Lending Club Blog

Greed: The Downfall of Many Investors

I recently started watching the CNBC series American Greed and have really been enjoying it. In each episode, a couple of high-profile cases of greed-driven fraud are profiled. While greed drives the perpetrators, it also seems to drive many of the victims.

The series covers many different types of fraudulent activities, but a recurring theme is how willingly victims agree to deal with the criminals. The promise of extraordinary returns on investments with little or no risk should raise a huge red flag. Instead, investors seem to flock to these opportunities in record numbers.

Don’t get me wrong. Amazing investment opportunities certainly do exist. Fortunes have been made in real estate, new businesses, the stock market, and many other types of investments. It’s just that those super-sized returns on investment likely came with much higher risk than less profitable alternatives. High-risk investments can be hugely successful, but also have a greater chance of being huge failures. The fear of missing out on the next big thing may also play into investors’ decision-making processes.

The risk-reward tradeoff between different investments generally holds true, but there are cases where anomalies exist. In such cases, higher returns may be possible with similar (or even less) risk. These discrepancies only go so far, though. The best returns occurring with the least risk is an outcome that likely never occurs.

Before making any investment, ask yourself if it seems too good to be true. If it does, you don’t need to dismiss the investment automatically, but you should approach it with extreme caution. If things still look positive after you’ve done your due diligence, then it might be worth considering. More often than not, digging a little deeper into the promise of low-risk, high-return investments reveals the truth that they really are too good to be true.

Have you ever invested on the promise of low-risk, high-reward returns?

Friday, February 20th, 2009 at 6:01 am

Comments (0)


Welcome Home

Lending Club named #5 on Forbes’ Most Promising Companies List

Get ready for tax season with Lending Club’s Tax Form Guide

New Adjusted Return Metric

See more
Lending Club Awards
  • Archives z

Recent Posts

Credit Performance Update

Summary: Credit performance of our standard program is coming… Read More »
February 7, 2016

New Infographic on Small Business Financing

Check out our latest infographic on the state of… Read More »
December 17, 2015

More Data Coming for Investors

We’re always seeking feedback and looking to make the… Read More »
November 10, 2015

Lending Club Surpasses $13 Billion

Check out our updated infographic to see what a… Read More »
October 29, 2015

Lending Club Launches Multi-Draw Line of Credit for Small Businesses

We’re excited to announce the… Read More »
October 16, 2015

Bloomberg Markets Names Renaud Laplanche on its 2015 “Most Influential” List

Read More »
October 6, 2015

Congratulations, Carrie! Named 2015 Financial Woman of the Year by The Financial Women of San Francisco

Read More »
October 5, 2015

Congratulations to Carrie Dolan – Named one of American Banker’s 2015 Most Powerful Women in Finance

Read More »
September 22, 2015

Welcome Nebraska, Kansas, and Indiana Investors!

We recently welcomed residents of Nebraska, Kansas, and Indiana… Read More »
September 21, 2015

Lending Club Job Spotlight: Technology & Member Support

Our Technology team develops and… Read More »
September 14, 2015


We went public today!

Ringing the bell this morning at the New York… Read More »
December 11, 2014

New and Improved Statistics Page

We recently redesigned our Loan Statistics page to make… Read More »
November 13, 2014

Lending Club Honored with Economist Innovation Award

This month I was honored… Read More »
October 15, 2014

Welcome Vermont Investors!

Today, we’re thrilled to welcome residents of the state… Read More »
September 4, 2014

We filed to go public today

We filed a registration statement with the SEC today… Read More »
August 27, 2014

Our Billion Dollar Quarter

We’re excited to announce  that we’ve facilitated over $5… Read More »
July 8, 2014

Is Lending Club Available in My State?

Is Lending Club available in my state? That is… Read More »
July 7, 2014

Lending Club Joins Senator Cory Booker to Discuss Improving Access to Capital for Small Businesses

Read More »
June 20, 2014

Lending Club Named a CNBC Top 50 Disruptor for a Second Year

For the second year in… Read More »
June 17, 2014

PRIME is now Automated Investing

Lending Club is excited to announce that PRIME has… Read More »
May 14, 2014
View All w