Question: Doug, I have been lending out of my IRA for some time and I have a friend that wants to borrow money from me with no collateral. Is this a good idea?
Answer: No. Unless you are sitting on a sizable pool to lend out and you are only lending out small bits and pieces and very high interest rates, then I would certainly avoid loans with no collateral, or unsecured loans. Larger lenders that have thousands of loans on the books know that a certain percentage of their loans will historically default. They can risk it. Most smaller lenders or individuals can’t take that kind if hit. I would require collateral.