HelpLending

Is Investing in P2P Lending Better Than Bank Depositing?

30 Oct 2020

Why You Should Try out p2p Lending Instead of a Bank Deposit The connection between the turbulent world economy and our savings has encouraged an increased sense of financial instability among society. In such unpredictable times, every day serves up yet another unknown challenge for our investment plans. Concerns also arise – Are my savings safe in a bank? Should I deposit in 2020? How should I diversify my income? What’s the safest way to do so? In this article, we’ll try to compare bank depositing with p2p lending. We’ll also try to figure out if bank deposits are as profitable today as they seemed to be in the past.

The Interest rate — Bank Deposits vs. Investing in P2P Lending Platforms

It’s fair to start our overview with the most important comparison factor — the Interest rate.

There’s no shame in admitting that bank credit options are actually pretty hard to figure out. Indicators such as Gross non-performing assets (NPA) and the Provision coverage ratio are made of complicated formulas with many variables. Even more difficult for predictions are bank collapses such as in the liquidity crisis of Northern Rock in 2007 and the collapse of IndyMac in 2008. But what does that mean for my deposits?

It means that your savings are not always safe with bank deposits. Major banking crises are major because they are absolutely unexpected. If you want to keep it as safe as possible, you need to always have an eye on for financial market & macroeconomic risk, and other important variables. And maybe a whole team of financial analysts on call.

However, with P2P lending platforms, you can invest in as many loans as you want to, with a better interest rate provided by your originator. Services like HelpLending provide their Investors attractive returns with interest rates starting from 6.5% and going all the way to 12.5%.

These investment opportunities stand out a lot at the expense of most conditions offered by traditional banking institutions. That way you don’t have to deal with negative interest rates and other controversial policy measures.

Your Savings, No Fees Attached

Banking fees have always been an unexplainable struggle for investors. Even the best deposit offer can be overshadowed by pointless operational fees. Thus, the user’s right of control over their deposit is bounded with illogical costs.

With p2p lending, you can invest your money without additional expenses. Online platforms don’t charge you for every transaction because operations happen instantly and cost-free. This practice gives more freedom to consumers and their invested funds.

For instance, HelpLending relinquishes its budget for online advertising to its investors. Instead of seeing pointless ads, investors are encouraged to join the Referral program and receive a bonus. That’s a quite different approach which so far has proven to work perfectly well.

Fair Distribution and Investment Freedom When you deposit your savings in a bank they can be used by the organization for any purpose and need, to any borrower, and so on. You eventually lose track of your money flow and just know your money is there… But, is it?

In this case, P2P lending platforms provide an innovative and easier way to connect lenders with borrowers. Originators are all about fair distribution that’s why as an Investor you can diversify your portfolio with lots of different loans. Plus, you can define on your own the percentage of your contribution.

Diversification gives you more investment freedom and reduces risk factors such as liquidity.

Payback Guarantee — Why does it matter? The biggest fear of any investor is losing their savings. The ability to know when to withdraw is a real talent if we have to be honest. But what if you don’t have to worry about that?

When you decide to go into p2p investing, instead of depositing, you will notice that some platforms will provide you Payback Guarantee. This way you are investing with controlled risk, and if your loan goes past its payment end-date the originator is obligated to pay you back the principal.

So, when you’re depositing your money in a bank, your worst-case scenario is losing your money. With p2p investing with Payback Guarantee, your worst-case scenario is losing interest.

Stay Up-to-Date and Reinvest

Most importantly, with p2p investing you can check out your savings every day and see how your transactions are going. With options such as Auto Invest, you’re able to reinvest your money 24/7 based on your requirements. That way you’ll be always the first to take advantage of new investment opportunities.

For comparison, by bank depositing, you can’t really get the full use of your savings, and there’s some chance you’ll lose some amounts due to inflation or liquidity.

P2P Investing or Bank Depositing — both methods have their charm, but their fortune depends on the goals you set for yourself. The global digital progress gives us many solutions to take advantage of, as long as we’re qualified and competent enough.

In the end, the choice is yours — always be responsible when investing and depositing, think logically, and take well-considered risks. Enrich your financial culture every year to make sure you are up-to-date with all new financial opportunities and stock trends. If necessary, consult a specialist to advise you on investing, saving and depositing. Stay safe! :)