As an investor who is risk averse, finding ways to grow your money without taking on too much risk can be a challenge. One option that may be worth considering is peer to peer lending. Peer to peer lending, also known as P2P lending, is a form of investing where individuals can lend money directly to other individuals or businesses through online platforms.
One of the key benefits of peer to peer lending for risk averse investors is that it can offer a relatively predictable return on investment. When you lend money through a P2P platform, you receive regular interest payments from the borrower, which can provide a steady stream of income. Additionally, many P2P platforms allow you to diversify your investment across multiple loans, reducing the risk of losing your entire investment if one borrower defaults.
Another advantage of peer to peer lending is that it typically offers higher returns than traditional savings accounts or CDs. While the exact rate of return can vary depending on the platform and the risk level of the loans you choose to invest in, many investors have seen returns of 5 10% or higher on their P2P investments.
Of course, like any investment, peer to peer lending does come with some risks. The main risk is that the borrower may default on the loan, leaving you with a loss of principal. However, by carefully selecting loans with lower risk profiles and diversifying your investment across multiple loans, you can help mitigate this risk.
Overall, peer to peer lending can be a valuable addition to a risk averse investor's portfolio. By providing a predictable return on investment, higher potential returns than traditional savings accounts, and the ability to diversify across multiple loans, P2P lending offers a compelling option for those looking to grow their money without taking on excessive risk. If you're interested in exploring peer to peer lending as an investment strategy, be sure to do your research and choose a reputable platform that aligns with your risk tolerance and financial goals.