It is important to many investors that your money not only works profitably but also fulfills a meaningful purpose at the same time. In crowdlending, the investor knows he supports private projects.
According to Grupeer Review P2P loans are considered largely transparent and understandable. These are simply direct loans with fixed terms compared to many other asset classes that work so confused that even bankers often do not know how the money works.
The investor has the opportunity to invest small amounts in crowdlending. Thus, the investment is not only accessible to a broad mass of investors but also enables an uncomplicated spreading of risk.
Default risk: P2P loans generally have a default risk. To counteract this, investors should only invest in investments in their desired asset class. It also recommends the proven risk-spreading strategy that is particularly easy to accomplish with Provider’s online investment tools.
P2P loans for investors
Peer-to-peer loans enable private investors to build an attractive portfolio of profitable asset classes. A loan platform such as Provider thus primarily fulfills the function of a creditor.
For a small fee, which accounts for a few percents of the loan, compliance with the loan agreement is monitored by both parties. Otherwise, the creditor is entitled to take legal action. For investors, peer-to-peer loans are profitable, as interest rates are higher than for banks. It is even possible to finance a project together with other investors.
Also, investors can benefit from the fact that there are different risk classes in which individual loan requests are subdivided. As on the financial market, ultimately the risk decides on the possible amount of the investment return to invest money
Types of investors for P2P loans
In principle, a distinction can be made between three investor types. There are the following classifications: The safety-oriented type of investor: this is careful to avoid risks and is satisfied with minimal returns. He is also prepared to give up his money over a longer period.
The Balanced Investor Type: A Balanced Investor Seeks to Balance Balanced and Profitable Asset Classes.
The return-oriented investor: This type is more risk-seeking and has the goal to achieve high returns. He can accept losses because he has a safe starting position.
For P2P loans as an asset class is suitable for all three investor types because the investor can put together a portfolio according to his own needs and spread the risk on several loans.
How security or yield-oriented someone ultimately depends on both the professional circumstances and the current portfolio. For example, an official may risk more and speculate on higher returns than a self-employed person who has no regular income.
Learn more about investor types and asset classes here: Investing in what? Also, the composition of the asset class on P2P platforms depends on the previous portfolio of the investor. Those who have already invested relatively a lot in safe and less profitable asset classes such as government bonds or overnight and term money accounts may consider more profitable investment opportunities.
The personal values of the investor also play a major role in the composition of the portfolio. For example, many P2P borrowers prefer the money to flow into a particular project that they can identify with.