I've been investing into P loans on many different platforms since 2018 so for 6 years now ever since then I've met a large number of exceptional people not only employees and CEOs of peer peer learning platforms but also individual investors and bloggers it's an experience I'm very grateful for that's why this is a hard step for me to take but I have a gut feeling it's the right one so I've decided to stop my investments into loans going forward and today I'll tell you the five reasons why reason number one I want to invest passively
wasting as little of my time as possible especially now that I'm a proud father of a 20-month-old girl I really value my time and sadly peer-to-peer Landing is not as passive as my other Investments like ETFs first because I feel like I too often need to check my accounts to see if uninvested funds are piling up due to interest rate changes or due to a decrease in loan availability second I need to stay up to dat on each platform and monitor if risks change for example is something going on in a specific country I have
loans in are the landing companies in a solid finan situation and are there any changes on a platform level and third I find it difficult to easily scale my investments in the sector with a broad-based lowcost ETF covering the global stock market I simply place an order for whichever amount I want to invest each month and my money is instantly invested over thousands of the most productive companies all over the world ensuring I collect the market returns over time which have averaged around 88.9% per year over the past 40 years and even though the returns
my wife and I achieved so far since starting with ETFs in 2017 have been even higher with an average of 10.88% per year through plenty of ups and downs on a monthly basis I like keeping my long-term return expectations a bit more conservative at around 7% per year by the way you can find the one ETF my wife and I buy on a monthly basis as well as what I consider to be the best lowcost brokers in Europe Down Below in the description which is a great way to support me if you'd like to and
don't forget to subscribe if you haven't yet now while we're easily able to invest whichever amount we want into the stock market this way no matter what may be going on at the time I found it extremely difficult with PP Ling that's because it can be complicated to diversify over several different platforms a large number of loans from different countries issued by Landing companies with solid financial statements the platform that comes closest to enabling investors to easily diversify over a large number of loans is the largest regulated pure PE Marketplace mtos if you use its
ready to use portfolio however the average interest rate using this strategy is only 8% per year on average at the moment which I consider a bit low for the risk continuing on that note this brings me to reason number two the risk reward may not match when things go well the interest rates you receive on your money are very attractive in a PP learning space but there's one thing you need to keep in mind when investing into loans your upside is limited to the interest rate you receive so let's say 8 to 12% per year
in a best case scenario however these Investments are far from risk-free what this means is that there's always a risk you could lose a part or the entire amount of money you invested into a loan especially if it's uncollateralized sadly that's not everything there's another risk you should be aware of Reason number three platform risk many highly popular Pia Landing Platforms in Europe like escit pberry and robocash are unregulated and while investors on these have been treated very well over the past few years with timely repayments and close to zero issues there's no guarantee that's
always going to be the case that's because they come with another risk that has nothing to do with the loans themselves platform risk since these are unre regulated there's no legal requirement to keep your assets so both the cash in your account and your investments in loans segregated from the company itself which means that your money could be exposed to another risk if the platform's company were to go bankrupt or if it simply gets sold to another company that doesn't care as much about keeping its investors happy and even if an unregulated platform claims to
keep investor funds segregated from its own there's no way of knowing for sure since there's no regulator confirming that's really the case the next reason why I'm done with PP Ling has nothing to do with risk or inconvenience but the simple fact that pure planning is tax inefficient compared to other Investments like passive ETFs this is because your entire return is made up of interest payments which have to be fully taxed each year you receive them now compar it to accumulating ETFs which in most European countries only have to be taxed when selling shares at
a profit for example in retirement by the way make sure you check out this video of mine to find out how 22 countries in Europe tax ETFs including my own home country Austria apart from everything I already mentioned that I have personal reasons for this decision as well first I'm not as interested in the space as I was when I started in 2018 both when it comes to keeping up to date with everything and making videos about it I feel like I'm providing you with very little value by reporting on this every month and it
sort of feels like a chore to keep doing that I'd much rather spend more time on research for other more useful videos and second when I look a few years into the future and think of my legacy and what I want to be known for it's as someone that motivated people to save and invest long term to reach their financial goals based on on reasoning tax efficiency and historical data sadly for me peer peer Landing doesn't fit into this plan now does this mean it can be a decent addition to a well Diversified portfolio anymore
no I think it can still have its place as long as you're aware of the risks I mentioned and as long as you limited to a small percentage of your overall portfolio if I had to pick a single platform today it would still be MOS the largest regulated peer Marketplace even with the reduced rates either way in my next monthly update I'll tell you everything about how cashing out is going and where I'm moving those funds most likely into ETFs so what do you guys think of this step do you agree or are you disappointed
I won't be reporting on this sector anymore please let me know in the comments below before I take off don't forget to gently tap the like button and to subscribe if you haven't yet if you'd like to get started with lowcost passive ETFs I'll link a playlist with useful videos Down Below in the description and please keep in mind that none of what I talked about today was of course mana's investment advice I'm just sharing my personal opinion based on my own experience as investor thank you guys so much much for watching have a wonderful
day and until next time
