Are you looking for secure investments? Not only a deposit may be a good source of profit.
On the market, the view persists that the only form of investing resources with no risk of loss of capital is bank deposit. Indeed, it allows reaching profit. Currently, interest on bank term deposits comes to as much as 3 percent a year. That’s why it’s worth looking closer at investing in loans.
Investments in loans are innovative on the European market. Thus, it may it raise mistrust. However, on the Global markets, this system works successfully and each year gains more and more supporters. What are the reasons for this? Most of all, rather high rate of return on the invested amount, simplicity, as well as - what’s the most important - safety. How does it work in practice?
Investment in loans is a solution for the future.
Scheme for investing in loans is as follows:
A client comes forward to a financial institution (mostly the non-banking one) to get a loan.
- A primal lender makes a diligent assessment of a borrower’s financial capacity and upon positive verification, transfers money to the borrower.
- This particular loan is placed on a FinTech platform which manages those loans - in Europe it’s e.g. Fastinvest.com, and you as a private investor may invest in it with just a simple couple of clicks.
- From that moment – you as an investor get monthly interest payments due to loans in which you invested.
As you see, the mechanism is simple and clear. That is the sole purpose of FinTech (Financial technology) companies, which were created to optimize the old and outdated banking system. The effectiveness of FinTech companies lay in the technology. Internet allows the simplification of processes, thus minimizing costs and bringing up the profits.
What if a borrower stops paying instalments?
This is the strongest element of FinTech system. Because the initial investment was performed through the platform the investors may count on their support. For example, Fast Invest provides guarantee of repurchase of loans (BuyBack) as well as Default Guarantee. Practically, it means that if a borrower’s delay in payment exceeds 3 days, the Fast Invest default guarantee starts working and investors gets both capital and interests for the investment period. As a result, the profit anticipated from investment made is certain. On top of that we must know that all the loans are insured (this is required by law), this way eliminating the risk of system failure.
It’s worth emphasizing that investing in loans, is also very easy. New FinTech companies work hard on making user experience as enjoyable as it can get. When dealing with Investment loans, you should only do so through a platform that is trustworthy. Remember that the fact that everyone is using it and it is very well known must not be the only factors for your choice.
I would recommend functionality over popularity. BuyBack guarantee, Default guarantee and most importantly entry fee – that is with how must money you can start investing. For example, Fast Invest allows you to start investing with as low as 1 Euro. Everyone can allow themselves to invest 1 euro.
How much does investing in loans cost?
Joining investments loans platforms basically carries no costs. Good investment platforms such as FastInvest.com take no fees from investors for registration, opening an investment account, annual subscriptions or payments related to payment of gathered resources. So how do they earn money? They earn money from spreading a difference between the rate offered to investors and the calculated interest rate on a loan.
How much is it possible to earn?
When investing in loans, profit is usually higher than low-interest bank deposit. It’s impossible to indicate one amount or percent of profits. Since everything is dependent on a repurchase of a loan offer. It will look differently if to compare a loan in the Polish zloty to a loan in Euro.
Not only for the rich
It’s obvious that the higher amounts of money are invested in the loan market, the higher profits are generated. However, this system gives an opportunity to those people who may allot only a few zlotys for investments. Why? Firstly, you don’t have to invest the whole amount of loan, but only a part of it. It’s quite often that a few to over a dozen investors crowed together to invest in a loan, then the profits are divided between them, appropriately to their contribution. Secondly – you as a investor must start somewhere. And even minor investments may become the beginning of history of effective savings for years.
The investments in loans market is a profitable new way of putting your money to work. This investment instrument holds a huge potential and allows to earn more than on deposit, without the loss of sense of ease and safety.