Peer-to-Peer Lending
Earn interest by lending money to individuals and businesses through online platforms.
Overview
Peer-to-peer (P2P) lending platforms connect lenders with borrowers, cutting out traditional banks. As a lender, you can earn attractive interest rates on your capital, though it comes with risk.
How to Get Started
- 1Research P2P lending platforms (LendingClub, Prosper, Kiva)
- 2Start with a small amount to understand the process
- 3Diversify across many loans to reduce risk
- 4Reinvest returns for compound growth
- 5Monitor your portfolio and adjust strategy as needed
Pros
- Passive income
- Higher returns than savings accounts
- Help others access capital
- Low minimum investments
Cons
- Risk of borrower default
- Capital is locked up
- Platform fees
- Not FDIC insured
Recommended Tools & Platforms
Pro Tip
Diversify across 100+ loans to minimize the impact of defaults. Stick to higher-rated borrowers for more consistent returns, even if the interest rates are slightly lower.
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