Open A Lending Club No Fee IRA, Enjoy Financial Incentives

by Silicon Valley Blogger on 2010-04-162

Open a Lending Club IRA.

It’s always wise to have a diversified portfolio, especially when you are going to rely on it for the long term. To add a little something different to your holdings, you could look into buying loan notes as a fixed income play. Typically, investors may be driven to buy something familiar, such as a bond fund or individual corporate bonds for fixed income exposure, but if you’re willing to take a little bit of risk, you can check out a Lending Club investment. Lending Club also makes it easy for you to open an individual retirement account, which you can fund with a 401k rollover.

One thing to note about being a Lending Club investor is that they offer occasional monetary incentives for investors by providing bonuses to existing and new accounts. For example, once in a while, they’ll announce limited time offers that will reward you for adding more funds to your account. In the past, Lending Club has offered up to a 3% cash bonus on deposits that were made to a new No-Fee Lending Club IRA account. At other times, they would offer free cash that they would deposit into your account based on the amounts you already had in your IRA or based on additional funds you deposit to grow your IRA. To take advantage of these semi regular promotions, you’ll want to hold an investment account with them.

Open A Lending Club IRA, Enjoy Financial Incentives

As mentioned, Lending Club occasionally provides a cash bonus to help hike up your funds. An example of this is by providing a tiered cash bonus that depends on the amount of your funds in your IRA. At this point in time, here are the cash bonuses you can get for funding a Lending Club IRA:

  • Get $1,500 on $100,000+
  • Get $500 on $50,000 to $99,999
  • Get $250 on $25,000 to $49,999
Open a Lending Club IRA, fund it, and receive a great cash bonus.
Open A Lending Club IRA

So remember that with Lending Club, if a promotion is going on and you decide to participate, you could be eligible for some extras. Tiered bonuses are often available on a regular basis via this network. Here’s an example of an older promotion that has since expired: if you opened a new account with an amount ranging from $15,000 and $25,000, you were eligible for a 1.5% bonus. If you made a new deposit that’s between $25,000 and $100,000, the bonus was sweeter, at 2.5%. If you deposited over $100,000, they hiked the bonus to 3% of your account. In other situations, Lending Club was known to give away $50 to $100 to open a new account, or would decide to inject cash into your account if you fund it up to certain required amounts. Again, this usually occurs as a one time infusion and happens whenever Lending Club decides to run a special promotion for new and existing investors.

So far, I only discussed those one-off Lending Club benefits. But what about the returns they provide their investors? I would think that this was the most important aspect of opening an IRA anywhere. So let’s look into this in more detail:

Lending Club’s investment notes (or lending notes) yield over 9.6% in net annualized returns. This, of course, is an average return and your own returns will be based on your choice of portfolio or notes that you invest in. I’ve seen some people who have made a good amount through Lending Club, but I’ve also encountered those who did well at first, only to stumble later on. It depended quite a bit on the amount of risk taken and how high the interest rates were offered for these notes.

Diversify Your Investments: Try Lending Club Notes

You can decide to open a new Lending Club IRA account and fund it with rollover funds or with cash. If you’re new to Lending Club and to the concept of peer to peer lending, then here’s a quick introduction. Lending Club is a well known peer to peer lender, which serves as a network that allows investors (lenders) to directly lend to borrowers who are part of the community (for more details on this, please check our Lending Club review). Lenders are able to invest via several methods. You can set up your account:

  • By using Lending Club’s Portfolio Builder Tool, which affords investors a quick and easy way to build a diversified portfolio;
  • By selecting individual lending notes through their Browse Notes feature. You can then check borrowers’ profiles individually to cherry pick the notes that you’d like to include in your portfolio, all for better control;
  • By becoming a PRIME account member, which requires a minimum balance of $5,000. This gives you access to Lending Club’s Investor Services team, which can offer you one on one assistance as you develop your portfolio.

IRA Eligibility Requirements

So what can you expect from a Lending Club IRA?

  • An IRA account will require a minimum balance of $10,000 invested in Lending Club Notes to escape costs. If you fall below this minimum, you’ll be charged an annual fee of $100.
  • The bonus may be taxable, so this is something you’ll want to bring up to your tax accountant.
  • Only residents of the following states are eligible to sign up as investors with Lending Club: CA, CO, CT, DE, FL, GA, HI, ID, IL, KY, LA, ME, MN, MO, MS, MT, NH, NV, NY, RI, SC, SD, UT, VA, WA, WI, WV, or WY.

Additional reasons to invest in a Lending Club IRA? It’s a free account with the following features:

  1. 9.6% annual returns.
  2. Tax-advantaged growth.
  3. Uncorrelated performance with traditional asset classes.
  4. No fees if you maintain at least $5,000 in your account, a balance which you maintain for the first 12 months. To continue to qualify for a no fee IRA, you’ll need to maintain $10,000 in your account after the first year.

For the curious, check out our discussion on Lending Club’s return on investment, which analyzes investment returns and performance at this peer to peer lender.

Copyright © 2010 The Digerati Life. All Rights Reserved.

{ 2 comments… read them below or add one }

david hanson June 26, 2010 at 4:25 pm

Where do you go if you are in Texas. Is there a place to get more info?


Silicon Valley Blogger June 26, 2010 at 5:09 pm

If you reside in a state that is not currently serviced by a peer to peer lender, then unfortunately, you’ll have to wait till regulations are established for your particular state. You can also call Lending Club or other peer to peer lenders to inquire about the timeline for getting your state under regulation for p2p.

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