How To Be Successful In Peer To Peer Lending Investing
The interest rates being paid on bank deposits throughout the world are currently very low; as little as 0.5% currently in the UK and we may not see any increase any time soon. This means if you have money you want to grow, going to the banks may not be a viable option. You might want to look elsewhere for a low risk way of making money from your savings. One option more and more people are turning to is peer to peer lending (also known as p2p lending investing). It is very important to become familiar with how peer to peer lending works and the risks associated with it before you invest.
Peer to peer lending investing is the process by which individuals who do not qualify or unable to acquire loans through the traditional banking method meet their financial needs through crowdsourcing. This may be in a case where the individual has no security or capital against which to get a normal loan. The investors weigh the propositions at hand and then they may fulfill all or part of the loan needs and in return, they will be getting proportionate monthly repayments together with interest until the money is repaid in full. The arrangement is a win-win for both parties since borrowers get the loan at fair interest rates as compared to the high rates of some pay-day lenders and at the same time the investor is getting a rate that banks can never compete with.
P2P investment lending on platforms like Lending Club is quick, simple and reliable to start. The process is transparent with no hidden charges or excessive fees. The first step involves creating an account in a P2P platform of your choice, depositing the money and going through the available loan requests before deciding which loans to invest your money in. The risks involved in the peer to peer lending can greatly be reduced by doing extensive research. Do research on the various P2P platforms available, the rates they offer and how protective they are of your money before joining any of them. To gain more knowledge on the importance of personal finance, consumer loans and investments visit https://en.wikipedia.org/wiki/Financial_management.
The single most important way of minimizing risks is to diversify the investment. Never put all your money in a single project if you have an option of spreading. The other important way of growing your investment is to engage in the use of Lending Club auto investment tools such as Fast Invest used for P2P. This ensures the money is always working and you can earn passive income since you will be utilizing opportunities automatically as they come. When done well and from an informed position a lending club investor can have a diversified and successful portfolio.
Update 1/31/19: Are you interested in this investment? Find out more in my other blog posts.
Update 5/7/19: I have been reading reviews and other blog posts about lending club investing and I have to say that the information presented is not very consistent in terms of matching what the research shows. While certain criteria are very standard (monthly income, length of employment, late payments) there are many that are not even mentioned. Specifically, more detailed payment history. This information is available on the data download available from Lending Club and it is very valuable for investors. You should understand what is offered on this file and know how to use it in your assessment of a loan. I believe this is essential if you are going to beat the averages over the long run.
