Peer-to-peer investing, or simply P2P investing, is on the rise in the last few years. For many people, this is still an unknown term and that’s why it is a good idea to make sure that you know what P2P investing is before you make any P2P investments.
The P2P concept is closely related to P2P lending websites. They represent places where investors and borrowers get in touch. The borrowers are looking for investors while investors are interested in financing other people in order to get high returns. What makes this activity interesting is that the returns are usually better compared to term deposits, savings accounts and other types of investments.
So, peer-to-peer investing allows investors to use their money to create a part of a certain loan that borrowers can use. Investing in consumer loans in this way allows you to get returns from loan repayments. Of course, you invest in a wide range of loans, not just consumer loans. This is an excellent way to diversify your portfolio and stay safe. Keep in mind that there are many investing platform options that allow people to invest in a single loan or to invest all your money in one loan.
P2P investment – a few tips
As we said before, investing in P2P loans, any kind of loan, is always a good idea. However, this doesn’t mean that you can expect great returns if you are not following some basic rules.
First of all, you should take some time to conduct research. We have already mentioned that you must understand how P2P investing works. Look after investment platform where you can find consumer loans with promising returns.
The next thing that you should do is to calculate the risk tolerance you have. Just like in the case of any other type of investing, P2P investing involves a certain risk. Generally speaking, the higher the risk, the greater the returns. However, investing in Fast Invest platform you will minimize your risk because every loan in out loan list is protected by BuyBack and Default guarantees.
Another great advice for P2P investors is to reinvest their profit. Obviously, whenever the borrowers are repaying the loans, you will make a profit. Once you get more money than you have invested, you will probably ask yourself whether you should withdraw all the money or invest them again. According to many experts, it is the smartest idea to reinvest the returns. As previously mentioned, Fast Invest is a strong and growing marketplace that is expected to become even more popular in the near future.
Finally, every experienced P2P investor knows that timing is one of the crucial elements for P2P investment success. So, the main question is when is the best time to start with this type of activity?
Finding the right time to start with P2P investments
If you have more money than you need, you are probably wondering whether you should invest them in the P2P marketplace. It is worth mentioning that there is no universal answer to this question. However, you should take a few basic things into consideration. For instance, you have to analyze the movements on the market, the latest trends, the options you have and more. This is general advice for every type of investment.
If you take a closer look at the P2P marketplace, you will realize that the right time to invest is right now and we will use this article to explain why.
First of all, we must compare P2P investments with ordinary investments that are handled by well-established banking organizations. What’s the first thing that people think when someone mentions banks? Organizations that play by their own rules? Organizations that have too much power? Organizations that you can’t control? All these statements are more or less true. P2P investing is letting people change these things.
Peer to peer investing allows people to act as banks at a micro level. With the help of specially designed P2P platforms, people can act as borrowers or lenders and provide and get loans directly from the Internet.
One of the reasons why you should invest in the P2P marketplace right now is the fact that this is a better option compared to standard banking investment options. On top of that, there is no middleman involved in the process.
Next, Peer-to-peer investing has proven to be an excellent way to diversify your portfolio. There are many investors in this field that have bond and stock investments too. In addition, you can diversify your portfolio on a P2P level too. As previously mentioned, you don’t have to invest in a single loan – you can invest in a virtually limitless number of loans. Additionally, these loans can be claimed by one or more borrowers. This is what makes P2P investing safer than many other options available to modern investors.
If you have invested in anything else in the past, like real estate, for example, you have probably witnessed a situation when the rates go up and down in a relatively short period of time. Of course, the P2P marketplace is no different. However, when we analyze the yield, we can see that investors in this field usually earn a higher yield compared to other investment instruments. What’s even better is that the risk involved is not that big. It is not unusual for a P2P lender to get up to 13% annual returns.
There are many people who are wondering why they should try a new investment instrument when they can use traditional instruments like the stock market in the past. These people have probably missed the crashes of the stock market we have seen in the last two decades. The stock market is relatively safe, but it can go down in a very short period of time. And it’s not just the stock market that is affected when something like this happens. Many of the other investment instruments are closely related to the stock market. P2P investing is not one of them. There is an insignificant connection between these markets. The market is stable in the last couple of years, but no one can guarantee what will happen in 2018 or even in the next month. By focusing on your P2P investing portfolio you will avoid the unexpected turns present on the stock market.
Finally, we should highlight the fact that making investments like this is a simple and easy activity. In most cases, everything is conducted over the Internet. You just need an online P2P platform, like Fast Invest, that will serve as a marketplace where you can find loans and that’s it. There is no need for wasting your time on paperwork and other formalities that are usually associated with traditional investing. As previously mentioned, it is highly recommended to perform thorough research before making P2P investments or any other type of investment.
The P2P concert is becoming more and more popular among people of all ages. In the last five years, the concept has shown steady growth. Yet, the lending market is still led by banks and P2P shares just a fraction of this billion-dollar market. Experts agree that P2P will probably not make the banks look for other markets, but this is definitely a promising platform for many investors. There is also news that some banks are considering to redirect their funds in P2P loans which are a clear signal that it is the right time to invest money in this field. Keep following the latest trends in the world of P2P lending if you want to make smart decisions.
There is more than one good reason why investors should take P2P investing into account and in this article we have explained the most important ones. Start looking for a P2P platform today and expect great returns after some period of time.