Are you looking for a new and exciting way to invest in the New Year? Are you tired of the volatility of stocks and the lack of returns bonds, savings accounts, and money market accounts offer? Check out the top 10 reasons you should consider P2P lending too.
1. DIVERSIFY YOUR RISK
Why should you put all of your eggs in one basket? Even if you diversify your stock investments, you still put all of your money in stocks. What if the market takes a nosedive? Where does that leave you? If emptyhanded isn’t a way you envision your investments this year, consider the benefits of diversifying your investments in peer-to-peer lending alongside or instead of your stock investments. With the ability to invest in multiple loans in even micro-amounts, you can diversify your risk just with P2P lending.
2. ANYONE CAN DO IT
As you long as you are 18-years old, meet the citizenship requirements, and have a bank account, you’re pretty much a shoo-in for P2P lending. Most platforms have low barriers to entry, including low initial deposit requirements. It’s a great opportunity for even the beginning investor to start seeing a decent return. Because of the simplicity of the platforms, even the novice investor can get started rather quickly.
3. NO FEES FOR INVESTORS
Who wants fees to eat away at their profits? That’s what happens when you invest in stocks. You pay fees for every transaction you make, leaving you with a lot less in your pocket than you anticipated. With P2P lending, investors don’t pay fees. Borrowers and/or originators pay the fees, which is how the platforms stay in business and provide you with the high level of returns that may peer-to-peer loans offer. Without fees eating at your profits, you may walk away with greater returns right off the bat.
The sky is the limit when choosing the right loans to invest in. Do you want short-term loans so that you see your money quickly? Do you prefer long-term investments for higher returns? Why not diversify and take a bit of both? You can alter your investments so that you continually have a stream of income including a return of your principal investment. You can choose an auto investment strategy or manually invest your money so that you can carefully stagger your loan options, giving you a steady stream of income.
5. HIGH RETURNS
While no returns are guaranteed, peer-to-peer loans have an average return of 12% when done right. Where else can you see that type of return with minimal investment required? Of course, the more money you invest the more you make, but why not start small and see how you like it? Chances are the high returns will motivate you to continue investing in peer-to-peer loans and even increase your investment amounts. Keep in mind that there is no guaranteed rate of return and every loan has risks. Always do your research and know what risks you take before investing.
If you invest in the right platform, liquidity should be simple. Unlike when you sell stocks and are at the mercy of the market value at that time, loans typically hold their value. You may even find that you can sell your loan at a premium, making money while you exit out of the investment earlier than anticipated. Liquidity is an important strategy when choosing your investments because as we all know, you can’t predict the future. You have no idea when you may need access to those funds immediately.
7. PASSIVE INCOME
Once you start regularly investing in loans, you can create a constant cash flow. Borrowers make monthly payments, just like they would with a bank. This means you get a return of your principal plus interest each month. When you invest in multiple loans, you can have a daily flow of cash coming in, allowing you to either reinvest or take the funds for spending.
Do you like to choose your own investments? Do you like to come up with your own strategies? You can manage your own peer-to-peer loans without the requirement to work with someone. Many platforms offer manual investing options. While time-consuming since you’ll need to figure out where to reinvest your earnings, it can be done with much less risk and time commitment that a strategy like day trading requires.
9. BUYBACK GUARANTEE
Depending on the platform you use, there may be a buyback guarantee on your loans. This means if the borrower defaults for more than 60 days, you’ll receive full repayment of your principal investment. While you won’t get the interest you anticipated, you at least walk away with what you invested plus any interest already earned. You don’t get that type of guarantee in any other investment, especially the stock market.
10. IT'S EASY!
Most importantly, crowdlending is easy. That’s why it’s increasing in popularity all throughout Europe. While it started as a small and new way to invest, new companies are popping up every day. Of course, you shouldn’t give your money to just any company. Do your due diligence. Know what companies offer including the rate of return, guarantees, and secondary market options. With the internet, though, anyone can easily invest in peer-to-peer lending, making it easy to start investing without excessive knowledge.
If you have money to invest, it’s time to explore your options that go beyond the volatile stock market. While some people have great returns in the stock market, they are few and far between. Why take a risk when you can have the chance of higher rates of returns, higher guarantees, and more control with peer-to-peer lending?