This is a personal decision, as we see from typical industry investors, they see P2P as an interesting alternative to traditional means of investing, i.e. high street banks and stocks & shares. The rate of return is significantly higher in the region 5% per annum interest (industry avg), compared to lowly rates sub 2% from most banks, and the outcome is socially beneficial; you are lending to a person or small business that is in need of funds. You are making a difference!
As an investor there are a few critical factors you should consider before investing money:
|Important Factors:||What you need to know:|
|Rate of return||
Rates can be achieved in a range 3-18%, depending on the product and risk profile. 5% is understood to be a typical rate for a five year investment in P2P lending.
P2P is not covered by the FSCS despite being regulated by the FCA. There is a risk you could lose your money. Platforms mitigate this with security procedures:
The industry standard default rate is below 2%, but you should still check the individual default rates of each respective platform in our comparison table before investing.