Note from Editors:
P2P sites lend entrepreneurs their much-needed capital and individuals in need of cash, at the same time providing the P2P investors high yields, positive social impact and regular distributions to satisfy the need for liquidity. The author disclosed that he invests in two groups, one of them is led by Jorge Newberry.
by G. Benjamin Bingham
Maybe the stock market isn’t the best way to #invest all your money. There are plenty of reasons to be concerned with no corrections to speak of since 2009, shaky geopolitical concerns and the like. Corporate and municipal bonds don’t seem to be the solid answer they used to be either: Retirees can’t retire on low single digit returns and bond funds are scary when interest rates threaten to rise and, at the end of the day, the values might drop suddenly. What should we do?
There seems to be a groundswell of interest in private #debt outside the public arena where interest rates have been painfully low for so long. At a gathering called LPGP Connect, at the beautifully renovated Carlton Hotel on Madison Avenue in New York City in July, there was a repeated theme: private debt is the place to be. For one thing, banks are either too small or too large to lend money to companies with revenues between $5 million and $25 million. This has been a big opportunity seized by a handful of smart firms who have been getting double digit returns steadily for the last seven years, lending to the small to medium size enterprises (SME’s) who need capital and can afford it.
Secondly, on a micro-level, some retail investors have also benefitted and expect to continue benefitting from #online opportunities like Peer to Peer (P2P) lending sites. In fact P2P lending has become so big that recently in London, the Chancellor of the Exchequer announced that P2P transactions would be allowed in Individual Savings Accounts (ISA’s) in the UK starting next April. This announcement included #crowdfunding as well, which is a third area of opportunity to be approached with caution but intelligent optimism.
P2P lending has been a real success story. Individuals with outrageously high credit card interest rates, or very small businesses with solid plans, can go online, state the interest rate they would like to be paying (often double digit) and their plan to repay the #loan. Other daring individuals can go online, trust that the information is accurate and make the loan. This has been going on with fairly healthy results for years now. So banks and other innovative firms have been buying up bundles of these loans, using their unique skill sets and algorithms to attempt to lessen the default rates and re-offering these loans to the crowd-funders, again online.
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Curated from Positive Private Debt as an Alternative to the Same Old Same Old – Huffington Post
Note: Featured Image credit to expertbeacon.com