Since the Covid-19 pandemic began, the world economy has grown more and more unstable. This trend is not likely to change, mostly because, as the virus continues to spread, governments will need to constantly spend more money in order to contain the pandemic and treat the sick.
However, the biggest issues are created by the measures that are designed to protect the population from infection, namely the temporary closing of many businesses and companies.
This can, naturally, restrict one’s options when it comes to finding safe investment opportunities, especially when considering that the pandemic has even affected international trade.
Luckily, there are industries and economic sectors that have been affected less than others and there are even a few that have prospered despite the economic instability of the past year. These continue to offer great investment opportunities.
This having been said, today we will look at one of the best investment opportunities for beginners who are not yet prepared to invest large amounts of money or are not yet ready to risk their earnings in the stock market.
P2P Lending Platforms and the Opportunities That They Present
These platforms have been around for some time and are now more popular than ever. This is mainly because they enable individuals to borrow money without having to worry about credit ratings, loan requests, or endless amounts of paperwork. P2P platforms only perform credit checks for loans that go over a certain amount and work much faster than other lenders such as banks.
As useful as P2P lending platforms may be to individuals who need to borrow money, they can be extremely lucrative for those looking to invest.
There are two types of user accounts that can be created on these platforms. One for borrowers and one for lenders. The platform itself only facilitates the transaction and puts borrowers in contact with lenders.
Once a lender joins a P2P platform, he will be able to deposit money into his online account and specify how it will be used for loans. It is possible to only allow the platform to lend the money to a single users, which is usually the more risky choice, but the lender is also able to set the money to be spread out across as many users as possible.
How Is Your Money Protected?
Most platforms insure the users, which means that if a borrower cannot return the money, the company owning the website will reimburse the lender. However, these are rare occurrences because P2P lending platforms only give out loans to individuals who meet certain requirements, such as providing proof of income, proof of address, and a bank statement from an active account. Payday loans in the UK sometimes also operate like this.
These measures ensure that borrowers are unable to trick the platform and evade repaying the money.
How Much Can You Earn by Investing in a P2P Lending Platform?
This depends on how much you invest, but also on how you allow the platform to lend your money to others. Allowing the P2P website to use the money form long term loans is usually more productive, however, it is not suited for those who want to see progress from one month to the next. Alternatively, you will be able to give out microloans using your deposit, but your earnings will be frequent and low in value.
Investing in P2P lending platforms should be approached as a passive financial activity. It is not useful for those who hope to get rich from one year to the next. This having been said, these platforms offer the best way to “make your money work for you”.