring a property manager) to the typical complaints of those opposed to rental property (such as “I don’t want to fix toilets”) there were still some things that were holding me back too. I liked the idea of investing in something that paid me back regularly, but the overhead and management of a rental property business dissuaded me from the investment.

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As a regular contributor to the Lending Club blog, I’ve seen a lot of the reasons why it’s so successful. The bottom line is that borrowers and lenders can benefit by using Lending Club. Anyone with good credit can get a great rate on an unsecured P2P loan at Lending Club. Loan rates start as low as 7.62% for people with excellent credit.

As a lender, the great rates continue. You’d be hard pressed to find an alternative way to invest your money for similar returns despite the relatively low risk. The amount of risk you take on depends on how you set up your portfolio. The average portfolio return is currently 12.20%

If you’re interested in signing up for an account with Lending Club, you can use this referral link.

To understand how Lending Club can offer great rates to borrowers and lenders, see my post on the topic.

You can also see a list of my posts here.