6 P2P Lending Mistakes 🛑 How to Avoid Them - YouTube

When starting out with P2P  lending, you’ll make mistakes. 

Heck, I’ve done all of them, and  I’ve paid for it. But, mistakes  

are sometimes the best way to learn and progress. 

My name is Jakub from P2P Empire  and in this video, I will share  

six mistakes that you will most likely make as  a new P2P investor, and how you can avoid them. 

In short, I’ve made mistakes and  lost the money so you don’t have to! 

So let’s start with this one:  Believing Everything You Read 

P2P investments always come with  certain risks, and because of this,  

P2P lending sites like to make their investments  look less risky than they actually are. 

I invite you to question everything! It’s common that certain P2P lending sites  

tend to diminish those risks with  terms like ‘secured investments’,  

‘buyback guarantees’ and ‘provision funds’ You should know that P2P lending is not risk-free. 

No one can guarantee positive results.  So, if someone promises you easy returns,  

you should be very cautious when  choosing whether to invest with them. 

Some platforms even promise a ‘safety blanket’. Safety blankets are great until several loan  

originators get suspended and your money  is gone or “stuck” in pending payments. 

The same goes for reviews published on  seemingly popular sites like Trustpilot. 

Here a user says that Fast Invest is the “best  and most transparent platform to invest”. 

Do you think that a P2P platform is the “best and  most transparent” by not publicly revealing their  

lending partners or by not addressing the fact  that the CEO was previously connected to fraud? 

Unfortunately, even the reviews on ‘trustworthy’  sites are sometimes fake. You should also always  

check the accuracy of the review. I invite you to read our reviews on P2P Empire  

which is one of the very few independent websites  that don’t censor “unpleasant” information. 

My advice is to proceed with  caution! Always check the  

accuracy of the information before you act on it. The second mistake is to ignore obvious red flags 

Before you decide to invest on any P2P lending  site, you should conduct your own due diligence  

about the platform’s terms and conditions,  risk management, team, and its partners. 

This can be a time-consuming task, which is  why we have added a ‘red flag’ section in  

every single one of our individual P2P  lending platform reviews on P2Pempire.com,  

where we are listing all known red flags  that can have an impact on your investments. 

If you don’t do your own due diligence but  invest on a P2P site because it promises  

high yields, you risk losing your money. Not that your diligence process will always  

spot ‘bad platforms’ but it is a good way  of decreasing the chances of being scammed. 

So my advice is to complete thorough due  diligence and follow that gut-instinct.  

Don’t ignore the red flags! Mistake number three would be  

to invest in high-interest investments It’s very appealing to invest in loans  

that promise a high interest of 20% or more, but  you will likely see those projects on platforms  

that are the least transparent within  the industry. And they exist on less  

transparent platforms for a reason… In fact, I haven’t seen a single  

platform that offers these kinds of returns to  be open with their risk management process or  

provide a full overview of the borrower  and its availability to repay the loan. 

Those platforms typically also  don’t publish regular updates  

about the projects and the repayment plan. We have seen fraudulent platforms like Kuetzal,  

Envestio or Monethera that have  promised high yields and buyback  

guarantees before vanishing with investors’ money. My advice is to stay away from those platforms.  

The risk of losing all your money is 50:50,  especially if you don’t know what you’re funding. 

Another mistake you might do is to set up  your auto invest without a distribution plan. 

Auto Invest is a tool that allows you to  set up your automated investment strategy,  

so that instead of investing manually, you can  let the auto invest tool do the heavy lifting. 

This is one of the most used tools within P2P  lending as it saves investors a ton of time. 

The problem that many new investors often  don’t realize is that most auto invest tools  

(like those on Viventor, PeerBerry, Iuvo  Group or Bondster) don’t distribute your  

investments equally across all lending companies. When using these auto invest tools, you need to  

create individual auto investment portfolios  otherwise you’ll always invest in the loans  

from the lending companies that have the largest  number of available loans at a given time. 

Why is this a poor investment strategy?  Ignoring the distribution of your portfolio  

increases your exposure in certain lenders  and by extension of that, your risk. 

You should set up your auto invest tool in a way  where you distribute your investments equally  

across profitable and well-established  lenders to decrease the risk of default. 

My advice is to you refrain from using  ‘one-click’ investment tools like  

Invest & Access or Bondora’s Go & Grow unless  you know exactly what you are signing up for. 

You certainly won’t yield the highest  returns by using them but that’s a topic  

that I can cover in another video. The fifth mistake is to be a passive investor 

P2P lending is often portrayed  as a passive investment strategy.  

How you treat your investments is completely up  to you, but if you’re a passive investor in 2020,  

you’ve already lost at least some of your  money and the chance of losing more is real. 

Signing up to a P2P lending site, investing  capital and letting the investments compound  

is a strategy that worked two years ago. But, unfortunately, not monitoring what’s  

going on within the P2P lending  space is quite risky nowadays. 

I suggest you follow all the news  surrounding your investments. 

You should read the latest announcements on  the platform’s blog, experiences of fellow  

investors in Facebook groups, and/or follow  the conversation in dedicated Telegram threads. 

With a bit of research, you’ll more likely  spot the early signs of a P2P lending scam  

and withdraw your investment before it’s too late. You should also login to your investor account at  

least every three weeks to check on delayed or  defaulted payments from suspended companies. 

Not keeping up with the latest P2P lending  news can be very expensive in 2020. 

My advice to you is to not be a  passive investor! Keep your eyes on  

news and contribute to the conversation. The last and probably the most important  

mistake you can make is to not take  responsibility for your investments 

P2P lending is still a rather unexplored asset  class. Many newbies aren’t fully aware of how  

it works which is why they might rely too much on  reviews from bloggers and self-proclaimed experts. 

This can be very dangerous as it will  give you a false sense of security. 

Be critical about what you read - even about  the information on our website P2P Empire. 

Use a variety of resources  and determine for yourself  

whether a platform is a good choice for you. In fact, before we test or review a P2P platform,  

we always send a set of questions over  and, if we’re not happy with the answers,  

we don’t invest. Instead, we write a  review/update an existing review of the platform,  

so you can know about our findings. You should do the same before signing  

up and investing your money. Because you will feel much better  

about your investments if you understand the  whole business model behind the platform. 

My advice is to not just read reviews,  but reach out to the companies yourself! 

So let’s wrap up this video with a few takeaways. P2P lending isn’t risk-free:  

don’t trust everything you read P2P lending reviews don’t always  

portrait the reality as they aren’t  accurate or often also outdated 

Don’t ignore red flags, it’ll  likely be an expensive mistake! 

Avoid the high-interest loans, they’re  usually not worth it unless you know  

exactly what you are funding Distribute your investments  

equally across profitable lenders Avoid using ‘one-click’ investment  

tools that promise high liquidity Be an active and responsible investor 

Monitoring your investment portfolio is one of  the most important tasks this year. We keep a  

close eye on the P2P lending industry and send out  regular newsletters to keep you updated about new  

findings or newly released videos. You can join  by clicking on the link in the description below. 

If you liked this video give  it a like and subscribe to this  

channel to not miss any further videos. Let me know what mistakes you have done  

when it comes to P2P lending and what did you  learn from it in the comment section below. 

Thanks for watching and I will  catch you in the next video.