It is believed that the financial crisis happens every ten years and it has been more than the decade since Lehman Brothers crashed. Are you getting worried as an investor? Peer to peer investments marketplace is here to help if you are cautious about your investment portfolio and the effects of the next financial downturn.
If you have been following the financial markets, you probably know that after the financial crisis of 2008, the world GDP has been rising for each consecutive year. Besides that, the most important US stock index S&P500, was at an all-time high in September 2018. The business optimism and asset prices indicate that the world economy is heating up and the next financial crisis is not far away. While many influential analysts are trying to estimate the date and amplitude of the next economic downturn, you can protect your financial future with the help of peer-to-peer investing.
Peer to peer investing is a disruptive new money-making force that challenges the established banking system. Peer to peer investing marketplace connects borrowers with lenders. The peer to peer platforms like Grupeer are an intermediaries that do all the difficult job such as screening the good and attractive deals for investing public and lists on the peer to peer platform. Additionally, Grupeer is managing the administration of the deals and handling the money flows between borrowers and lenders. There are plenty of benefits that are coming with investing in peer to peer marketplace, but in this article, we will concentrate on the protection of investors during and before the financial crisis that is predicted to come by many famous economists.
Grupeer team has thought of 5 reasons why 2019 is the time to explore possibilities of peer to peer marketplace.
1. Past experience
Many think that peer-to-peer investing is a recent phenomenon and has been developing rapidly after the financial crisis. However, not many know that the P2P industry celebrated its 13th birthday in 2018. The first-ever P2P lending company has been established in 2005, it was a UK-based company called Zopa. During the financial crisis of 2008 Zopa has brought 4% net returns to its investors, whereas all other asset classes have seen negative returns. So, if you are afraid that your investments might lose value during the upcoming financial crisis it is a safe option to protect it by putting your money in peer to peer loans and be confident that it will not be hit as hard as other asset classes.
2. Alternative economy, alternative cycles
The financial crisis is usually caused by large amounts of debt. Currently, the debt is so high, that many prominent economists and analysts predict the financial crisis. There is a reason for that, as the availability of cheap money and many market players are borrowing cheap funds to finance their consumption or business growth. When central banks will start raising their interest rates, the era of cheap money may come to an end and it will disrupt the usual behavior that lasted for a decade. With the peer-to-peer marketplace, there is a different picture. Most of the loan deals that are listed on Grupeer peer to peer investing marketplace are issued by non-banking financial institutions. These loans are financing small and medium enterprises or individuals that already are not served by banks, due to the restrictive banking procedures.
After the financial crisis banks have very conservative lending procedures that overlooked the large segment of borrowers. This gave rise to a new generation FinTechs that are relying on artificial intelligence or other sophisticated scoring models to allow lending to a wider array of lenders who have been overlooked by banks. This has translated to a higher interest rate than offered by banks, more than 10%. This money is not cheap, to begin with, and are needed for urgent business needs. So, it is safe to say that these loans are not “overused”, but are taken when the real business or consumption needs arise. These non-banking financials institutions prefer not to work with banks, but with like-minded FinTechs such as Grupeer and raise additional working capital through peer to peer investing marketplace. So, eventually, when the financial crisis will hit the traditional financial institutions, it is safe to say that alternative new generation FinTechs won’t be affected, because they are already operating outside the traditional established financing circle and are not issuing cheap money. So, individual investors, who put their money in peer to peer investing marketplace will be protected.
3. First mover advantage
The banking industry has been relatively consistent during the past two centuries. Peer to peer investing is disrupting the old banking and it is an exciting time to be involved. Despite the birth of the industry in 2005, only now serious investment professionals and financial market participants start realizing that p2p investing is a serious industry and requires proper attention. The good thing is the wider public is still not aware of lucrative returns that are offered by p2p platforms.
Thus, it is a great time to be involved for savvy investors. There is a saying that “When housewives and taxi drivers start investing in something” the time to get premium returns is gone. This means that when the hype reaches everyone, the returns are not as attractive and the investment market will become overheated. Remember the Bitcoin, when it was not a hype- you could get abnormal investment returns, however when the hype became so big that people started to invest in Bitcoin at the price of $20,000 the market crash followed soon. So, don’t hesitate to get involved in the peer to peer investing right now.
4. Fintech revolution
Peer to peer investing market places such as Grupeer is common in many countries. The rapid growth and recognition of p2p platforms have facilitated the development of sophisticated risk assessment tools. In 2019 the scoring models have entered the new growth leap, as FinTechs using Big Data to make a quick loan decision, started to create cost-effective solutions. This means that peer to peer platforms are placing the loans with adequate risk-reward ratio. Previously investors could question whether their risk is valued correctly, now due to the maturity of the industry, there should not be any doubts. P2P platforms are not simply connecting borrowers and lenders anymore, but incorporate the sophisticated models that became available due to the development of artificial intelligence.
5. Investments in real estate
The last massive competitive advantage offered by investing in peer to peer marketplace and especially with Grupeer is an opportunity to invest in real estate projects. The commercial property is such an asset class that does not correlate with other investment products. Investing in commercial property offers massive protection and diversification in case there is an economic downturn. And who can invest in commercial property? Usually only large institutional investors. However, Grupeer offers an opportunity for small private investors to participate in the investment pool into such property. Grupeer on its platform not only lists the investment opportunities into loans but also development projects. This means that you don’t have to search for diversification in different platforms, but get it in one place- on Grupeer.
If you are a smart investor who is worried not only about growing your capital but also escape and protect yourself from economic downturns you need to think ahead about the financial crisis that many experts predict. You can easily get the peace of mind by becoming an investor or allocating more funds to your peer to peer investment portfolio. Grupeer is always thinking ahead and placing the winning deals on our platforms that will help to protect the money of our clients. If you have any questions that you want to ask about what opportunities we offer do not hesitate to contact us.
Your Grupeer team.