Published on July 1st, 2016 | by admin0
5 Reasons to Invest in P2P Lending After Brexit
No-one knows quite how the UK’s financial landscape will change after Brexit, but peer-to-peer lending has a lot to recommend it as a potential investment. Here are our top five reasons why you should consider adding a peer-to-peer lending account to your portfolio:
It’s safe. When you lend your money out, there is a potential risk that the borrower will be unable to meet their repayments, and will end up defaulting. Peer-to-peer loans are never made with one lender’s cash, though – each loan is instead made up of capital from hundreds of different accounts, keeping the risk to each individual very low. In addition to this, P2P companies like Zopa offer accounts which are protected against defaults, so even if the borrower should fail to pay, your money will still be returned to you.
It’s competitive. In a market where high-street banks are offering only minimal interest on limited balances, the projected rates of return for peer-to-peer lending look increasingly attractive. With different accounts offering different ratios of return vs. safety, investors are able to pick and choose the option that best suits them.
It’s resilient. With the future of the UK clouded in uncertainty, it’s hard to say just what the stock markets will do next; the value of sterling plunged precipitously in response to the referendum result and has slowly stabilised, but future developments could mean a decline in foreign investment. Since peer-to-peer lending is almost exclusively between domestic individuals and small businesses, any reduction in overseas investment won’t directly affect the value of peer-to-peer loans, meaning the industry will remain stable in the face of reduced foreign expenditure.
It’s flexible. Though rates and conditions vary from one lender to the next, most peer-to-peer schemes offer various options for lenders with different criteria. Zopa, for instance, offers their low-risk “Access” account, which allows lenders to quickly retrieve their money at no charge, and a “Classic” account which promises higher returns but has more restrictions.
It has a proven track record. Although peer-to-peer lending is still seen by some as a new and unproven industry, it’s one that can boast a decade of flourishing growth throughout years of austerity. Although economic growth benefits peer-to-peer lending, it’s already demonstrated that in times of recession it’s still able to provide both lenders and borrowers with a viable option.