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goPeer Review: Peer-to-Peer Lending in Canada

In recent years, peer-to-peer (P2P) lending has emerged as a revolutionary alternative investment avenue for Canadians. With traditional banking routes becoming increasingly cumbersome, platforms like goPeer have made it easier than ever for individuals to lend and borrow money directly. This article explores the inner workings of goPeer, its advantages and disadvantages, and actionable tips for aspiring investors keen on diversifying their portfolios through P2P lending.

What is goPeer?

goPeer is a peer-to-peer lending platform that connects individual investors looking to fund personal loans with creditworthy borrowers seeking financial assistance. Founded in Canada, goPeer operates within the regulatory framework set out by provincial financial authorities, providing a safe and legally-compliant avenue for P2P lending.

How Does goPeer Work?

The process is simple:

1. Investors Register: Individuals looking to invest need to create an account on goPeer and complete the necessary KYC (Know Your Customer) requirements.
2. Evaluating Borrowers: Borrowers apply for loans, which goPeer assesses based on their creditworthiness. Each borrower receives a credit score, which helps investors gauge the risk level.
3. Funding Loans: Once a borrower is approved, investors can choose to fund their loan partially or entirely, with the minimum investment typically starting at CAD 25.
4. Loan Repayment: Borrowers repay their loans over fixed terms, making monthly payments that include both principal and interest, which are disbursed back to investors.

The Benefits of Investing with goPeer

Higher Returns

One of the primary attractions of goPeer is the potential for higher returns compared to traditional investment vehicles. While savings accounts and GICs may offer paltry interest rates of 1-2%, P2P lending can yield returns ranging from 5% to 12% or even higher, depending on the risk profile of the loans funded.

Diversification of Investment Portfolio

Investing in P2P lending offers a unique opportunity for diversification. By spreading investments across multiple loans with varying risk levels, investors can mitigate the risk associated with any single borrower defaulting, thus enhancing their overall portfolio performance.

Supporting the Community

With goPeer, investors are not only growing their wealth but also helping individuals within their community achieve financial stability. This socially responsible investing aspect appeals to many Canadians who prefer to support their local economy.

Considerations and Risks

Credit Risk

While the promised returns are enticing, it’s essential to acknowledge that P2P lending comes with inherent risks. The primary concern is credit risk, the risk that borrowers may default on their loans, resulting in a loss of principal or expected interest income. goPeer does provide detailed credit assessments, but no investment is without risk.

Liquidity Issues

Investments in P2P loans are less liquid compared to traditional assets like stocks and bonds. Once funds are allocated, investors typically cannot access that capital until the borrower repays the loan. Thus, potential investors should plan their liquidity needs accordingly.

Regulatory Compliance

goPeer operates in compliance with Canadian regulations, yet investors must stay informed regarding changes in laws governing P2P lending. Regulatory shifts may impact lending practices, reporting requirements, and investor protections.

Actionable Tips for Successful Investing with goPeer

1. Conduct Thorough Research: Before investing, spend time reviewing the available loan listings on goPeer. Consider factors like the borrower’s credit history, loan purpose, and term length.

2. Diversify Investment Across Multiple Loans: Minimise risk by funding various loans rather than putting all your money into one. Aim to allocate smaller amounts across different borrowers to achieve diversification.

3. Monitor Your Investments Regularly: Keep track of your funded loans, repayments, and overall portfolio performance. Re-evaluating your strategy based on performance helps optimise returns.

4. Invest What You Can Afford to Lose: Given the inherent risks, never invest money that you cannot afford to lose. Treat P2P lending as an alternative investment rather than your primary source of income.

5. Stay Informed About Market Trends: Understanding macroeconomic factors and prevailing interest rates can help you make informed investment decisions. Subscribe to newsletters and follow industry news to stay updated.

Conclusion

goPeer represents a significant opportunity for Canadian investors seeking alternative ways to grow their wealth. By providing access to differently structured lending opportunities, goPeer not only offers higher returns but also fosters community-based support. However, like any investment, it is vital to conduct proper research and understand the associated risks. With judicious investment choices and keen awareness of market dynamics, you can navigate the exciting world of peer-to-peer lending in Canada successfully. Whether you are seeking to diversify your portfolio, invest for long-term gains, or support others in your community, goPeer presents a formidable option in the financial landscape of Canada.

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