Investing is an attractive and modern way to invest money: Investors can invest their money in loan projects of individual borrowers. Because often it is not easy for the latter to get a loan because the bank, for example, requires a higher Schufa score than the borrower owns it. For example, investors support loan seekers and receive a profitable return. In this respect, we have established itself as an alternative investment, since above-average returns for investors and attractive interest rates for borrowers are possible. For example, return is 5.0% on average, with relatively little risk . Even returns of 16.3% are possible. For you as an investor, the risk can be influenced, because by diversifying you have the opportunity to contain the risk. This means that if you divide the investment amount into different projects, you minimize the risk of default.
Money – The risk of investing
With every investment, risk and return depend on each other. In other words, if the risk increases, the potential returns also increase. If the risk drops, then the returns also fall. Because the return is in a sense the compensation for investors that they lend their money. The more uncertain as an investor is whether the loan is properly repaid, the greater the compensation must be for you to take the risk. Normally this means that a certain amount of risk has to be taken on a financial investment if high returns are to be achieved. The risk is very low relative to the high return. Although interest rates are also based on the creditworthiness of borrowers and thus on the possibility of a loan default. However, offers its investors the opportunity to spread the portfolio widely and thus to minimize the overall risk. The risk of default can be minimized by investing in a large number of different loan projects, but only with small amounts, for example 25 euros. This diversification minimizes the risk and allows investors to still achieve above-average returns. In order to achieve this diversification, investors can use the Portfolio Builder to automatically distribute their investment amount into different projects. Here you have the opportunity to choose between risk-oriented and yield-oriented diversification. Investors are visually presented with a risk assessment by the score. If you choose the higher risk as an investor in Portfolio Builder, your return is higher. The other way round, if you choose the lower risk on investments, the return will also be narrower. A simple bill that pays off.
Risk – The Benefits
The advantage of investing is the ratio of return to risk. While the risk remains low with proper diversification of the portfolio, the risks associated with similar return opportunities are significantly higher. Also provides a range of credit information to help document the liquidity of borrowers. So the risk of a loan default can be better appreciated.
The online credit marketplace is a good opportunity for investors to invest their money. The transparency of credit seekers’ credit projects gives them more insight into the value of their investments and can achieve returns averaging between 5.5% and 16.3%. The risk is disclosed on the one hand and controllable on the other hand, depending on how personal diversification is defined.