Peer-to-peer lending and crowdfunding: the risks
In peer-to-peer lending you lend money to individuals or companies in return for interest, and in crowdfunding you invest in small companies or property projects. High promised returns also mean high risk. In this guide you learn to assess platforms and limit your risks.
You will need
- Online banking credentials
- A sum you can afford to lose completely
- An emergency fund in place
- Time to compare platforms
Steps
Understand what you are investing in
A peer-to-peer loan is a promissory note, and whether it is repaid depends on the borrower. In equity crowdfunding you buy shares in a company whose value can go to zero.
Check how the platform is supervised
Estimate credit losses
Diversify in small amounts
Limit the share of your wealth
Monitor your investments
Report the income for tax
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