Here’s another post where I would love to have your input. Let’s discuss a relatively up and coming investment vehicle known as peer-to-peer lending.
What Is Peer-To-Peer Lending? And Why Should I Care?
Peer-to-peer lending is, in essence, a method of financing new ventures using debt without having to go through a financial institution. In other words, person plays the role of the lender. Known as P2P lending for short, it’s an investment vehicle that allows for non-institutional investors to take part in lending activities. This is important since lending may return much higher fixed yields than other fixed-income investments, however there may be more risk attributed to P2P lending.
Upsides and Downsides
The upsides of P2P lending are notably the possibility for higher fixed income as well as having no need to manage or control a business. Similarly however, the main downsides when it comes to this investment vehicle are the lack of said control, as well as the need to pay extra attention to the entity to which you are lending since P2P lending platforms tend to garner attention from entities not big enough to go public on the stock market.
That being said, this is still a discussion post, and I would love to hear what you all think about peer-to-peer lending. I personally believe it’s got great potential if the investor is wise enough with his choices, and I do love the fixed-income aspect.