Peer-to-peer lending is a type of investment that in Europe has become very popular over recent years. It lets individuals borrow and lend money to each other without having to go through the banks. It helps remove that middleman element, and now so many are hopping on board to get a slice of the action. So why is P2P lending so popular at the moment?
High Returns
One of the many benefits that P2P lending has is its high returns. With investing, you want to get the best value for your money, considering the risks that are involved when it comes to lending money. There’s no guarantee in investments that the money you invest is something you’re going to get back. However, when it comes to high return, peer-to-peer lending, it’s something that’s available for those who are smart and lend without getting their hands burnt along the way. It’s important to start off small and slowly build your investments up. This allows you to grow your financial portfolio organically and steadily. It’s usually rash decision-making that can lead to failure or loss of money. Tread carefully, and you’ll probably come off better than you would with other investment opportunities that are out there.
Low Risk
Depending on the investment, the risk to your money can be minimal to great and the more careful you are with risk, the better. P2P lending has a lower risk than usual investment opportunities, and it’s all dependent on what products you go for. From protection funds to low default rates, it’s a good idea to do your research on what platforms are out there and which ones are offering the best payback for your money but come with the lowest of risks.
There are many P2P lending sites out there, so it’s wise to shop around on comparison sites like p2pempire.com, where you can find the platform that fits you the best. P2P lending sites such as Bondster offer you great returns as well as a solid protection of your investments.
Seeing reviews of other people’s experience is going to help you make the right decisions, rather than hopping into something that probably wasn’t the best choice. However, it is important to remember that there are risks within this type of lending and that caution should always be taken regardless of how little risk there might be. You might want to also consider covering your back and choosing a lending platform that has a buyback guarantee so that if your borrower can’t pay back the money, the company who owns the site will.
Good Transparency
With many of the top P2P lending sites, they offer good transparency because they are regulated. Be sure to check that the site itself has a certificate of registration and that you can clearly see who you’re lending your money to. That’s the whole point of the peer-to-peer aspect is that you can see them and they can see you. Having a clear view of the rates that are available to you and access to your portfolio is essential to see how your investments are performing, in comparison to any other investments you have. It’s important to have transparency in investments because often enough, it’s not something that’s always given. This might be why p2p lending has increased in popularity because of its transparency towards what you’re investing into and what the potential outcomes are.
You have a right to know how your money is being used and what is going on with your money at all times. The better the transparency is, the more you’re covering your own back as plenty of scandals have been uncovered simply because of the transparent nature of P2P lending.
Good Diversification Options
It should be said that diversifying your investment portfolio is essential to help further reduce risks. That saying ‘you shouldn’t put all your eggs in one basket’ is accurate when it comes to investments because if you’re putting all your money in one place, there’s a chance you could lose it all. P2P lending gives you the scope to spread your investments across multiple products. That means that if one doesn’t pay off, then you still have others with the potential of making you some money. With diversifying your investments, you also increase the amount of returns that you’ll get because it’s not just coming from the one pot.
P2P is a popular investment option that can offer lower risks than other investments and good transparency. You can find out exactly where your money is going to and what happens with it over time. It gives the everyday individual, the opportunity to invest their money, so why not give it a go?