Investing in secured loans ceases to be an alternative investment but is spreading to the general public. Experienced investors make up less than a fifth of this rapidly growing investment field. These are the findings of an online survey made by the investment platform Bondster.
Data from the survey of 513 investors on Bondster show you do not have to be a seasoned investor to start appreciating your finances through investing in loans. People who think of themselves as experienced investors make up only 18% of all respondents. Others tend to see themselves as less experienced or even as beginners.
The respondents' answers also showed they are cautious in their investing and diversify investment risk among several instruments at the same time. Although they have chosen a more dynamic way of appreciating their finances by investing in loans, most of them also use traditional savings instruments. The most commonly used ones include savings accounts, pension funds and society building accounts. Only 10% of all respondents said they did not use other instruments.
Chart 1 - What other "traditional" savings instruments do you use? (multiple choice)
"Diversification of investments is a very important and effective tool for mitigating the risk of loss. In practice, it means that investors do not put all their finances in one particular investment but rather spread it across the board. Moreover, we advise our investors to diversify their portfolios elsewhere. They should not direct more than a third of their funds in P2P lending, and even this third should be diversified among several loans and loan originators," says Bondster’s financial analyst Vladimír Vála.
Investors appreciate high returns
So what specifically attracts investors from the general public to invest in P2P loans? Most of all, the respondents praised the high appreciation and protection against inflation because the average return on the platform is 15%. They also praised the acquisition of a stable passive income. Many investors plan to improve their retirement this way. Moreover, the respondents’ answers showed they expect the P2P market to continue to grow also in 2021. A total of 51% of respondents said they expected the market to grow, 35% expected it to stagnate, and only 14% thought the market would decline.
Chart 2 - What kind of P2P market development do you expect in 2021?
Maybe that is why almost 70% of all the respondents use several P2P platforms simultaneously. On top of that, 89% of them said they would maintain or even increase the amount of funds invested in P2P. Only 9% said they would reduce their investments, and less than 2% said they would not invest in P2P this year at all.
Chart 3 - What strategy do you plan to adopt for P2P in 2021?
What investors say about Bondster?
On Bondster, investors especially like the higher appreciation of their deposits compared to other platforms. The data also show that people are not only attracted by the high appreciation of their savings, but 82% of respondents like to use the opportunity to invest in loans with lower yields, but which are secured by a piece of real estate. Bondster also received positive points thanks to the buyback guarantee which ensures that investors will not lose money if the borrower defaults.
Many investors in P2P loans also said that investing is fun. Hundreds of them enjoy checking their investment account almost every day to find out how much they have made by keeping the money they have earned reinvested on the platform. One of the main advantages of this kind of investing is the fact that virtually anyone can start doing it, it is done online and from the comfort of one's home.