5 Reasons We Should ALL Invest in Peer-to-Peer LendingOct 20, 2014 Blog INVESTMENTS
Over the last little while a quiet financial revolution has been taking place the world over. Harnessing the power of the people, it has funded over $1 billion in loans and that number is just the beginning. South Africa is joining this revolution, or rather evolution, in how we all view finance.
Peer-to-peer lending, or social lending, is here to change how we go about our financial lives. RainFin, following in the global footsteps of giants such as Lending Club and Prosper, has brought this unique and innovative investment platform to very own doorstep. Here’s why we should all take notice…
1. Global Player
Now the first rule in finance is that if something sounds too good to be true, then it generally is. Peer-to-peer investing could be misunderstood and thrown into that category. However, the global facts say otherwise:
Lending Club and Prosper have not only serviced over $1 Billion in loans but have even grown to the point where they are offering peer-to-peer based retirement funds. RA’s are pretty long-term investments – a sure sign they don’t plan to go be going anywhere in a hurry.
2. The GREAT Returns
Now the global returns are pretty impressive for something that has been in existence for less than 10 years. According towww.crowdfundinsider.com over $500 million in loans in the USA alone are being originated every month. The returns on these loans, according to www.lendingmemo.com, averages out to around 9% per month – far greater than any savings account could offer. Locally,RainFin, the South African option for peer-to-peer lending, currently service around R400 000 in loans per day.
3. Creating Their Own Market
The world of peer-to-peer lending is pretty unique. Unlike conventional investments like the stock market, forex or property, there were no clear rules at the start. This was an entirely new ball game. While having to follow the general financial laws of the countries they are based, their lack of attachment to any settled form of investment means they are separate entity altogether.
Sheltered in a way from the turmoil of the latest DOW JONES stock rise or the sudden drop in property prices, peer-to-peer can continue to work as long as there are people who are willing to invest in others.
4. Easy As Pie
Simplicity is key with all social networks. Signing up for a Facebook or Twitter account has to be simple otherwise no one would bother. Peer-to-peer investing is much the same. To get started doesn’t require much more than creating a profile.
The other plus point is if you like what you see you can give it a try. Being able to invest small amounts of money into several loan opportunities means you’ve spread your risk around AND tried it out for a minimal cost. And you know what they say: try everything once…
5. The Ethics of It All
Now this point might not mean much to some people but the idea that you’re investing in someone or something that you truly think is worthwhile is a feeling that can’t be matched. The unique selling point of a peer-to-peer lending platform like RainFin is that you can see where your money is going.
When you stick your money in a unit trust account or buy some large conglomerate’s stocks, you have no control over what that money gets used for. What if it goes towards animal testing, pollution or child labour – the unmentionables that are unfortunate facts of the world we live in. Peer-to-peer lending allows you to take an active role in ensuring your money is used well and wisely.