{"id":3129,"date":"2019-09-16T03:40:59","date_gmt":"2019-09-16T08:40:59","guid":{"rendered":"http:\/\/payment1.flywheelsites.com\/?p=3129"},"modified":"2026-06-23T01:50:32","modified_gmt":"2026-06-23T01:50:32","slug":"lending-as-an-addition-to-your-investment-portfolio","status":"publish","type":"post","link":"https:\/\/payment1.com\/es\/2019\/09\/lending-as-an-addition-to-your-investment-portfolio\/","title":{"rendered":"Lending as an Addition to Your Investment Portfolio"},"content":{"rendered":"

These days, the word \u201cinvestment\u201d gets thrown around too easily, used casually in every other sentence. But what does investment really mean?<\/p>\n

An investment is anything purchased with money that is expected to produce income or profit. So let\u2019s say the car<\/a> you bought will be used to transport products that you sell, the car can be considered an investment.<\/p>\n

There are three basic types of investments: ownership, cash equivalents, and lending. Let\u2019s take a closer look at each one:<\/p>\n

Ownership investment<\/strong> is the most common type. This includes real estate, business<\/a>, stocks, and precious items and collectibles such as paintings. Cash equivalents<\/strong> are investments that are \u201cas good as cash,\u201d meaning, they can be easily converted to cash. A good example of this type is investing in money<\/a> market funds.<\/p>\n

Now let\u2019s zoom in on the third one: Lending investment<\/strong>. This type of investment allows you to act like a bank. Having a savings account already makes you an investor because you essentially lend money to the bank. The return is low, but the risk is close to none. Another type is bonds. A bond is a blanket term for a wide range of investment types including treasuries and international debt issues<\/a>, credit default swaps, and corporate junk bonds. The risks vary depending on each type, but generally, lending investments have lower risk and lower returns compared to ownership investments.<\/p>\n

What about Peer-to-peer Lending?<\/strong><\/p>\n

P2P or Peer-to-peer lending has gained traction with investors over the years, probably due to the disappointingly low returns of savings<\/a> and bonds. In peer-to-peer lending, investors give personal loans to borrowers and expect an average annual return of 7% to 11%. Unlike title loans, the loans made here are unsecured. Peer-to-peer lending is basically banking without the bank. It\u2019s making loans and returning the proceeds to investors; but in peer-to-peer lending, the intermediary, which is the bank, is removed. However, this does not mean that the bank is totally uninvolved in the process. P2P platforms may use banks as servicing agents in administering each loan, but since the involvement of the bank is limited, charges are lower.<\/p>\n

As an investor, you can browse through borrower profiles to decide if you want to make a loan<\/a> or not. Most loans are funded by more than one investor. You will likely be investing in a series of \u201cnotes,\u201d which represent small portions of various loans. Some denominations can go as low as $25. This is a form of diversification. It allows you to spread a relatively small investment across different loans. It also provides a cushion for when a borrower defaults, which is very likely to happen.<\/p>\n

Speaking of which, what are the risks involved?<\/p>\n

Before jumping onto this type of investment, know the risks first:<\/p>\n