Is p2p investing really investing?

[BIRMANBOY]

Its a continuum...at one end is secure investment at the other end is gambling. Where it sits on that long and winding road depends on the individuals personal perception of the facts combined with an educated (or otherwise) estimate of its future prospects. This particular type P2P is short on facts (no history) and long on hopeful assumption. To my mind this puts it further towards the gamble end of the continuum. Diversification is great but I'm not sure I want to go this far away from the investment end. The longer its been in existence and the more utilized it becomes then it could shift. However there is no growth to be had here. Its not like a good share that will grow in value the longer you hold it. I think the downside here is bigger and conceivably could involve bigger losses if the industry doesn't turn out or becomes saturated with too many entities fighting for a piece of the pie.

That might have been me but I do think it is an investment. It is providing money in return for a risk weighted return. Gambling is providing money in hope of a chance(lotto)/performance(sports) based return.

Having said that, if you don't diversify, then it become more of a chance based return over a risk based return. I am sure someone in trained in statistics/finance will disagree with me.

[Harvey Specter]

However there is no growth to be had here. Its not like a good share that will grow in value the longer you hold it. I think the downside here is bigger and conceivably could involve bigger losses if the industry doesn't turn out or becomes saturated with too many entities fighting for a piece of the pie.

How do yo compare it to the likes of investing in corporate bonds or finance companies - which are its true competition, not shares. I compare it to the finance companies, the difference from the finance companies of old is you are actually being compensated properly (or at least better) for the risk you are taking on.

And if you end scenario does take place, just start withdrawing funds, rather than reinvesting. You might not pick exactly when competition gets to tough but most of you money will be in older loans so you shouldn't be overly impacted unless you have been increasing your investment recently.

[BIRMANBOY]

Yes your analogy to finance co's is on the money...and we know where that led. Personally wouldn't put bonds into the same category however. I would be worried more with the cataclysmic type of event that may see all funds and loans frozen. Lenders may not have the luxury of exiting gradually. Major concern is this is brand new territory....who knows what may happen or could happen. I'm sure that there have been safeguards written in but nothing has been tested or put under pressure so outcomes are completely unpredictable the fact that the FMA has some oversight wouldn't allow any peace of mind in my opinion.

How do yo compare it to the likes of investing in corporate bonds or finance companies - which are its true competition, not shares. I compare it to the finance companies, the difference from the finance companies of old is you are actually being compensated properly (or at least better) for the risk you are taking on.

And if you end scenario does take place, just start withdrawing funds, rather than reinvesting. You might not pick exactly when competition gets to tough but most of you money will be in older loans so you shouldn't be overly impacted unless you have been increasing your investment recently.