Peer to Peer Lending The Investment of the Future |
Posted: August 15, 2018 |
As an investor, are you searching for another avenue to expand your portfolio and increase your income? Have you tried to leverage some of your funds to an alternative investment, such as a real estate investment trust (REIT), but due to the complex nature of these loans and high minimum fees, you were unable to break into these investments? This may have discouraged you from additional investing, and until the 21st century, avenues like retaining money in a savings or money market account, owning your own business, pursuing an education, or purchasing a share in a stock or bond, were the only kinds of investments available for most investors. Fortunately, the digital age has birthed an innovated avenue for investing called peer-to-peer or P2P lending, and it is an investment worth considering. What is peer-to-peer lending? Established around a decade ago, this concept of borrowing and lending entails digitally, lending money to borrowers for personal loans, such as a down payment for a mortgage or starting a business, without approval from a financial institution or involving a middle-man. Also, the process is almost instantaneous, does not require a multitude of applications, and is conducted through an online platform like Upstart or Mintos. Another perk of this investment is that you are allowed to view the credit history and credentials of your potential borrower. Some P2P websites, such as Upstart, actually employ artificial intelligence to determine the risk of a particular borrower for you. Furthermore, you can choose whether you are the sole lender of money to the borrower or if you want to be in a group of investors lending to a particular borrower. For example, if the borrower is requesting a $10,000 personal loan, you and four other investors can each lend them $2,000; you each will earn $2,000 plus the 7% interest rate, for example, over the life of the loan. Make a financial plan In any project, it takes a plan, ideally successive to be able to see the progress or the delays in the time. You must clear up all the points that are closely related to your budget. When will you start? How much do you have to spend per month and how much should it stay in your bank account? What will you invest in next? Of course, there may be changes along the way, but let them always be well studied, that is why the intervention of deadlines is important. You must also schedule for when you will create or complete your wealth and how much you want to achieve for this year and for the upcoming years. So, if you are searching for a new way to invest income without being reliant on a financial institution, P2P lending may be the route to take. The statistics are already speaking for themselves: this investing route is a billion-dollar industry. You never know, this investment may be the key investment to sustaining your own financial independence.
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