When it comes to diversifying your investment portfolio, it’s worth being open to all different types of investment, whether they’re short-term or long-term. There are lots of ways that you can help grow your money, and one of those is through P2P lending. Peer to peer lending is the practice of lending money to individuals or businesses. Various P2P platforms provide the opportunity to match lenders with borrowers, and as a result, it can help provide the money needed for the borrower and profits for the lender on their money.
So why should you invest? There are many reasons as to why individuals choose to try out peer to peer lending. Let’s look at the benefits of choosing this type of investment for your portfolio.
It’s A Stable Asset
Firstly, unlike many investment opportunities, P2P lending is a stable asset. You won’t expect to experience so much volatility as you would with investments like the stock market, for example, or cryptocurrencies.
For many investors, there’s a considerable amount of risk regardless of the investment you choose, and some would likely want a bit more stability in the investment they put money into.
The higher the risks, the more payback you tend to get, but some investors might prefer to go with an asset that’s a lot more stable and more likely to get their investment back and to make a profit too.
When it comes to P2P lending, you can also invest in real-estate backed loans. That means that your investments are secured by a mortgage. You can learn more about how it works in this EstateGuru review from P2P Empire.
There’s Broad Diversification
With some investments, there might not be a lot that you can diversify when it comes to the options available.
However, with P2P lending, the money you’re lending could go into a range of loan types.
These could be secured by collateral, mortgage, or buyback guarantees. It gives you the opportunity to explore different loan types as some might be more effective than others.
Some lending platforms will have auto-lending or auto diversifying, and that might be useful for most people.
Make sure that you’re not missing out on any loan types that you might want to have invested in when it comes to picking these automatic options. Play around with different loan types to see which ones work for you.
It Supports The Economy
Supporting the economy is definitely something that you should be doing a lot as an investor because anything you put back into the economy might help to influence the performance of some of your own investments. This is particularly so when it comes to your own peer to peer lending investments.
When you invest in consumer loans or business loans, it helps the economy in various regions and helps promote new jobs. This is all good for making sure the economy is healthy and remains healthy in the future. Putting back into the local economy is essential nowadays!
One of the biggest advantages of P2P lending is that pretty much anyone with a small reserve of money can start investing from only £10.
These investment opportunities are much lower than bonds or stocks that you’d have. It’s worth having a look at the peer to peer lending opportunities that are available to UK investors.
It’s important to do your research on all the relevant ones that are available as there are some out there that might not as good as others. There might be certain terms and conditions that are worth reading up on to see if they affect the quality of the investments you go into.
With a lot of investment opportunities, there tend to be various added fees that are included that can end up affecting how much profit you make as a result.
With P2P lending sites, you can invest for free.
There are also no processing fees like you’d experience with stock brokerage companies.
That means that you’re going to get the best return on your money without having to worry about paying additional fees that could make the investment less profitable on your part.
This can be important when you’re investing in certain loan types and amounts, every little can help to save.
If you’re looking at investing and diversifying your current investment portfolio, then P2P lending is something you should certainly consider doing.
A stable asset and something that offers a broad range of diversification options is certainly something that should be appealing.
And the fact that you can invest for as little as £10 means it’s a good investment for anyone who has always been interesting in the idea of investing their money.