What is your opinion of peer-to-peer lending?
Do you think it's worth it, is the risk controlled, have you tried it?
In a world of zero percent interest rates peer to peer lending can look mighty tempting for yield hungry investors.
Don’t be deceived. Your investment profit is determined by mathematical expectancy (most simply understood as probability times payoff). Expectancy=(Gain on a Winning Bet * Probability of Win) + (Loss on a Losing Bet * Probability of Loss).
When filtered through that lens the problems with peer to peer lending are immediately obvious:
Your gain is strictly limited to the interest rate; whereas, your loss can be 100% creating a negative risk/reward ratio.
Your probability of gain or loss is impossible to define because the system is too new to have been adequately stress tested.
Simply put, if you are playing the peer to peer lending game from the investor side then you are gambling – not investing - because you are working with an unknowable and potentially unfavorable mathematical expectancy.
I wish I had written the following peer to peer lending review myself but Doug Nordman of The-Military-Guide.com beat me to the punch with a well researched three-part analysis of peer-to-peer lending. Rather than re-create the wheel I asked him to boil his series down to a useful “consumer’s guide” explaining the various issues you must consider as a smart investor when looking at peer to peer loans.
https://financialmentor.com/investment- … eview/9777
by salt 8 years ago
If you had a spare $1000 what would you invest it in to make money.
by ngureco 8 years ago
What Is Peer-To-Peer Lending And How Is It Done?
by Gary Anderson 8 years ago
I bet you didn't know, with the way the banksters treat you, that when you deposit to the bank, it is a LOAN to that bank.You need more respect, after all, they are the borrowers!!!
by Justjed 7 years ago
In your own opinion, which is better, Long Term Investment or Short Term Investment?Long term investment with low risk factor or short term investment with high risk factor?
by Terje Sannarnes 7 years ago
Is It Really Beneficial To Invest In Silver?What are your opinion about this? I think it is beneficial to invest in silver! Would you try to convince me not to buy more Silver or do you share my opinion?
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