We talk a lot on this website about how to increase returns and lower defaults, but at the end of the day our money is simply not worth living for. The reason I work hard to earn a good return on my Lending Club IRA is so that it might enable what is more important: the relationships with my family and friends.

Life is found in living generously. In the day to day, this entails joining into reciprocal life-giving community with others. Yet few realize how every element of our lives can become generous. But beyond caring for friends and family, we can make a tremendous impact on the world in the way we structure our lifestyle, even in how we operate our finances. The ways we earn and spend our money has a tremendous ability to positively impact the lives of those around us.

For today’s post I want to focus on a really interesting question recently asked by a reader:

“Could you compare lender withdrawal of their investment between Prosper and Lending Club. I am a new Lending Club investor, but since I realize there is no way we can get the money out if we need to use it for emergency. Lending Club has a trading platform that one can sell notes at market price, so most likely an investor like me has to take a loss if we want to get the money out, thus wipe out the profit we made in the process. Because of this reason, I decide not to put too much money in this type of account. Does Prosper do better? Any comments, suggestions would be greatly appreciated.” Huina Smith

Huina is experiencing a typical problem that we all face eventually. Often lenders have trouble understanding how to get their investment back if they want to close out their accounts. The short answer is that Lending Club actually has made it quite easy, even in the event of an emergency. If you want to price your notes at cost, gaining no profit (but taking no loss), you can have your money back in a matter of days. If you want to go slower, you can earn a great profit on your healthy notes. However, her larger query about Lending Club vs Prosper got me thinking. She asked if I could compare the withdrawal process between the two platforms.

Today, LendingMemo is happy to announce the launch of The Liquidity Project. This will be a five month experiment to examine how easy it is to liquidate a peer to peer lending account. We will do this by selling $1000 worth of notes (40 notes) from each platform on the secondary market.

Last week we ran a reader survey asking people for the various reasons they are interested in peer to peer lending. There were 13 responses in total, with Mike's 7th entry being randomly chosen to receive the Lending Club sweatshirt (with runners up Ed, Bill, & Randy). Congrats Mike!

The various responses were really interesting! Having looked closely at the feedback, I've categorized them under six major headings.

Part 1 – Introduction: Risk
Part 2 – Avoiding Defaults
Part 3 – Low-Grade Loans
Part 4 – Multiple Filters
Part 5 – Tools to Platforms

Once we have created our filters, we can use them to invest in quality notes and develop a higher than average performing portfolio. Different lenders have used different methods of moving from tools (like NickelSteamroller) to platforms (like Lending Club or Prosper).

Ways to invest with filters:

• Save them to the Lending Club or Prosper websites
• Use third-party tools (NSR LC Invest tool)
• Download the raw notes file and filter through Excel

Part 1 – Introduction: Risk
Part 2 – Avoiding Defaults
Part 3 – Low-Grade Loans
Part 4 – Multiple Filters
Part 5 – From Tools to Platforms

Hopefully by now you understand the basics of finding borrowers who are less likely to default on their loans (part 2). Secondly, you have chosen a degree of risk for your account, perhaps choosing to invest in a few low-grade loans (part 3). Today we will try and combine these two tactics into a single filter, going on to split it into multiple filters. Additionally, even though today's post focuses on Lending Club, all this information works just as well on Prosper's site.

Before we start, it would be wise to declare a goal: today we will try and create a medium-risk portfolio with a historical ROI of 12% (remembering that this “historical” ROI is probably a bit inflated).

P2P lending speaks to different people for different reasons. Some of us are interested in the lucrative returns while others are simply exploring stable alternatives to investing in the stock market. Whatever your reason, it would be interesting to hear them all.

Today, we're going to do something special. I have a bin full of great Lending Club hats, water bottles, and fancy pens from my visit with them last week, as well as a snazzy zip-up cotton hoodie. To win, you need to answer one question: why are you interested in peer to peer lending?

Wednesday, after my interview with Prosper, I barely had five minutes of rest before I arrived at Lending Club’s headquarters. Arriving at 3:30pm, I was invited by their receptionist to take a seat and wait for Scott Sanborn, Lending Club’s Chief Operating Officer.

Behind her stood the red squared Lending Club logo, cut and illuminated. Next to me on the wall was mounted the infographic they produced when they crossed $1 billion in issued loans (see here). The whole thing felt a bit surreal.