The short answer is yes! P2P lending platforms are great investments and although some are risky, they offer great returns on investment (avg 12% pa) on your savings. After starting out with a small amount in early 2017, to build my trust and learn the strategies, I wish I had put in more earlier.
What are P2P Investments?
Peer-to-Peer Platforms or can also be known as Crowdlending platforms or Crowdfunding platforms, bring together people to participate in two sides of the transaction. On one side you have the borrower who is looking to borrow money, this can be as a personal loan or a business loan and on the other side, you have lenders (like us) who are willing to lend their savings to secure a higher return on their capital.
How does it work?
In Peer-to-Peer Lending (P2P Lending) borrowers are matched directly with investors through a lending platform. This process is different than the traditional way of getting a loan from a bank or credit union. In p2p lending, you make part of a larger group of investors to fund loans for borrowers.
Scenario: You (the investor) together with 999 other people can be lending a small amount of €10 each to fund a business loan of €10,000 at 14% interest p.a. Simple right?
How to start?
Now that you have a better idea of the whole P2P lending ecosystem you must be wondering how do I start and there is no right or wrong answer. You can start straight away on any p2p platform out there or check my portfolio page for a list of p2p platforms that I have trusted since the start.
What I want you to do is be smart with your money and in one of my next posts, I want to dive in more details how to be smart in your investments and diversify in a strategic plan. It’s all well and good when everything is smooth but we have to make sure when things go bad we don’t lose the whole farm.
Read all reviews out there and start small. You don’t need to be a genius if you start small. Make sure to take advantage of a signup bonus so you earn straight away, deposit a few funds from your bank account to the platform and choose which investments you are highly attracted to.