[Wrats6]

On several occasions I have shared my Prosper successes (12-14% ROI for past 3 years) with friends and relatives.  During these discussions I have tried to explain that P2P lending is a relatively low risk approach to obtaining a consistent ROI.  I have even used some of the information I have learned from the Lending Academy website and these forums.  It's not like I push P2P lending like a used car salesman, its just a normal discussion.  However, not a single friend/relative has decided to participate in P2P lending.  Most of them think I am crazy!  I have nothing to gain by them stepping into the P2P waters, but I feel bad they are not enjoying the success of P2P lending.  Any tips on how to best convince others of the advantages of P2P lending?  What has worked for you?

[DanB]

There is a way..............Live in a million dollar house, ( at least 2 million if you live in CA, CT or NY), have at least 2 cars (one has to cost $100k or more). Then when you talk to your friends, which unless you already do all of the above, will be a completely different & somewhat wealthier group of people you currently associate with (no offense)...............exaggerate by at least 1000% how much money you have invested in p2p. Let it be known that you make 12-14% per annum, but say so in a nonchalant way. That is it. No more  crazy looks. They will either seek you out for more info. or look into it themselves. 

People who have money (but not mega money) like to think that they do so because they are real smart,  savvy etc. & will not be able to handle for long the fact that you are getting  super returns & that they aren't.    

[Peter]

While Dan's suggestion has merit it may be a little unrealistic for many of us...

This is what I do. I explain that one of the reasons banks have been so profitable for the last few decades (2008-09 not withstanding) is because they make a boat load of money on credit cards. They are borrowing money at 0-0.25% and loaning it out at 16% or more. That is one profitable spread.

Today, through the wonders of the internet the average Joe can now get in on this business. It is called p2p lending. Here is an article about consumer credit and p2p lending in the reputable publication Forbes:
http://www.forbes.com/sites/marcprosser/2012/03/28/debt-that-pays-a-25-interest-rate-become-the-credit-card-company/

I notice when I talk with people about this that some are genuinely interested and others all but roll their eyes and think I am crazy. I am never pushy about it because investing is a very personal thing and for some people it would not be a good fit. But as p2p lending grows and goes more mainstream some the people you have spoken with will end up coming to you for advice.

[TravelingPennies]

Peters idea has merit as well................but only if you can talk real fast. Most peoples attention span waver after 4-5 minutes (7-8 minutes for people with money, but not meGa-money) I fear that Peters' explanation will exceed that time. 

But even Peter admits that with his approach he still sometimes gets the "are you crazy" look................& he will continue to get that look until a Dave Ramsey or, God forbid, a Suze Orman says it is OK to invest in it. With my approach the crazy looks stop immediately.....................& these people don't care for Dave Ramsey & would rather be boiled in a vat of oil than admit they even know who Suze Orman is ! 

 

[TravelingPennies]

It's not worth trying to "sell" anyone.  Talk them into it and if they somehow screw it up they will blame you which will hurt the relationship forever.  Not worth it imo. That's my approach to any kind of investment advice. 

[graceful]

I don't bother mentioning it any longer. The "you are crazy" looks and "that sounds like work" responses reminded me of the time when I was investing in Real Estate.

The best place to spend my time nurturing P2P investors is on these forums. Here we have the ears of folks curious and motivated.  Seems a much better investment to grow P2P than yapping with family and friends who are tone deaf.

Graceful

[TravelingPennies]

Thanks for the advice so far!  I forgot to mention that another response I receive is the popular "If it sounds to good to be true, it probably isn't."  That bothers me the most because they see me as a fool when in reality I am making very good money.

[TravelingPennies]

correction. You are earning very good money.

Make no mistake, it takes time to have strong returns. This is an active investment, one that many don't have the time for.

 

[Fiscal Sergeant]

I have tried explaining P2P lending to friends, family and co-workers.  All but one have told me something along the lines that equates to I am crazy.  I have gotten "If it sounds to good to be true", "The economy isn't good right now", "How do you expect to make a lot of money with $25" and so many more responses.  The one who didn't give me the "you are crazy speech" said he would think about it in a year after I have had some time to make money.  The problem is people are set on their ways.  P2P is new and not the stock market.  People have accepted the idea of using banks but are resisting change and the idea of becoming the bank.  If you read below, there is a little experiment envolving the "training" of monkeys.  The problem is people who do not want to take the time to educate themselves on a new idea will continue to be one of the monkeys in this experiment.  I will admit when I first heard of Propser, it spent about a year reading about it to educate myself.  I even took a loan out to see if the "customers" were real.  The result was I am now an investor.



So here is the monkey experiment I copied from some other site:

Four monkeys were placed in a room that had a tall pole in the center. Suspended from the top of that pole was a bunch of bananas. One of the hungry monkeys started climbing the pole to get something to eat, but just as he reached out to grab a banana, he was doused with a torrent of cold water. Squealing, he scampered back down the pole and abandoned his attempt to feed himself. Each monkey made a similar attempt and each one was drenched with cold water. After making several attempts, they finally gave up.
 
Then researchers removed one of the monkeys from the room and replaced him with a new monkey. As the newcomer began to climb the pole, the other three grabbed him and pulled him down to the ground. After trying to climb the pole several times and being dragged down by the others, he finally gave up and never attempted to climb the pole again.
 
The researchers replaced the original monkeys, one by one, and each time a new monkey was brought in, he would be dragged down by the others before he could reach the bananas. In time, the room was filled with monkeys who had never received a cold shower. None of them would climb the pole, but not one of them knew why!