Alternative Investing
P2P Lending, Crowd Investing

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Rebuilding Focus

This site is 12 years old. Yes, it was 2005 when I was actively "investing" in high yield investment programs (so called HYIPs), participating in forums and believing there's something real in all that crap. There was none. All HYIPs are Ponzi schemes, period. I quickly realized that and started bashing those scams on this site. Then changed my focus to FOREX, day trading and other methods to QUICKLY build cash. Most didn't work. Do you know what worked best for me? My business.

Meanwhile though I invested in some mutual funds and land - things that looked too conservative for me at that time. Well these investments are still there and some of them making profits. A dozen years later I am hopefully smarter and know it's unreasonable to expect 100% ROI per year not to mention per month. My new goal is actually achieving 10% - 20% yearly ROI. A goal that seems to be pretty achievable long term.

So, here is my new focus:

P2P Lending

P2P Lending
Photo credit InvestmentZen

Peer-to-peer lending is a thing for more than 10 years since the start of Prosper. But in the recent years there's a real boom with platforms popping like mushrooms after rain. The reasonably expected yearly return from P2P loans is 5% - 15% with some platforms and investors claiming to make about 20%. I have invested in 3 platforms a couple of months ago so it's a bit early to draw conclusions but I will share details of each investment in the upcoming months.

P2P lending doesn't come without risks: bad loans, platforms failure or plain scams like it happened with some platforms in China. With the regulations in the developed world, especially EU, UK and USA, plain scams are nearly impossible. But the investment platform or loan originators can go bankrupt and most important: there are bad loans and in recession time there will be more bad loans. Investing in P2P lending requires careful selection of loans and good diversification at platform level and between platforms.

Crowd Property Investing

Crowd property investing has existed before in the form of REIT that we'll talk about later below. But in the recent years a lot of platforms similar to the P2P lending platforms popped up allowing you to invest in specific property development or purchase. The property is then owned by all the investors and rent income and capital gains are spread between them. The average ROI is in the same range as with P2P lending - typically 5% - 10%, sometimes up to 15%.

It might be slightly lower risk because of the real estate that's behind the loan or investment. On the other hand most of these investment require you to place at least $100, sometimes $1,000 or more into a single property which makes diversification harder. I am just starting with this and have chosen a Spanish site as a beginning. I will write about this soon as well.

ETF and Stocks

Capital market in my opinion is the most robust, proven in time method to diversify your investment across different sectors and achieve great results. The average long-term return (talking more than 10 years) of moderate stock investing can be somewhere between 7% and 12% which is not bad at all. With more active trading some investors have managed to achieve over 20% but losing more than 20% of your money is also not an exception.

I still think every reasonable investor must have a decent part of their portfolio in stocks and ETF. Probably anything between 20% and 50% of your assets could be there. At least this sounds reasonable to me.

REIT

Real Estate Investment Trusts are similar to property crowdfunding in the sense that you are getting diversified investment in real estate. But the similarities end here. REITs are usually traded on stock exchanges like stocks. You don't pick the properties the REIT will invest it and don't own shares in them - you own shares in the REIT. The ROI of REITs can be slightly lower than this of crowd-funded properties but REITs have much longer track record and are time-proven.

I am including REITs in my portfolio and they'll have larger allocation than property crowdfunding projects. I will write about both with details.

Equity Crowd Investing

Now we are getting into really risky market. Equity crowdfunding is available in the USA since a few years and I think since about 10 years in Europe. It's an excellent way to get early stage investment in start-up companies. It's also the easiest way to lose money of all investment vehicles listed on this page.

I invested a little in 3 companies through Symbid 5-6 years ago. Two of the companies are now gone. The third one - WakaWaka - is still doing good but Symbid investors have not seen any returns yet.

Startup investing is closer to gambling: it can bring great rewards but it also carries the greatest risk.

Real Estate, Mostly Land

I am also investing in traditional real estate but currently just agricultural land. The problem with real estate is you need a lot of money to buy a single property. Too much risk for my taste at the moment for too low return - the rental income here is about 5% at best. The return from land is the same or lower, but the risk is much lower and you have a lot less worries in managing your land than managing a rental property.

Crypto Currency

I think crypto is in a bubble. Which does not mean you can't profit from it. You can profit from Bitcoin, Etherium or even the small alt-coins. However this stuff is much closer to gambling than to investment. So I am keeping a very minor part of my portfolio in crypto and playing with some trading. I don't plan to write much about it unless something really interesting appears.

A note of warning about ICOs. ICOs are the new total craze and a lot of money will be lost. Everyone is starting insane ICOs - decentralized dental industry, decentralized marijuana movement, decentralized my ass. This is like HYIPs, all of this is ponzi schemes. Not even ponzi because the creators don't need to pay or deliver anything. There is a chance that 0.01% of the ICOs are real business and will be gems but good look finding them. I personally stay away of ICOs except with really minor play money. You can profit from all this of course. You can as well win the lottery.

What I am NOT Doing Any More:

  • HYIPs. Finito forever.
  • Forex trading. Too close to gambling for my taste.
  • Mutual funds. So much for my trust that fund managers will beat the market. They take outrageous fees for what? For delivering worse than the average. No thanks, passive ETF and REIT are much better.

So, stay tuned. This blog is getting back to life.


Published at Aug, 28 '17 , Read 88 times.



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