Alternative Investments – Peer-to-Peer Lending

Alternative Investments can provide lucrative returns that are unavailable by investing in the stock or bond market. In earlier posts, we discussed alternative investments in farmland, rooftop solar system, private equity, collectiblesreal estate, and gold. In this article we discuss investing in another form of alternative investment – Peer-to-Peer Lending, or P2P Lending or Crowd Lending as it is more commonly known. P2P Lending has gained plenty of momentum in the recent years as the hunt for alternative sources of investment and higher returns are pursued by investors, especially in this low interest rate environment.

Alternative Investments – Peer-to-Peer Lending

Peer-to-Peer Lending is the practice of lending money to unrelated individuals, or “peers”, without going through a traditional financial intermediary such as a bank or other traditional financial institution. The lending takes place online on peer-to-peer lending companies’ websites using various different lending platforms and credit checking tools. It is important to realize that these are unsecured personal loans – either to an individual or a small business.

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Alternative Investments – Private Equity

AlternativeIn this version of the alternative investments, I discuss investing in Private Equity. Earlier in this series, I discussed investing in Farmland and Rooftop Solar System as alternative investments. Alternative investments can provide lucrative returns that are unavailable by investing via stocks and bonds.

To start off, lets look at what private equity means. Private equity refers to equity capital that is not quoted on a public exchange. The company that you invest in is a private company. Unfortunately, it is hard to invest directly in private companies, unless you are an institutional investor or know the founders/executives of the private company. Most private equity consists of institutional investors or accredited investors who can commit large sums of money for long periods of time. However, even as a small time private investor, it is not impossible to find opportunities. For e.g., the blogger – Asset-Grinder shares his story of investing in a local brewery. Be sure to check it out here. One other way to own part of a private company would be to work for it, where stock options are provided as compensation packages. This is all too common a method especially in the tech industry, where startups include a stock options plan that are vested over a period of few years for employees.

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