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  1. #31
    If borrowers fail to repay their loans, you can lose your cash

  2. #32
    I also believe that thinking big and trying to gather more funds is a good idea because the risk of spending the little you borrow and not growing is out there.

  3. #33
    Junior Member
    Join Date
    Mar 2017
    Quote Originally Posted by Salvador Briggman View Post
    Some good introductory thoughts on Peer to Peer lending in this NASDAQ article.
    As regards to the safety of p2p investments, there is one crucial thing you need to understand (taking into account that you already know about such concepts as diversification).

    The most important thing is understanding what is the underlying asset. Meaning, to who the particular p2p platform is lending. And this is extremely crucial. Just to give you an example. Consider p2p platforms that issue payday loans (i.e. Twino or other p2p consumer lending platforms). In essence, if you go through this platform, you lend money to people who are unserved by banks and in most of the cases incapable of managing their finances. Currently the default rates are low and this is fine and they have even a buyback guarantee (meaning that if your loan defaults, you get the principal back). But imagine what happens in case of financial distress. There would up to 70% of loans defaulting and no payback guarantee would ever work in practice. So as long as economy is doing well, p2p concept can be considered relatively safe. But be careful what is the asset.

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