Posted by Lending Club :: February 15, 2008 @ 5:00 am

While you may debate which tried and true piece of wisdom has the top spot as the first rule of investing, diversification is certainly near the top of the list. Yet many investors are unwittingly placing all of their investments in only one type of vehicle: retirement accounts.

Saving for retirement has become increasingly important as companies move from defined benefit to defined contribution plans. Employees must take personal responsibility for their own financial well being in retirement as a result of this transition, and many are responding well. Even those who have well diversified retirement portfolios are missing an important point: There’s a lot more to investing than retirement planning.

Too many people think that by investing for their retirement, their investment duties are over. That’s fine if you want to live modestly until you retire, but why not make the most of your money while you wait for retirement?

Having non-retirement investments, while important, shouldn’t come at the expense of your retirement accounts. Again, your investments for retirement may be your only source of income in those years. Adding on the many tax-advantageous ways to save for retirement, that really should be your top investment priority. But once you’re saving enough for retirement, be sure to consider your shorter-term investment options.

We don’t all have the necessary skills to make money in the stock market. Even experts in the field often lose money. Real estate, which traditionally seemed like an easy way to make great gains, is much less certain of late. Creating a P2P loan portfolio on Lending Club is a great way to put your extra money to work, and for many, social lending offers the perfect balance of risk and reward.

Retirement savings should almost always come first. Once you’re doing well in that area, look at ways to multiply your wealth on a more short-term basis. There are few investment options today to serve that need as well as peer-to-peer lending with Lending Club.