Avoid This Investment: P2P Lending

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 8 August 2018

⏱️ 33 minutes

🔗️ Recording | iTunes | RSS

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Summary

#216 Why peer-to-peer lending on platforms like Lending Club and Upstart is no place for individuals to invest given higher defaults, lower returns and competition from institutional investors.

Thanks to Circle Invest for sponsoring today's episode.

For show notes and more information on this episode click here.

Episode Chronology

[1:04] There are a lot of issues going on with the global P2P lending market
[5:34] How the P2P lending environment has changed over the past few years
[11:24] Why advertised returns are higher than actual returns
[15:35] How are these P2P lending platforms surviving?
[21:26] How these 3 credit enhancements impact the P2P lending market
[25:51] Individual investors don’t do as well in P2P lending environments - here’s why
[30:00] Here’s the bottom line on why you should avoid P2P lending investments

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Transcript

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0:00.0	Welcome to Money for the rest of us. It's a personal finance show. It's on money. How it works? How to invest in how to live without worrying about it. I'm your host David Stein today as episode 216. It's titled, Avoid This Investment.
0:16.6	Earlier this week there was a report in the Financial Times
0:19.2	that stated, hundreds of police officers
0:21.9	locked down Beijing's financial district.
0:25.0	Teams of police and security guards were gathered at every corner of the intersections near the offices of banking and security regulators, as well as the entrance of the
0:35.7	underground train stop for the financial district.
0:39.4	I mentioned they checked identity cards of everyone entering the square
0:44.2	kilometer that is home to Beijing's domestic and
0:47.5	international banks. What were they worried about? They were worried about?
0:53.3	They were worried about an announced protest by investors who had lost money in the recent collapse, the article said, of peer-to-peer lending platforms.
1:07.0	China's online peer-to-peer lending market is the biggest in the world, $180 billion in loans outstanding.
1:19.7	This is according to the Industry monitoring service, D. I. Wandai. And at the end of June, there were
1:28.6	1836 online lending platforms operating in China with 4.1 million investors
1:37.0	having lent money to 4.3 million borrowers.
1:44.3	That's according to the online lending house.
1:49.0	1836.
1:51.3	When I went to, I'd search the internet.
1:55.7	I went to Pier Finance 101, it's a site run by Joseph Hogue.
2:00.1	His ultimate list of Pier Lending sites for 2018 listed 24.
2:05.0	Not far shorter than 1800.
2:08.0	Here's what's going on in China though.
2:10.0	According to the Financial Times, over the past two months a wave of default shocked
	...

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