How long does it take? An hour or two. All you have to do is open an account at any number of places and put some money in. This article will teach how to open your first investment account.

First things first: you need to see how much money you have. How much liquid, expendable income do you have right now? Check your savings and checking accounts, under your mattress, and in your coin jar. All you need is a few hundred bucks to get a good investment account set up, but obviously the more the better. Keep in mind, this money that you are investing is extra money that you do not need and won't need for a while. Expect your money to stay invested for years to capitalize on compound interest.

Ok, so now you've accounted for your available money. You need to now decide how you will invest your money. For young people, there are a lot of choices: stocks, mutual funds, bonds, index funds, lending at Lending Club, and lots of other options. How you decide to allocate your money depends on your willingness to be risky and the amount of your available money. This site has an awesome asset allocation calculator (needs java) that might help you get started: http://www.smartmoney.com/oneasset/. There are plenty of other great tools on the Web for determining how to invest.

I have a relatively high risk tolerance and I am fairly young, so I split my money between stocks and index funds. When choosing stocks, I choose companies I know. For example, I know technology, so I’ve chosen mostly tech companies. You might want to check out the S&P 500 Index Fund.

Next, you need to open an investment account. For stocks and funds, I use companies that have low fees and can easily handle direct monthly deposits. Once you've created an account, transfer over your available money and purchase your choice of stocks and funds in the proportions you determined earlier. To maximize your diversification, you might also want to create an account at Lending Club and lend directly to others. On Lending Club, you can set your own risk/return preferences to determine your asset allocation.

That's actually all it takes to get started investing. Like I said, it takes only a few hours. These few hours might be the most productive hours of your life, though, because the earlier you start saving, the more money you will make.

One important thing that you should immediately do is set up a system to directly deposit a portion of your paycheck into your investment account. If the money gets there without you ever touching it, you are much more likely to continue investing.

This is the first step to building a future for yourself. Good luck!

As announced yesterday, we will be performing routine maintenance and upgrade on the secure site http://secure.lendingclub.com tonight at 8pm Pacific time. The site will be available again by 9pm Pacific.

Lending Club Members Speak Out Series

We continue to receive many comments from our members. This weekend, we would like to share a few more comments from Lending Club borrowers, who often focus their remarks on Lending Club’s better interest rates, convenience, and more responsible approach to credit.

“It was very easy and straightforward, and I received my loan within the same week that I applied for it. I used the money to consolidate my credit cards into one easy monthly payment, which makes them easier to pay off coming out of college.”
-- Brian, 22, from South Boston, MA

“I loved how quick and easy it was to get a loan, I really enjoyed that I got to track how many people were able to help me out up to minute since it is all done online. The site also sent me updates while everything was going on so I didn't have to worry. Being a just out of college adult and having student loans, I wasn't able to get such a great rate with anyone else. The rate I got was at least 5% less than my other options.”
-- Stephanie, 24, from Atlanta, GA

“I used Lending Club to get a better rate and pay off my credit cards. I had $5,000 on credit cards with an average APR of 20 %. I paid off the amount in full and I just have one Lending Club bill per month. I am saving 50 % on interest every month which I used to pay to my credit card companies.”
-- Sharad, 25, from Syracuse NY

"Lending Club made it possible for me to get the money I needed without a ridiculous rate. With credit cards, you'll bury yourself with service fees and cash advance fees. Glad I chose the better route. Thanks, Lending Club!”
-- Jim, 22, from Austin, TX

These and other testimonials will soon be available on our secure site at http://secure.lendingclub.com. If you are a lender or a borrower on Lending Club and have your own success story to share, we’d love to hear from you. Leave a comment on this blog or write directly to feedback@lendingclub.com.

We had a busy week here at Lending Club, so we’re going to enjoy the weekend, watch a few videos and relax until tomorrow’s upgrade at 8pm Pacific.

Renaud

We will be taking the secure site http://secure.lendingclub.com down for about one hour tomorrow night at 8pm Pacific for a scheduled maintenance and upgrade. We apologize in advance for any inconvenience.

These are tough times in the financial markets. As we discussed last Saturday in our post on subprime, borrowers are beginning to feel the pinch of higher interest rates and much tougher underwriting criteria. Even for borrowers with prime credit (FICO score above 620), it is difficult to qualify for a loan now. Those that do qualify face tougher terms, limits, and more.

The credit crunch looks like it is here to stay for a while. The markets will continue to react to ongoing disclosure of subprime exposure. The Fed is doing a good job of trying to inject confidence into the markets by lowering the discount rate, and we think that they are likely to lower the fed funds rate at their September meeting. According to a poll conducted by Reuters, 71.4% of economists think the Fed will cut the fed funds rate at or before its September 18 meeting.

Until then, companies are having a hard time issuing commercial paper – the buyers have all pulled out of the market. This is leaving a number of deals at risk. For example, one of the big private equity deals this year was the sale of Home Depot Supply is supposedly facing pressure because the banks are having a hard time lining up the financing for it. There is even speculation that private equity debt issuance will stay dried up for months – because commercial debt is so hard to place. Mortgage companies and mortgage units of financial services companies have responded to the crisis by cutting costs. Lehman Brothers, Accredited Home Lenders Holding, and HSBC Holdings announced thousands of job cuts this week.

What should consumers do? If you do not need to borrow or refinance, you should be fine from a credit perspective. You may want to talk with your financial advisor about your overall portfolio during the time of turmoil.

If you need to borrow, shop around for great rates. If you need to borrow 25,000 or less, and you have good credit (640+ FICO, 20% or lower DTI), consider getting a loan with Lending Club.

If you are looking for somewhere to put your money to work, consider lending it at Lending Club, where you can put it into a diversified portfolio of loans that can earn from 7% to 17% before losses.

Please send us your comments.