P2P: A Genuine Investment Opportunity

Many people say they want an investment with high returns, but most serious investors are looking for an investment opportunity that strikes the right balance between risk and reward. Unless you have money to burn or are not worried about losing your capital, you will need to keep certain things in mind with respect to your investment goals.

Generally speaking, you will want to target investment opportunities that can help you generate attractive risk-adjusted returns. This is true regardless of whether you are making relatively small investments intended to help your nest egg grow a little faster, or have adopted a strategy aimed at ensuring your long-term financial security.

For beginners and professionals alike

Such as perspective also applies whether you are targeting an investment opportunity for beginners or prefer investment options tailored to those with years of investing experience. Either way, the objective is the same: to make your money work harder for you, and to ensure that you and those you care about have sufficient resources available when it matters most.

To get to this point, however, it is important to consider what institutional investors take into account. For one thing, they try not to look at their investment options through a narrow lens. They know there is more to long-term performance than simply choosing the “right” security. In particular, they understand that the key to long-term success is portfolio diversification–that is, to avoid putting all your eggs in one basket.

The best "free lunch" in finance

Professional money managers have found that spreading their risk among different investment options is generally the best way to generate attractive returns over the long haul. But while sophisticated investors have been at the forefront in employing such strategies, they are not the only ones who can benefit from diversifying their holdings.

Indeed, those who are searching for small investment opportunities can also position their portfolios to capitalize on what academic researchers have long described as the financial world's only "free lunch." By expanding the range of asset classes they invest in and focusing on the long-term, so-called amateurs can keep pace with those who manage money professionally.

The most viable investment options

A related question, of course, is what investments should be included in a diversified portfolio. While some investors have targeted niches that have, in the end, only benefited a few–typically those with insider knowledge or a unique “edge”–the optimal course of action is to consider seasoned opportunities with proven staying power. Among the most promising are those that are related to peer-to-peer investment.

Marketplace or "P2P" investment programs originally came about as a way for small investors to fund loans for individual consumers, typically those with near-prime credit ratings, who had found it difficult to obtain financing from banks and other traditional lenders. In the past, borrowers like this would simply have been out of luck. However, in the wake of major advances in technology and global communications, online P2P lending has become an increasingly viable financing alternative.

In recent years, peer-to-peer investment has evolved into what many now consider to be an attractive investment opportunity and a robust asset class, attracting a growing share of capital from individuals and institutions alike. Aside from enabling investors to capitalize on the track records of firms like Bondora, this crowd-based approach makes it easy for them to diversify away from such traditional favorites as stocks and bonds, which many now believe are riskier than ever.

More options…and more ways to generate attractive returns

In fact, the range of p2p investment options has expanded dramatically. Regardless or whether you are seeking large or small investment opportunities, you can now invest through online platforms that offer access to all types of borrowers, including individuals, start-up companies, and even established businesses, some of which, ironically enough, are working through or in collaboration with banks or other intermediaries.

Better yet, you don't need to have substantial capital at your disposal to participate–deposit thresholds at most online P2P marketplaces tend to be fairly modest. In addition, investors generally have a great deal of flexibility with respect to how much they can or want to invest, entry and exit timing, account liquidity, and borrower segments to target or avoid, among other things, which has literally placed control of their financial destiny at their fingertips.

Tools and transparency

As with many other industries, innovative technologies have made it possible for those who don't necessarily have the same time and resources at their disposal as the full-time professionals do to achieve their ambitions. Big or small, peer-to-peer investors can generate regular income and long-term risk-adjusted returns that can supplement, and maybe even underwrite, the kind of lifestyle many want and are striving for.

To achieve these objectives, of course, it is important to work with a user-friendly interface, in-depth market information, and powerful investing tools. Bondora, for instance, provides a degree of transparency and insight regarding borrower histories and creditworthiness that ensures investors can make informed decisions. In addition, the firm’s flexible platform enables clients to invest the way they want–and to be as “hands-on” as they prefer–to realize their investment goals.

Improving returns and knowledge

Some P2P marketplaces, including Bondora’s, offer much more than that. In many respects, they are akin to the best investment websites, which not only make it easy for investors to put their money to work, but which also provide them with insights and educational resources about marketplace lending and related aspects that can help to keep them at the top of their game.

In sum, those who are looking for investing strategies that can go some way toward ensuring they are on the path to financial security will find that peer-to-peer investment has a great deal to offer. For part-time amateurs and full-time professionals, the prospect of generating attractive returns with well-diversified risk, together with easy access, transparency, flexibility and control, is the winning combination for long-term success.