What You Need to Know About Investing in Peer-to-Peer Lending in the Philippines
n our previous posts, we’ve explained what peer-to-peer or P2P lending is and how the system works. In a nutshell, it means exactly what its name suggests – peers lending money to their peers. The borrowers would have to repay the money they owe from the lenders with interest.
If you have some extra cash lying around, and you want a return on your money instead of letting it sit doing nothing, then maybe it’s time for you to explore becoming an investor.
P2P lending allows you to extend your resources directly to those who need it – the borrowers. You’re going to take a share of the returns on top of your actual investment when they repay you.
When investing on a P2P marketplace, you are given the option to fund loans that you choose by yourself. In other words, you’re also in control of the level of risk involved in lending your money, so your ROI will be dependent on the choices you make on the platform.
Why lend through the P2P platform, Blend?
In the Philippines, interest rates for a personal savings account often range from 0.10% to a little over 1% per annum.
If you save PHP 50,000 of your extra money in a bank and decide not to touch it for an entire year, you can get anywhere from PHP 50 or PHP 500 depending on your account’s interest rates after this period.
Compare that to getting an ROI of 6% to 30% per annum on a P2P platform like Blend. You’d be looking to earn around PHP 3,000 on your PHP 50,000 investment when applying the minimum interest rate.
If you want to get a more attractive return, you’d never let your money sit untouched.
Ideal for first-time investors
Some people get automatically turned off upon hearing the word, “investment.” But there’s no need to get intimidated, really.
Here’s a sweet fact for you: Do you know that you can start lending money to borrowers for as little as PHP 5,000 on Blend PH?
Compared to other investment vehicles, this is more enticing especially when you’re a first time investor and you’re just trying to test the waters.
How’d you like the idea of getting some return on your money instead of spending it on a brand new pair of kicks or a dinner buffet for two at a hotel? The amount of PHP 5,000 may not look or sound that big to you, but it might go a long way when it gets invested on an interesting small business that booms in three to four months’ time.
You not only get to recoup your principal and an interest, but you also get to empower another individual to improve his or her life and finances.
Start becoming a lender through these easy steps
It’s so easy to get started on your journey to becoming an investor on Blend PH.
- First, you’ll need to register on our platform as an Investor and submit the requirements necessary to open an account. You’ll only need to submit two (2) IDs, a valid Government ID and a valid ID (for example, an employee ID). Our team will be reviewing your application shortly after you’re done with this step.
- When your Blend investor account gets approved, you will be receiving instructions on how to deposit funds to your Blend Wallet, which is what you’ll be using on the platform to finance borrowers.
- Once you have placed funds on your Blend Wallet, you can start choosing the loans you want to fund right away.
- You will be receiving monthly repayments consisting of the principal and the interest rate when you fund a loan. The payments will be credited back to your Blend Wallet.
Your monthly ROI can be a form of passive income
When you choose to put your money on traditional investment vehicles, you let your money sit for a while, meaning you won’t see huge returns unless you wait for years and unless you put out a significantly bigger capital.
This is another area where P2P lending provides you with an edge. As mentioned earlier, you will be repaid monthly for your investment. It will be as if you’re generating sort of a passive income.
The legwork just involves depositing the funds to your wallet, performing your own evaluation, and then carefully choosing the loan you want to fund. A huge chunk of the process is already laid out for you on our website. In any case, our team will always be ready to assist you in order to make the process even easier.
You’ll also get the freedom to reinvest the money again so that you can build up your earnings faster. You can also opt to withdraw the money from your wallet anytime you want.
Spread your investments and diversify your portfolio
You can spread your investment across a variety of different creditworthy borrowers on the Blend platform. With this, you can easily diversify your portfolio.
Diversification is a way for investors like you to reduce risk on your portfolio without reducing your expectations in terms of ROI. Whether you want to lend to every type of borrower on our marketplace, or only on specific types of loans from our members, you’ll get complete control over how you decide on your investment and spread your risk.
When you are given the chance to choose how you want to spread the money you want to lend, you can sit back, relax, and watch your investment grow. We generally recommend investing on borrowers across the different loan types offered in our platform, which we will be discussing on future blog posts.
Blend PH’s role in this equation is to run a vibrant and dynamic peer-to-peer marketplace, where borrowers can post their loan applications and lenders can choose which borrowers to fund. Every loan application is thoroughly processed so that lenders are assured that they can get their investment back from the borrowers. We act as an intermediary so that investors and borrowers can benefit from each other and fulfill whatever goals they have successfully.
Finally, we collect and distribute the payments from the borrowers back to the lenders while providing security and transparency.
Remember, money that’s not invested is as good as an opportunity lost. If you’re looking to stop spending your savings on unnecessary things, or you plainly want to stop letting your money sleep, then consider your lending opportunities on Blend PH today.