Millennials are widely bagged for their lack of go-getter attitude. We’ve even had ‘motivational speakers’, like Simon Sinek, saying that it’s the parents of Millennials who must take responsibility for the ‘lazy, narcissistic’ mind-sets of this much-maligned generation, for telling them that they were special all the time, and giving them medals for coming in last.
Well, shame on you for trying to do the best for your kids! The thing is, that while Millennials don’t seem to be living up to other people’s expectations, they are doing things their own way, and like it or not, that’s how society evolves. And one of the things that Millennials are doing better than anyone else, is investing in consumer finance.
The consumer finance model developed following the financial crisis. While the hard-pressed banks reined in their lending, a huge number of potential borrowers found themselves devoid of options. They needed funds to grow small businesses, to buy new cars to be able to get to work, or to re-decorate homes to welcome new babies, but because they lacked the significant collateral the banks suddenly required, they found themselves at a loss. Consumer lending put the financial control back into the hands of the public – and so far, those hands have proved to be far more trustworthy than the big financial institutions! From ‘Angel Investors’ to P2P (peer to peer) loan providers, the public took up the slack that the ailing banks left, helping borrowers to find the funds that they needed, and investors to make their money work for them. Despite all the nay-sayers and the accusations of ineptitude, it’s Millennials who are leading the way in this financial revolution.
While the financial crisis was deterring Millennials from saving, millions of other people were struggling to access temporary capital. There was a desperate need for a new infrastructure which would allow those without surety but with a strong credit rating to borrow money. And that’s where consumer lending emerged.
With faltering interest rates, people with savings needed to find a way to get a worthwhile return for their money, but with the stock exchanges struggling under the weight of the recession and banks a less than attractive proposition, the idea of loaning funds to those who both needed it, but could also afford to repay it, became a very attractive option. The idea of Angel investors developed, whereby wealthy individuals stepped in to assist SMBs and startups with potential, in return for a stake in the company, while for individuals, P2P lending began to take shape.
P2P finance is a form of alternative finance and Peer to Peer investment is the process whereby individuals apply for their lending needs to be fulfilled via a form of crowdfunding. They make their application, the details are checked by a certified credit institution, and then individual investors offer to contribute to the fund. Loans are usually relatively small and for a short-term – usually in the region of one to twelve months – which means that investors are not making daunting or lengthy commitments. In most cases, P2P loans are satisfied by multiple parties; although there is nothing to stop one person offering the full sum, from a risk point of view it makes more sense to spread your funds among several different investments. For the borrower, this form of lending makes sense because, first and foremost, it grants access to funds they may not otherwise be able to obtain, but also because they can deal with their financial needs on their terms. For the investor, P2P means a far better interest rate than traditional banking can offer, without the risks of established investment techniques, or the irritation of having to become involved with banks. In addition, you can find more details on how P2P investing works in one of our article: Here’s Everything You Need To Know About P2P Lending.
How To Invest In Alternative Investment Platforms?
If you’re interested in joining the alternative investment revolution, all you really need do is to find a platform to work with, the rest is as easy as pie. While there are plenty of online investment sites out there, do your research before you commit to any of them.
The ideal company to invest money with should:
- Offer a high return on investment (ROI), obviously! You’re investing in P2P loans to make money after all. ROI varies with different companies, but look for something not lower than 10-12% (Fast Invest offer up to 16%!);
- Make the process smooth, easy and quick with a user-friendly platform and an efficient financing system;
- Protect your money with a BuyBack guarantee (unexpected things happen, and your money should be accessible to you if they do!);
- Offer protection from late borrower repayments with a MoneyBack guarantee that if the borrower is late to make a payment, it’ll be covered by the company.
Also, if you use the Auto Invest tool you can arrange for your payments to be reinvested to make your money work even harder, but that's something for you to decide for yourself.
Alternative Investing appeals to Millennials because it comes with a sense of openness and honesty. There are no hidden fees, and no need for extensive knowledge; everyone can take part, and everyone benefits – apart from the City fat cats, who’ve had it their own way for too long. Some people will say that it’s going down these alternative routes that make Millennials seem arrogant – why can’t they just do what everyone else has always done? Because, quite simply, new ways are sometimes better and alternative investment is one of those cases.