Peer-to-peer (P2P) lending, also known as "social lending" or "crowdlending", lets individuals lend and borrow money directly from each other. Just as eBay removes the middleman between buyers and sellers, P2P lending platforms eliminate the financial intermediaries like banks and credit unions.
Every month, more and more investors are signing up to P2P lending platforms as a way of accessing investment opportunities. If you want to know why you should be one of them, look no further because we’ve listed down four key benefits that investors are getting out of P2P lending platforms.
Better investment returns
After the financial crisis back in 2008, interest rates remain very low in most of the Western world. Keeping money in a bank actually causes you to lose money as inflation is higher than the returns on most savings accounts in Europe.
It’s obvious that investors started to seek for alternative ways to invest, turning to P2P platforms that offer projected annual returns. For example, at Swaper the annual return expected is approximately 13,3%. Of course, returns depend on the performance of loans, the credit quality and the total amount invested, as well as the level of risk taken by the investor.
The first key benefit of P2P platforms lies in having the freedom to choose from attractive return rates aligned with your own appetite for risk.
One of the best sources of steady income
Sustained high returns on investments make P2P lending platforms a sought-after investment option for fixed income investors.
Unlike investments such as stock and forex investments where you have to spend hours on end research and analysing different products, P2P lending can be 100% passive. Some platforms even have auto-investing tools that automatically direct investor’s paid principle and interests to the market.
Swaper is one of the platforms that offers Auto-Investment Portfolio tool which allows investors to increase their returns exponentially over the years.
If you have parameters set for Auto-Invest, you don’t have to do any manual work regarding your investing, the Auto-Invest will do everything on your behalf and all of your balance may be employed at all times.
As you continue receiving interest and principal payment, you have the ability to keep reinvesting it. This re-investment of returns allows them to counter inflation through compounding returns, hence adding to the growth of steady income over the years.
Greater control over your investments
P2P investing really leaves control in your hands. For example, you can choose what currency to open your account in, browse all available loans and decide which ones to invest in, and last but not least – you can withdraw your free funds anytime.
You can even set up several loan strategies and change your priorities as you wish. In contrast are the stock markets where you can’t control your investments in the same way.
Under your investor account, you can also see some key parameters such as your total value, the interest you’ve already earned, your total deposit and total withdrawal amounts, and the return rate of your investments.
Having all this knowledge at hand, you can devise a long-term investment strategy and even diversify within the platform.
Low barriers to enter - everyone can invest
P2P Lending Market data reflects the continued maturity and growth of both the market and its customers. Thanks to the transparency and control offered, P2P investment platforms are facilitating financial inclusion not only of investment activities.
Previously faced barriers in the financial world such as no transparent system and lack of control for participants, have been solved by P2P platforms which open doors to the investment industry to many people who might not have had the chance before.
Getting started with a P2P platform like Swaper is quick and intuitive. It only takes a few minutes to set up your investor account, transfer funds and start investing into loans on the platform.
The minimum investment amount is also generally low. For example in Swaper, you can start from as little as 10 EUR and with no fees on the platform itself. There is no maximum investment though, giving investors greater flexibility over their investments.
P2P lending is one of the most revolutionary and disruptive financial innovations of our times. Even with moderate returns, P2P lending is a smart investment choice for investors with higher returns that beat inflation and help you to plan your financial future.
Ready to become an investor? Sign up and join thousands of others who’ve already taken the plunge.