Wednesday, 17 February 2016

Stocks vs. Peer-to-Peer Lending

When making investments in the market, it is very important to know where to invest. You must make sure you use the correct financial instruments to invest so that they complement your daily habits. Be it the amount of risk you take or the time you’d like to dedicate. 

Therefore, in the next few articles we will tackle some of the predominant investment options and how easily they can be used to increase your wealth.

Stocks are one of the most popular financial instruments in the world. People have multiplied their wealth by many times through stocks. What does it take to be able to make money through stocks?

  1. Money: We all know that market volatility is a part of the stock market. It’s extremely important to understand how a market works to even start investing money. Millions of dollars have been lost due to recklessness in the stock market game. There isn’t much room for error in stocks. Gaining experience slowly means having a lot of capital for you to let go as the amount of time you spend learning defines how much money you will lose. Though with Peer-to-Peer lending there is still some risk, you can spread this risk among borrowers. The chances of default are quite low and there is a very low chance of you actually losing money. With new P2P Lending websites, you are even provided tools and data which assist you in making the right decisions.
  2. Time: Having time along with a lot of effort is a prerequisite for investing in stocks. You must be on top of your game at all times. Stocks require continuous management to ensure that you are always invested in the right industries. Without correct care you can lose all your money overnight. Investing in stock markets requires you to have a ton of information about all industries along with knowing every single detail about the industry you have invested in. There are so many factors which affect stock prices and you must keep an eye on all of this. This involves giving a lot of your time to studying the market. Peer-to-Peer Lending on the other hand does not need constant care. You must only understand the profile of the borrower at the time of investment. Once the investment is made, you only have to enjoy the returns.

While the returns from stock markets can be inviting, the risk and time required to handle stocks is very high. So if you are a person with a big bank account and lots of time, stocks may be the answer for you. If not, you should definitely look at other financial instruments, especially Peer-to-Peer Lending.

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