How to Get Started with Peer to Peer Lending

Many consumers are seeking out new ways to grow their wealth so that they can work less and enjoy life more. Early retirement, working part time and passive income are all buzz words when consumers are talking about their financial goals and plans for the future.

Lifestyles have changed and not everyone is willing to wait to 65 or older to enjoy some free time.

They are looking for ways to work less, work remotely and set their own schedule. One of the best ways to accomplish this is to create a passive income.

That is money that is coming to you without you having to be at work to earn it. It is a means of having your money work for you to make more money. With a little peer to peer lending advice, you can begin to create passive income to help you reach your financial goals.

peer to peer lending

Set Some Goals

The first step in taking action on any plan is to set goals. Without goals, you have no way to measure the success of your actions. And when you are investing your hard earned money, you want to be sure that you can measure the growth. And if for some reason you are not seeing growth then you want to quickly reassess your plan and correct the issue. In the case of investing, you will want to set a goal of a dollar figure that you will invest each week, month or quarter. This investment amount just becomes another line item on your budget and the money is sent off just as a payment to a lender. You also want to set a goal or expectation of how much you want to earn each month from your investment. This helps you determine that your investment strategy is working. A good estimate for return on investment for peer to peer lending is around 10%. So that is a realistic goal to set.

Research Your Options

As with any investment, you are going to want to do some research before selecting a P2P platform. Due to the recent increase popularity, there is a lot of information out there about the larger lending platforms. You need to complete your due diligence just as you would if you were selecting an investment banker to entrust your money to. There are a lot of articles being written about the concept of P2P lending and they will mention the names of some of the larger platforms but don’t rely solely on size when making your selection. Seek out financial information and articles that actually investigate the rates of return and investor satisfaction level with specific platforms. One key factor to check out is the number of available loans. You want to get your account open and then be able to invest as quickly as possible to begin making money so be sure that there are adequate opportunities to get invested quickly.

Take the Plunge

Once you have selected a platform and made the money transfer from your bank then you are ready to invest in your first loan or loans. Again, you will need to do your research. There is no fast track or secret to selecting the perfect loan to join. But there is a general secret about investing in P2P platforms, diversification. Earning your 10% or whatever goal you set is your target. You are not going to find one loan that will offer a huge bonus but you could find one that is a bust. And if all of your money was in that loan then you are in a big hole. The way to avoid a fast failure is to diversify your funds, or investments, into many different loans. What you are doing is reducing the risk associated with your total investment.

Automatic Features

Once you have set up your account and invested in a few loans then you are ready to see some return on your investment. These will show up in your account fairly regularly after you have been investing for a bit. And keeping track of the funds and reinvesting them can get time consuming. Again, to take full advantage of the return on your investment, you need to keep investing and not have money just sitting in your account not earning. So you will want to learn about the auto invest feature that your platform offers. In most cases you will be able to select parameters for the types of loans that you want to invest in and then the system will automatically invest you in the loans that match your criteria when there is money sitting in your account. By using the automatic investment feature on your lending platform you have created truly passive income.

Watch Your Progress

As with any process that you automate, you need to keep tabs on the results to make sure that you are getting what you expected. In this case, you are looking for profit or growth of your initial investment. If you are not seeing that, then you need to go back and tweak your system. You might have too strict parameters set up in the automated feature and you could have money stacking up in your account but not being reinvested. Most platforms will give you an estimate on your annual return on investment and that is a good place to start.

Keep Expanding

Once you have a strong revenue stream setup on your initial investment you just need to keep the momentum going and continue to invest. You might decide to invest in a different platform to diversify even further or you might open up your investment criteria on the original platform. But the key is to keep growing your passive income and making you money work for you. Peer to peer lending advice is helpful when you begin your investing and want to see what has worked for others, but as you gain experience you will develop your own strategy and take control of your financial future.

Call Now Button