Some of the cons about p2p lending:
- New type of investment; most investors are skeptical tapping the market, they only try minimum amounts – testing the waters
- Most p2p lending platforms offer unsecured loans, risk of default
- Limited information about the loans offered
- Each p2p lending platform has its own rating system on the loans offered, hard to have a benchmark for reference
- Risk of platform default
Number 1 rule I follow, and I am quite strict about this one cause thats the only way to safeguard my investmetns, is diversification.
In p2p lending currently I invest around 20% of my total investments, I begun about a year ago with only 5% but the results have been steady, hassle-free and good, so I have raised my exposure to 20%. I have been earning around 9.5% net per year. I do not use only 1 p2p lending platform and my total exposure is currently spread into 5 different platforms; 2 of which offer loans backed with buyback guarantees.
The reason I have allocated only 20% in p2p lending is because its a fairly new type of investment, most p2p platforms offer high rates but on unsecured loans, thus the default risk is always there.
