Retirement: a word that often comes with many connotations. It can lead to thinking about enjoying time with family and friends in the golden years of your life, or it can remind people that they need to save, save, save.
Along with a 401k plan offered through an employer, an Individual Retirement Account (IRA) can be an effective tool for saving for retirement.
If you’re looking for an investment that has historically offered lower risk and steady returns, then consider opening a LendingClub IRA.1 Through an IRA at LendingClub you can invest in LendingClub Notes, which correspond to fixed rate, fully-amortizing loans and can generate income on a monthly basis.
Here are 9 reasons why you should consider opening an IRA through LendingClub2:
1. Low volatility
LendingClub Notes correspond to loans that are designed to offer steady monthly cash flow and low volatility. They have historically shown low correlation with the stock market and its movements generally, so you can worry less about market swings.
2. Tax-free compounding
Compounding investment returns over a long period of time can be one of the best ways to grow your money. The earlier you start, the more potential benefit you’ll have since any interest earned can be reinvested and grow over a longer period of time. Imagine a snowball: it starts off small, but as it rolls along it gets progressively larger.
3. Monthly cash flow
LendingClub Notes correspond to fixed-rate, fully-amortizing loans that are designed to generate both interest and principal each month, in comparison to many fixed income assets that distribute returns semi-annually or annually. Monthly cash flow can be reinvested, which gives your money the opportunity to grow over a long period of time, tax-free.
4. Easy to Diversify
You can invest in LendingClub Notes in increments as small as $25. (Each Note corresponds to a fraction of a loan.) That means that with just $2,500, you can diversify by investing in up to 100 Notes. Diversification can help increase your potential returns by reducing your exposure to any one borrower or loan.
5. Solid returns
99.8% of investors who have invested in at least 100 notes of relatively equal size have seen positive returns.3 Historically, LendingClub Notes with grades A-C have seen returns of 5.25-8.57%.4
6. Low Fees
Low fees means more money in your pocket. LendingClub operates online with no branch infrastructure, and it uses technology to lower operating costs. We pass the cost savings to borrowers in the form of lower rates and investors in the form of solid returns and low investing costs. There are no hidden fees or charges. Learn more about our fees here.
7. Customizable portfolios
LendingClub IRAs allow you to build a portfolio that suits your individual needs. LendingClub grades loans (from safest to riskiest, A to G) based on their relative risk. Before getting started, you can pick which grades you want to invest in to make sure that your portfolio matches how much risk you’re willing to take.5
8. Alternative asset
LendingClub can be a great way to diversify away from traditional stocks and bonds. Whether you are looking to put some of your cash to work or complement your portfolio with an alternative asset class, Lending Club Notes are a great way to move beyond just stocks and bonds.
9. Easy to use
Despite all of the potential benefits a LendingClub IRA offers, it wouldn’t be meaningful if it wasn’t easy to use and understand. From registration to actually investing your money, it is possible to have your account up and running within 5 minutes.
There are a lot of investment options for your retirement needs and you should take the time to research all options available to you. After all, you worked hard for your money so make it work equally as hard for you. Whether you’re looking to complement your existing retirement strategy or just getting started, a LendingClub IRA can help you grow your assets for the long term.