Published on July 15th, 2016 | by admin0
3 Smart Ways to Invest in P2P Lending
Deciding where and when your money is best placed is the trickiest proposition facing investors today, with traditional options like shares becoming more volatile and savings accounts offering very low interest rates. Peer-to-peer lending is one of the most flexible options available to modern investors, and offers a range of potential plans to strike the perfect balance between risk and reward, allowing each individual to choose their ideal investment. Here are three smart ways to invest in peer-to-peer lending:
1) Long-term Safety:
If you’re looking to save, you would traditionally open a savings account with a reasonable interest rate in which to place your savings. However, most modern savings accounts only offer very low rates of interest, and putting your money into a low-interest savings account is a risk in itself; with even the highest-paying current accounts topping out at 3%, you’re likely to find that the real value of your savings doesn’t keep up with inflation! Instead, investing in a long-term peer-to-peer lending account is a smart way to keep your savings above inflation – companies like RateSetter offer returns of 5.7% on 5-year investments, and Zopa offers an easy-access entry level account with a 3.5% annual return.
2) Maximum Return:
Trading on the stock market requires a lot of time and expertise to stand a chance of producing high returns, and without any protection from dips in the market it’s easy to turn your life savings into pocket money. Peer-to-peer lending offers the option to trade a little risk for a larger reward; for those looking to make a bigger return on their money than is available on the high street, firms like Zopa offer “Plus” accounts which can provide 6.7% annual interest. Since these accounts aren’t protected against defaulting borrowers it’s possible to lose money on some loans, but the risks are much lower than trading in the stock market.
3) Funding a Mortgage:
Most borrowers from peer-to-peer lending companies take out loans for a new car, or to improve their home. There are, however, much larger loans on offer; companies like “Landbay” provide mortgages by aggregating several different lenders together to fund a mortgage. Much like a high street bank, you’re able to decide whether you invest in a variable or fixed rate mortgage, and the monthly interest from the borrower’s repayments is paid straight to your account.