There are many types of investments that you can easily put in your money to earn some income. Every type of investment is believed to be risky. The only difference between the different types of investment in terms of risk is that some investments are riskier than the other. However, the profitability of the investment seems to be directly related to how risky the investment is. For example, putting money in real estate is believed to be very profitable. However, it would take you years to recover the money spent on the building, especially when you are putting the rooms or offices out for rent. Real estate is believed to be profitable until natural disasters or a careless tenant destroys the building and you are left with the only land. On the other hand, investment such as gambling can multiply your capital a thousandfold within an hour if you are lucky enough, however, the probability of losing all your money within a second is also very rife with gambling. One of the many investments that are available with benefits and risks is peer 2 peer investments (also known as p2p). Here are the benefits and risks of peer 2 peer investment.
Benefits of Peer 2 Peer Investments
A major benefit of Peer 2 Peer investments is the power of numbers. A peer 2 peer lending platform that consists of just 1,000 people willing to invest 1,000 USD means the capital of 1,000,000 USD. However, when proven to be effective, you could easily get a capital of 1,000,000,000 USD as more people would be willing to invest more money. Thus, the strength of numbers can easily make any p2p network a force to reckon with.
Another major benefit of peer 2 peer investment is that it could be a very reliable way of making a good profit within a short while. This is in the case where the profit promised by the networks is not excessive and the funds are being used for business. This implies that the company does not hope to pay you with the money of new members but from the profit, they have made from investing your money in other ventures such as agriculture or real estate. It could also be that they loan the money out to other people at an interest rate of which you get your money part with a percentage of the interest paid by the person who borrowed the money as is the case with IUVO P2P investment.
Risks of Peer 2 Peer Investments
A major risk of P2P investment is that people might be deceived into it. There are a lot of P2P that know right from the start that they are only out to fleece their investors. Thus, they promise excessive returns and try to meet up with the first few customers. Within a few days or months, they have been able to gather millions and instantly disappear.
Another risk of P2P investment is that if a significant amount of the money invested by the customers is suddenly pulled out, it might lead to the crash of the network. It might be difficult to meet demands and when complaints begin to come in from those who were not promptly paid, it could lead to panic withdrawals by the other members. This could also lead to the crash of the system.