Welcome to my website about How to invest money!
Before we start investing our hard earned cash let me introduce myself. My name is Jan, I am 37 years old and I am from Slovakia. I live in Austria before I spent a few years in Ireland where I accumulated my first savings.
I bought an apartment in capital city and let it rent. Rent was my first passive income. It was not bad but after few years of renting I was not too happy with my ROI (Return on Investment). Yes, there was the situation where the real estate property has no tenant and it led to the loss of rental income and the decrease of investment returns. So I sold the apartment in capital city and and spent half of the money to buy another apartment in smaller city where there was not too many apartments for rent so I was able to higher up the rent. The rest of money I put in the bank thinking I will earn the interest. Unfortunately my interest for the whole month was the “massive” 0,09 €. So I decided to withdraw my money and I was looking for something to invest in.
Fortunately I came across to Peer-to-peer lending (P2PL) which consists in lending money to borrowers in exchange of interests on the money you are lending. Basically, you are playing the role of a bank by lending money to other people. However, it’s not about lending a large amount of money to a single person, but rather small sums to many people. I could not believe that someone can offer me such a high interest rate from 10 to 20 %. So I was reading and reading about P2PL and finally I start trusting this innovative type of investment. I invested first part of my savings and after I become comfortable with it I invested the rest of my savings using about 15 different P2P platforms to diversified the risk.
And now I am here to open your eyes too. Are you happy with the interest rates getting from your banks? What is it now? Mine was about 0.0017 % p.a. I know I should never let my money in the bank and start earlier with P2P lending. Time is money. Now I am getting average interest of 15 % across my portfolio earning 8823 times more than before where my money was just sitting in the bank.
Potential Risks of Peer-to-Peer Lending
Peer-to-Peer platforms you will invest could go bankrupt or simply be complete scams. How to minimize this risk? There are now many sites with reviews of those platforms made by people that actually invested their own money (like myself) and that share the results with others.
Also there is no guarantee that the person you are lending money will actually pay you back. But you can avoid that as well. One of the best ways I know is to only invest in loans that come with what is called a buyback guarantee. This basically means that even if the borrower doesn’t pay back (after a given amount of time, usually 60 days), you will get your money back.
Benefits of Peer-to-Peer Lending
Peer-to-Peer lending has great returns. You usually get above 10 % of interest rate, and it’s not unusual to have platforms where the yields are above 15%.
Peer-to-Peer lending is really easy to diversify. You can invest from very low sums (usually 10 Euros), it’s really easy to diversify your investments across many loans & platforms, therefore greatly reducing the amount of risk in your portfolio.
Peer-to-Peer lending is passive investment. You need to do some work at the start to find good platforms, build the portfolio, but after that everything can be automated and you’ll only sit back and enjoy the returns
Peer-to-Peer lending is all manageable online. You can register, deposit money, invest and then get your returns back without ever leaving your house.