Investing: P2P Lending vs. Bank CDs

I'm going to start this post by stating something that is stupidly obvious: there are a huge number of different ways to invest your money.  From stocks and bonds, to investing in new companies, to burying your cash in the backyard, if you can imagine it, you can probably invest in it (dream a little dream, you dreamers!).  For the purposes of this article though, I'm only going to focus on two that I think have a good deal in common: peer to peer (P2P) lending and certificates of deposit (CDs).

How P2P Lending and CDs Are Similar

The key similarity both investments share is that both require you to tie up your money for a certain, specified amount of time.  As such, both are essentially illiquid investments.*  However, this length of time is fairly short-term, particularly when compared to 30 year bonds, for instance. 

For CDs, your money can be tied up anywhere between three months and five years, depending on how long you choose to invest.  For P2P, (which I'm basing on my experience with Lending Club, as I am unfamiliar with Prosper and others), your money is invested for either three years or five years.**

With the above similarity stated, let's look at the pros and cons of each investment.

An Analysis of a 2 Broke Girls Episode

If you're interested in personal finance and you haven't been watching 2 Broke Girls, what in the world is wrong with you? that's probably okay.  However, the show, at least tangentially, revolves around ideas that have a lot to do with money, and, for this reason, here's a post about it.

For those unfamiliar with the show, the two main characters are Max, a gruff, sassy waitress who makes cupcakes for (mostly) fun, and Caroline (pronounced Care-oh-line, so you know she's uppity), a saccharine-sweet, suddenly bankrupt daughter of a Bernie Madoff-like character.  Despite the tough-girl front that Max puts up, you can tell that she, slowly and grudgingly, is coming to like her new friend Caroline, mostly because every episode seems to feature Max feeling slighted by something Caroline does, Max writing Caroline off for being like every other person who has ever mistreated her, and Caroline making a GRAND GESTURE that gets Max to like her again.