January 24, 2020

10 Good Reasons to Invest in Peer to Peer Lending

By Sona Mathews
Crowdlending is also referred to as peer to peer lending or P2P lending and is a form of investment that connects private individuals looking to borrow money and other individuals who are looking to make passive income.

10 Good Reasons to Invest in Peer to Peer Lending: eAskme
10 Good Reasons to Invest in Peer to Peer Lending: eAskme

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It does all these through an online marketplace, thus cutting out the middlemen and resulting in far better conditions for both investors and borrowers.

Before trying out, you should perhaps learn about some of the most compelling reasons why you should invest in Crowdlending. Here are ten reasons to:

1. Amazing returns

Peer to peer lending or Crowdlending usually offers investors an extremely attractive rate, and it is not uncommon to get a rate of return above 12 percent per annum in euros, and higher in other currencies.

The interest income is massively higher compared to bank savings and is gradually getting higher and stable returns than the stocks.

An average long-term return on stocks is usually around 6 to 7 percent per year, while most saving accounts could yield well below 1 percent.

2. Diversification reduces risks

Diversification is a very essential part of investing. For any investor, you don’t want to put all your eggs in one basket.

You don't want to lose all or a huge chunk of your investment by putting all your money into one investment option.

Crowdlending on its own is a way of diversifying your investment and has proven to be the best alternative to saving accounts, stocks, and bonds.

Crowdlending offers numerous options to diversify, including diversifying between countries, loan or project type, foreign currencies, and investing in small chunks of loans to spread your funds across as many borrowers as possible.

3. Low entry barriers

Investors face a very low entry barrier to Crowdlending.

Whereas in stock trading you will be required to pledge a substantial amount of money, it is possible to start with as little as 1 EUR in Crowdlending and you can access the marketplace from the comfort of your phone or computer at home.

This low entry barrier also means young investors with limited financial muscles can start up their small savings in Crowdlending early on.

4. Early exit

Life is unexpected, and you may find yourself in a situation where you want to withdraw part or whole of your investment.

With peer to peer lending, this is totally possible compared to other traditional investment options such as the stock market.

With Crowdlending and its secondary market option, you can decide to sell off your investment at a discount.

Apart from the secondary market, some Crowdlending platforms offer a buyback option for your investment at a small fee.

5. Zero investment fees

Unlike other investment options such as bonds, stocks, funds, and other investment programs, there is no any investment fee in Crowdlending.

6. Short term investments

Crowdlending allows investors to invest in both the long-term and short-term.

One of the reasons why many investors prefer Crowdlending is that some platforms allow you to inverts your funds for as little as 1 to 30 days in personal loans.

7. Passive income

Borrowers make repayments for your loan on a monthly basis, meaning you will be generating a steady income stream every month aside from your normal income and independently of how the stock markets usually fluctuate.

You can choose to reinvest the repayment if the platforms you are using offer this option, or if you need the cash, you can just withdraw it into your bank account.

8. Become your own investment manager

Peer to peer lending  offer you a great chance to manage your finances from the comfort of your home.

And it is pretty easy, with the high returns, a high degree of diversification, no fees, and the option to track your own investments every day.

Moreover, investors can use the massive lending market to sub-divide their investments among numerous small loans and multiple lending platforms, thus diversifying risks.

9. Buyback option

Some of the Crowdlending platforms offer a buyback option for delayed loans.

This is usually if the loan is delayed for 60 days or more.

10. You are helping with job creation

Last but not least, when you invest in Crowdlending, you are helping create local jobs.

Small businesses usually takes peer to peer lending loans to hire more people to help keep up with the demands of growing and expansion.

If you still have any question, do share via comments.

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