Despite P2P investing is a relatively recent phenomenon, which draws attention from all over the world, it still has the same fundamentals as traditional investing. We have collected the powerful quotes of mastermind investors and discuss what are the main takeaways and what you can learn from them to become the master of passive income.
Sure, there are huge differences between traditional and P2P investing. Take, for example, the barriers to entry: traditional investing is more like a closed club, while P2P investing is democratizing access to financial freedom. Also, it is open to virtually anyone, who is over 18 and has as little as Eur 10. Another huge difference (and in some sense a paradigm shift)- are impressive returns with minimal volatility. Nevertheless, investing is ancient craftsmanship, which has captivated smartest minds of all time. Let’s see how the old investing wisdom applies to cutting edge modern fintech firms, such as peer to peer investing platforms. This article will not only give you tips, but also will serve you as a guide to the history of investing, and its greatest heroes.
Benjamin Franklin (1706-1790)
One of the Founding Fathers of the United States, author, politician, scientist and much more.
1. “If you fail to plan, you plan to fail.”
Meaning: We will start off with a general, but very relevant quote. Even though Benjamin Franklin wasn’t an investment professional, he was one of the greatest minds of modern history. His famous quote is applicable to many fields, especially to investing. It means that planning is essential no matter what you do.
P2P Lesson: If you want to have a prosperous retirement, or if you are saving for an important purchase or event, it is essential to plan, i.e. save for the future. P2P investing is a modern tool for how to save for your future, so don’t wait for something good to happen to you, take control in your hands and plan your financial future.
Benjamin Graham (1894-1976)
Investor, founder of Graham-Newman Partnership. Mostly known as the “father of value investing” and for distinguishing investors and speculators. Mr. Graham wrote several books, which became an investment classics, such as “Security Analysis” and “The Intelligent Investor”. Also, a former employer of a young Warren Buffet.
2. “You are an investor, not someone who can predict the future. Base your decisions on real facts and analysis rather than risky, speculative forecasts.”
Meaning: “The father of value investing” is taking a very simple approach to investing, he admits that investors don’t have to be super-humans to know where to invest. All that is necessary is to make your research and make a smart decision after.
P2P Lesson: right now, there are plenty of options available for peer to peer investors, as the number of platforms is increasing with tremendous speed. You don’t have to guess to make the right decision, all you need is to research the subject of your investment interest and act afterward.
Phillip Fisher (1907-2004)
Stock investor, who despite being active 50 years before Silicon Valley was founded, practiced investing in innovative promising companies. Advocated long-term investing and published the book “Common Stocks and Uncommon Profits” in 1958, which is published until today.
3. “Another testament to the fact that investing without an education and research will ultimately lead to regrettable investment decisions. Research is much more than just listening to popular opinion.”
Meaning: many people believe in a “gut feeling” or rumor when investing, however, it is not a very reliable approach. Sometimes a “word of mouth” is not based on any fundamentals and may leave you with losses.
P2P Lesson: right now, there are many forums and blog, where peer to peer investors can leave feedback about their experience, which is a good thing. However, some biased reviews or false statements may lead you astray. This is not reliable, do your own research and invest in what is good for you.
Sir John Templeton (1912-2008)
Investor, founder of Templeton Growth Fund. Sir Templeton was sometimes called the greatest stock-picker of all time and made his first fortune during the Great Depression when he bought stocks when they collapsed. His investing philosophy was “avoiding the herd”.
4. “The only investors who shouldn’t diversify are those who are right 100% of the time.”
Meaning: One of the golden rules of investing is diversification. The phrase “do not put all your eggs in one basket” is as old as Shakespeare’s play “Merchant of Venice”. You always have to diversify, as no one is ever right all the time. We are all humans and errors will always happen, what you can do, is to minimize the chance of a big loss by spreading your holdings.
P2P Lesson: We can’t agree more, in fact, we love diversification, as we offer investments not only in business loans but in development projects too! The geographical diversification is a must too, so look for P2P investments in various countries. In Grupeer the variety is impressive- check it out here.
John C. Bogle (1929-2019)
Investor, founder of the Vanguard Group, father of passive investing and my personal hero. Mr. Bogle believed that investing should be for everyone, so he created the first-ever ETF (exchange-traded fund, indexed fund, which copied the market).
5. “To earn the highest of returns that are realistically possible, you should invest with simplicity.”
Meaning: Mr. Bogle always believed in simplicity- that you don’t have to beat the market in order to protect your financial future. The index-following funds were simple, but revolutionary at the same time.
P2P Lesson: the idea of P2P lending is also very simple, but was revolutionary, when it first came around. Financing someone’s loans and earning impressive returns without banks? Bring it on!
6. “Lower costs are the handmaiden of higher returns.”
Meaning: the idea behind passive index following funds was that active portfolio managers charge higher fees on the returns that surpass the market, which makes active investing less attractive. Mr. Bogle believed in lower fees and matching the market returns, which brought more to the investors.
P2P Lesson: sometimes individual investors don’t look at the fees, only at promised returns. This is a mistake, as fees can eat a big chunk from the earned interest rate. Thankfully, Grupeer has 0% on everything! Phew…!
Warren Buffett (b. 1930)
Sometimes is called one of the most successful investors of all time. Mr. Buffet is a CEO of Berkshire Hathaway and a third richest person in the world according to Forbes magazine with $82 Bn wealth. He is famous for his buy & hold or long-term investment strategy.
7. “Anyone who is not investing now is missing a tremendous opportunity.”
Meaning: We think this is self-explanatory, but said by the investment master it should be remembered as a mantra.
P2P Lesson: the real interest rate is negative in the majority of developed countries. (Real interest rate = nominal interest rate – inflation). This means that your savings are losing its purchasing power, hence you are losing money if you are not investing. Moreover, many assets don’t bring impressive returns anymore. Peer to peer platforms bring you impressive returns with the lowest volatility possible.
8. “Wall Street makes its money on activity. You make your money on inactivity.”
Meaning: Wall Street or any financial hub is a concentration of investment professionals, who make money from trading a lot, and trading frequently. This is their job and they are paid to do this. Individual investors are not going to benefit from frequent trading, but from buying and holding.
P2P Lesson: When you are investing in P2P loan or a development project, don’t plan to sell it quickly on a secondary market. Buy it if you are intending to hold it until the end of maturity, and if you urgently need liquidity, only then sell it on a secondary market.
9. “Do not save what is left after spending, but spend what is left after saving.”
Meaning: Again, very wise phrase, which helps you plan your financial future. You need to make a budget, which must include money set aside for investing, and only then spend the rest.
P2P Lesson: You need to figure out what amount of money you want to invest on a regular basis to help you reach your financial goals. Thankfully, you can use Auto-invest feature offered by Grupeer to help you maintain the consistency. You can choose the amount and investment criteria, which will put your money aside on a regular basis.
George Soros (b. 1930)
A controversial Hungarian-American investor and my fellow alumnus with a net worth of $8 Bn ($32 Bn Mr. Soros donated to his charity). Scandalously known for the “greatest currency bet”, when he made a short position of over $10 Bn against the British Pound back in 1992, causing Britain to leave European Exchange Rate Mechanism.
10. “The hardest thing to judge is what level of risk is safe.”
Meaning: When you are an investor, you can’t avoid the risk. Every investment possesses the risk, which you are compensated for with an interest rate. Every investor has to decide what is his/her risk tolerance and this is the hardest part.
P2P Lesson: You need to carefully decide what is your return/risk requirements and look for transparent and safe loan deals to invest. Moreover, invest only with trustworthy peer to peer platforms.
Burton G Malkiel (b. 1932)
Investor and author of the influential financial book “A Random Walk Down Wall Street”. He is a huge supporter of an Efficient Market Hypothesis. Mr. Malkiel spent 28 years as a director at Vanguard Group, also served as a dean at Princeton University.
11. “Put time on your side. Start saving early and save regularly. Live modestly and don’t touch the money that’s been set aside”.
Meaning: This is more applicable to value investor with long term investment goals, as time will be on your side in this case. Moreover, the earlier you start, the more will be saved for later. It is a mistake to start thinking about retirement savings when you are close to retiring. The earlier you start, the easier it is to achieve your goal. We have written before a detailed article about investing for retirement. Read about it here.
P2P Lesson: you can start small and thanks to generous yield steadily build your long-term investment portfolio, thanks to Auto-invest feature you can top-up and reinvest your income without monitoring it.
Peter Lynch (b. 1944)
Investor, author, and mutual fund manager of legendary Fidelity Magellan Fund throughout 1977-1990. During his tenure, the assets under management (AUM) increased from $18 Mn to $14 Bn! Moreover, the average return during his work as a portfolio manager he earned 29.2% average return (consistently, doubling the return of the S&P 500).
12. “Do your homework before making a decision. And once you’ve made a decision, make sure to re-evaluate your portfolio on a timely basis. A wise holding today may not be a wise holding in the future.”
Meaning: Nothing is static in this world, especially traded securities. The share prices are volatile for a reason- there are lots of fundamentals and current factors that affect the price and return of any asset. So, once you bought it, make sure you review your portfolio regularly to make sure that you are still happy with what you are holding.
P2P Lesson: This quote may have many applications to peer to peer investment industry, but the most important is reviewing the platforms’ work and transparency on a regular basis. Because the industry is so new, many new products are being added continuously and you need to keep up with changes that are happening with platforms.
13. “Behind every stock is a company. Find out what it’s doing.” & “Know what you own, and know why you own it.”
Meaning: These two very similar quotes have the same meaning. When you buy a share- you are essentially buying “a piece” of that company. Your future earnings are dependent on the business that this company is doing, its strategy, management, and many more. So, do the research and find out what it is doing.
P2P Lesson: Here we can rephrase this quote to sound it like: behind every loan deal is a company, find out what’s it doing. When you see an investment deal – find out why the company is borrowing, what it is financing and what are the chances for success. Asking yourself such questions will make you a savvy peer to peer investor.
14. “In the long run, it’s not just how much money you make that will determine your future prosperity. It’s how much of that money you put to work by saving it and investing it.”
Meaning: If you are rich now it is not wise to spend all your income. All known billionaires and millionaires engaged in planning and investing, this is the key to success.
P2P Lesson: When you receive your income, it is wise to plan how big part of it you will contribute towards saving and investing for the future. The investment industry is here for you to plan a bright future.
Robert Kiyosaki (b. 1947)
An author of “Rich Dad Poor Dad”, an influential personal finance book
15. “Real estate investing, even on a very small scale, remains a tried and true means of building an individual’s cash flow and wealth.”
Meaning: The public speaker Robert Kiyosaki may be a bit controversial, but he was right when he said that real estate is key to building your financial wealth, even on a small scale.
P2P Lesson: Many wonders how can they afford investing in real estate. Thankfully, P2P investment platforms democratized access to this investment segment as well. Grupeer, for example, allows you to invest in development projects in Norway, Belarus, and Sweden as little as Eur 10.
We hope that you enjoyed reading the wise words once said by renowned investors and got some inspiration for building your financial freedom with the help of peer to peer investments industry. These quotes were once said by experienced investors, but you do need to think of terms and goals that suit specifically your investment profile. Good luck investing and let us know who is your role-model investor?