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Is now the time to diversify into peer-to-peer lending?

Journalist: Marc Shoffman, Freelance

ended 16. December 2022

I am looking for views on if investors should consider peer-to-peer lending as a way to diversify amid high inflation and economic uncertainty?

If so, how should they do it, what percentage of their portfolio should an investor put into P2P lending?

This is for Pee2Peer Finance News so ideally I need the comments to be pro-p2p lending or at least constructive..

2 responses from the Newspage community

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Samuel Mather-Holgate
Independent Financial Adviser at Mather and Murray Financial
The risk of peer-to-peer lending has never outweighed the rewards, until now. With all rate benchmarks increasing this year, peer-to-peer lending is now offering a very high yield in comparison to savings accounts. Of course, the risk is correlated to the return but if you chose a good platform with a robust risk mitigation strategy you shouldn't see delinquencies and default rates too much higher than they are now.

Peer-to-peer is now a very viable asset in a well diversified portfolio and I can see up to 15% of a client's overall wealth exposed to this area. With such differences in approach between providers, it's really key that clients understand how each platform works, their objectives on default rates and how they plan to achieve this and the diversification strategy.
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Eugen Stamm
Startup Journalist at Verve Ventures
Marketplace lending should have a firm position in every asset allocation. It is a very attractive alternative to more traditional fixed-income investments. There is a broad range of lending platforms that allow for diversification, which is essential. Returns compare favorably to bonds, which is why investors can allocate a large part of of their portfolio to marketplace lending, as long as they are cautious to work only with established platforms that have a good track record and controlled growth. However, due to rising interest rates, they should pick loans with relatively short duration.