Lending investing which is also called peer to peer (P2P) lending has been happening in the United States since 2006 when Propser created the first platform for this unique investing arrangement. Shortly thereafter, Lending Club opened their platform for business and in no time at all P2P lending became more than just a novelty. In fact, it grew into a multi-billion dollar industry in just few short years.
Of course, it was not without some bumps in the road. The housing crash of 2008-2009 was devastating to many peoples personal finances and this had an effect on peer to peer lending investing. However, the economic recovery that followed improved not only individuals finances but also the outlook for the lending investing industry. In addition, there was somewhat of a scandal at Lending Club in 2016 that caused concerns for many investors. However, these issues are now history.
Another point that needs to be made about these platforms is that they do not get all of their funding from individual investors like you and me. In fact, most of the investor dollars they get are from what they call institutional investors. These are investment companies and managers that invest their clients money. They can buy up large numbers of entire loans. The fact that institutional investors are so heavy involved with these platforms is an indication that they are not only viable but potentially very profitable.
It should be noted that expectations must be reasonable because this is not like investing in stocks. If you are expecting to double or triple you money then you are in the wrong place. If this is what you are looking for then try crypto currencies. After you lose most of your money there then you can come back and try an investment that is actually legitimate.
Of course, there is some risk because you are trusting that borrowers will repay their loans. Since there is no collateral then you have no recourse if a loan is nor repaid. But this can be ameliorated by properly diversifying your portfolio. It is important to know these types of tricks if you are going to have success with peer to peer investing.
Also, you should considering using one of the investing services. As mentioned above, those institutional investors know what they are doing and are making money for their clients. If you are uncomfortable trusting someone else with your money then you should consider getting advice but still managing your money yourself. There are many services that rate loans and help you select loans for investment.
This is the basic information that you will need for successful investing. Further study will of course give you a better understanding of this investment and will help to further increase your returns. Hopefully, you will find that it is a profitable venture for you and continue to grow your portfolio.