Lending money to a person or business who needs it but can’t get it from a bank is one of the oldest and most tried and true ways to invest, with the investor receiving interest and eventually the loaned principal back. Power Credit, good at money lending in Tanjong Pagar, is the perfect example of this.
Shares, bonds, and mutual funds have come to stand in for “investment” nearly entirely in previous decades. However, stock market volatility has increased, and there are several advantages to diversifying your portfolio by becoming a private lender. Listed below are some of the advantages:
Superb flow of money.
Banks and other lending organizations have not only stood the test of time, but also consistently rank among the world’s most lucrative industries. Too many people today are borrowers rather than investors. If you are in a position to lend money, know that it will be put to good use.
You can earn more than twice as much in today’s low-interest climate, without the risk associated with the stock market. If banks raise their rates, private lenders will likely follow suit. This is so because there will always be a demand for “underground” or “unofficial” means of obtaining credit.
Clients who are looking to maximize their current asset base can earn interest rates in the high single digits and even low double digits by taking on the role of private lenders. You may plan for your monthly expenses with the certainty of knowing exactly how much money you’ll be bringing in each month, as this is often contractually guaranteed.
Diversification.
Private lending allows you to spread your investments out across more than just stocks and bonds; for example, you could easily spread your money out across multiple asset classes or geographical regions with a little help from a private lender. Of course, it’s convenient to deal with local businesses. However, you could be stuck in a region where it’s tough to make a good return on investment.To lower your exposure, it’s recommended that you make a number of small loans through peer lending.
It’s a safe bet to put your money there.
Even though there are a variety of possible structures for private lending arrangements, real estate loans almost always involve some form of collateral, such as a first deed of confidence on the financed property.
If you are handling the transaction on your own, having an appraiser confirm that the property’s value is more than the loan amount is a must. Investment safety increases when loan-to-value declines.