Investors turn to Peer to Peer (P2P) Lending for high yields
- May 12, 2016
- 1 min read
Volatility in stocks and low bond rates have prompted many investors to turn to peer-to-peer (P2P) lending for higher yields.
It's easy to see why. The average net annual returns for investors who lent money through peer-to-peer (P2P) Lending platforms, have ranged from 5-15%. Compare that to about 1-2% yield for bonds.
P2P Lending demand from borrowers and investors - retail and institutional - remains at an all-time high and is projected to grow even more. A $10 billion industry in 2015, it's expected to grow to $150 billion by 2025, according to PWC.
Here's how peer-to-peer (P2P) lending works: Borrowers receive money directly (around 1%) from investors, while P2P online platforms, take a fee from issuing the loan. As with any investment, there are risks. Borrowers can default and peer-to-peer (P2P) lenders could go bankrupt.
How can investors get started? We recommend that investors diversify their peer-to-peer loan holdings.
Comments