Is P2P investing a scam and is it even ethical in the first place?
In today’s episode, we will speak to my friend Anna, who is an Investor Relations Specialist at Robocash, a P2P lending investing platform.
Online peer-to-peer lending platforms are gaining popularity as they are giving investors an alternative form of investing their money. But they also get a bad reputation due to scams, and there is the ethical dilemma one can face when investing in them. So what is peer-to-peer lending all about? And is it safe at all to invest in those platforms?
These are exactly the topics we will explore with Anna today. She will explain the concepts in a very digestible way and we will discuss the pros and cons of peer-to-peer lending, what you should look out for and we will also tackle the delicate question about the ethics behind it.
…or listen on Apple Podcasts
This episode is for you if you are new to investing in peer-to-peer lending platforms, if you have heard of it and want to know more, or simply because you are not yet sure if it is for you or not.
- What is P2P lending?
- The gist: One person lends money to another person through a third party.
- Banks take a long time to process loan applications (bureaucracy) while alternative lending institutions take only 1-2 days with an easy application process thanks to more agility and advanced credit scoring systems.
- The P2P lending platform collects money from investors and lends it to borrowers.
- Profiting from the poor?
- The risk profiles of the borrowers are higher than with traditional banks but these institutions also evaluate the risk of default.
- Not a black or white answer, but P2P lending is a way to help people to get money faster when they cannot get the money from another source.
- Pros and Cons of investing in P2P lending
- Convenient: Easy to sign up on the website, quick, and it is passive once the portfolio is set up.
- Liquidity is quite good because you can choose the term – 7 days, 30 days, etc. And there is a secondary market as well.
- Low volatility. You know what returns you can expect
- The returns are about 10% in the European market.
- Cons or risks:
- It is still a high-risk investment although the market is developing and should become less risky in the long term.
- The default risk.
- Buyback guarantees can be a risk depending on the financial solidity of the platform.
- There is no unified legislation yet at the European level which can help to protect investors.
- Who should invest?
- It can be for both beginners and more experienced investors, but it is not for everyone.
- According to Anna, everyone should try as there is a low barrier to entry: You can always experiment with a couple of euros to see how it works (provided that you did your research and understand how it all works)
- Someone who is afraid of the volatility of the stock markets or crypto.
- If you are already investing, you can diversify with Peer2Peer lending as a diversification.
Who is Anna?
- Website: Robocash
- Facebook: @robocash.invest
- Twitter: @Robocash1
- LinkedIn: Robocash Investment Robot
- LinkedIn Anna: Anna Semenyak
- Youtube: Robo.cash Investment robot
- Book recommendation: The Martian Chronicles
- Best purchase below 100 euros: A Kindle and yes you can still find some below 100 EUR!
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Disclosure: This post may contain affiliate links. That means I may make a small commission (at no cost to you) if you make a purchase. This will help to support Joney Talks!
* I am not a financial advisor, this episode is for education and entertainment purposes only.
*The interview is not sponsored by Robocash.