Can Peer To Peer Lending Be A Good Investment?

Practical financial success tips

Can Peer To Peer Lending Be A Good Investment?

February 8, 2016 Financial Services 0

There are many ways to safely invest money but some actually chooses giving loans to total strangers without any guarantee that they will pay back as an investment method. There are many arguments to and against this method of investment. P2P lending is a way of lending money to others on lower interest rates but short term. There are many upside and downsides to this method of investment.

You still have to pay your taxes
Most of you might think p2p lending Australia is similar to an online stock trading, since you use a website and put some of your savings to be lent for a lower interest rate than at the bank and get your capital and the interest repaid over a time. Since the bank as the middle man is eliminated in this process, the interest rate is lower than at the bank, but still higher than what the bank will give as a savings interest rate. So this is actually better than putting your money as a savings in the bank, but the downside is that you still have to pay your taxes for the earnings.

Your money will not be lent straight away
So when you deposit money to the websites who carry out these unsecured business loans Australia you need to know that your money is not straight away given for the borrowers. It can sometimes just sit there till a suitable opportunity comes. You may think it’s not so bad as long as the money is there. But the problem is you lose any interest you could have gained by keeping it in the bank during that time. For example if you keep your money in the bank you get an interest paid from the day one. But when you put them in these websites, unless your cash is lent you don’t get any interest paid. So this is a good investment method, if you have a lot of retaining cash.

Even if the site shuts down your money will still be paid
This is a bright side to this form of lending. The website or the people who run the website are the third party who collects the money from you and give to the people in need. And they are also responsible for collecting the money from them. But what if the website goes down, the problem most people have is that they don’t know if the money they paid will be given to them. Of course you will still be owed by those who borrowed. Just that the third party who collects them for you is gone now. So the recovery of your money is a long and a complex process. No part of it is easy and it’s stressful.