Let’s be brutally honest for a moment. Many of us will have savings that could one day make us rich…if only we found the perfect investment opportunity. The unfortunate reality for most of us is that our savings probably won’t grow fast enough, given the current economic climate. You might not think so, but peer-to-peer lending is actually an excellent way to invest money and increase its value over time. It’s one of the safest and most trustworthy investments you can make right now with your savings. Here are three reasons why peer-to-peer lending is the best way of investing money.
P2P lending is a safe investment
The first reason why peer-to-peer lending is an excellent investment opportunity for you is because it’s a safe one. Unlike other investments, such as stocks, where there is always the chance of losing your money if that investment goes belly up, peer-to-peer lending has never yet been recorded as a total loss. It’s also not uncommon to see peer-to-peer loans go on to generate huge returns. The average return on P2P lending is 7%. This means that over time, you could see substantial profits from your initial investment.
P2P lending is an effective investment
P2P lending is the most effective investment. The reason for this is because of the low risk associated with it. In fact, the peer-to-peer lender is often able to earn an annualized return of 7% or more on their investment. And if you are a borrower, you will be charged an average rate just below 9%. This means that your money can grow in a safe and effective manner, given the right opportunity.
P2P lending is profitable
One of the best reasons why peer-to-peer lending is an excellent investment opportunity is that it’s profitable. You might be thinking, “but I thought peer-to-peer meant something like lending money to my friend?” Well, that’s sort of true, but not in the way you think. Peer-to-peer means different things to different people. In this case, it means investing in loans made by individuals to other individuals with the intention of making a return on your investment. There are a lot of different platforms for this type of investment (such as Lending Club). The idea is simple: you buy shares in one or more loans that are being offered by lenders from all over the country. All loans have risks (which you can get a sense for when you take a closer look at each one), but if something goes wrong and your loan turns into a defaulted loan (i.e., the borrower doesn’t make timely payments or repay their loan), that’s where your risk management comes into play. If there are no defaults on your invested loans, you can start earning profits almost immediately!
Peer-to-peer lending is risk-free
One of the best things about peer-to-peer lending is that it’s risk-free. This means you don’t have to worry about your investments falling flat on their face and losing all your money in the process. Peer-to-peer lending uses an algorithm to match borrowers with lenders, so there’s no need for you to maintain contact with the borrower or even know who they are. Your only responsibility is to lend money when a borrower needs it and to collect interest when they repay the loan. Naturally, peer-to-peer lending also has a much lower risk of default than other types of investments, like stocks or bonds. If a borrower doesn’t repay their loan, the lender can take that person to court and request what’s owed through a lawsuit. Plus, peer-to-peer lenders have access to data about past loans that helps them make better decisions for future loans.
Peer-to-peer lending pays high returns
Many people have heard of peer-to-peer lending because it has been so successful in the last decade or so. It’s easy to see why: when you are a peer-to-peer lender, you can make as much as 15% interest with no risk.
Peer-to-peer lending allows you to invest small amounts of money
One of the best things about peer-to-peer lending is that you can invest small amounts of money and reap substantial returns. If you have $10,000 to invest, for example, you’ll get a much better return than with other investments like the stock market or even property. When you invest in peer-to-peer lending, not only are you creating an investment opportunity for yourself but also for others. In addition, peer-to-peer lending allows you to make money through interest rates and compounding interest rates. Peer-to-peer platforms offer rates at a level that’s often higher than what banks give us these days because they don’t need to worry about mortgage loans or car loans. It’s simply the best way to invest your money today without having to break through those high savings account ceilings!
Concluding words
Peer-to-peer lending is the best way to invest money because it’s not a gamble. It’s not like investing in stocks, which can rise and fall without warning. Peer-to-peer lending is actually a great way to diversify your investment portfolio, so you are never putting all of your eggs in one basket. If you can only afford to invest a small amount of money, you can still get started with peer-to-peer lending!
