Myths about investing are everywhere. Some will scare you away from it entirely, while others will trick you out of your money. Others will have you believe that you need to take on too much risk, or not enough. A few even seem to promise guaranteed success, but rarely live up to the hype.
With all of the myths about investing circulating, how are do you find the truth? To help you do just that, here are five myths about investing debunked. Read More
The term P2P loan has become increasingly popular as of late. In case you’re unfamiliar with it, it refers to a specific type of loan that requires no intermediaries like a bank or other financial institution. As the name P2P or peer-to-peer suggests, these loans are borrowed from one person or group to another. That means that you can apply for a loan without ever having to visit the credit bureau or a bank. Since this type of loan has been around for some time, experienced lenders know how to earn the highest returns and keep your investment secure.
With all these benefits, the fact that P2P loans are so popular with investors does not come as a surprise? But are there any drawbacks to it? If you want to learn more about P2P loans, read on to see how they compare to traditional loans, how the process works and why investors are rushing to get in the game.
The Benefits for the Lender
Lenders investing in P2P loans can expect higher returns than they would get from a savings account. On average, investors can expect the returns from P2P lending to be four times higher than those at reputable banks, as reported by Forbes. Essentially, with P2P loans everybody wins. This is why investors are pursuing P2P as an attractive addition to their investment portfolio. Of course, you have to use reputable P2P platforms like Silver Bullion.
The Benefits to the Borrower
Borrowers looking to escape debt often resort to debt consolidation or credit cards. However, P2P loans are a great option for people looking to repay their debt at an interest rate more affordable than the ones offered by banks and other financial sources. P2P lending offers more affordable loans to those in need.
What Type of Loans are Offered
Usually, P2P loans are usually small loans, around $1000 to $35000 for individuals. However, you can use that money however you like as these loans are flexible. People often use these loans to pay off other debts or loans with higher interest rates.
Another common reason individuals apply for these loans is for a home remodeling projects. The interest rates for special loans granted for these types of projects at a bank are higher. Furthermore, the money the bank grants can only be used for home remodeling. P2P gives you more freedom to use the money how you see fit with lower interest rates.
Small businesses also often resort to P2P loans when starting up. Since opening a new business involves paying some money upfront, most people turn to banks. However, banks set the interest rates for new businesses high due to the risk of the business failing. With P2P loans, investors are free to choose whether to finance a startup or not, which makes the interest rates lower. However, the amount you can get from these loans is limited.
P2P lending is a promising financing option that’s only starting to gain momentum. But since P2P loans still aren’t completely regulated, you need to make sure to side with a reputable and trustworthy institution.
With legalization becoming a reality in many states across the country, marijuana stocks are becoming hot commodities for day traders and traditional investors alike. But they are particularly appealing to day traders because of the cowboy nature of these entrepreneurs taking advantage of a brand-new, growing industry. Day traders need to take risks, just like these pioneers of the weed industry.
Day traders are used to taking risks and so are marijuana business owners. The regulatory climate is such that even if you are operating in Colorado or another legal state, the threat of federal enforcement of existing drug laws is always looming. That also makes the sector very volatile, which is like catnip to day traders. Day traders love volatility because it gives them a chance to make real profits.
Investing in marijuana stocks does not just mean learning about growers, dispensaries and producers. There a lot of ancillary business surrounding marijuana businesses in states that have chosen legalization. When you are talking about companies that provide services to marijuana growers and producers, you are talking about business consultants, extraction experts and many more.
Colorado has a lot of these types of marijuana adjacent businesses like Nexus Greenhouse Systems, which builds greenhouses for growing. In business since 1967, Nexus began as a manufacturer of greenhouses for regular horticultural uses, but has charged headlong into the cannabis market since legalization took hold. These types of marijuana stocks are ideal for investing because they have a base in business beyond cannabis. Gibraltar Industries bought Nexus in 2016, which makes Gibraltar a great buy.
Then there is Amercanex, an online electronic marketplace for cannabis transactions. It provides commodities experience and also allows deals to happen in its proprietary currency and allows deals to be completed, along with lab results, before the value can be released in cash. So all parties are satisfied. The service is valuable to participants in such a volatile industry. Wholesale and retail cannabis distributors can buy, sell or exchange their inventory on the exchange.
If you want to day trade marijuana stocks or any other stocks, it helps to get used to the idea of risk. The business owners behind these companies are ready to take calculated risks that the marijuana sector will grow and more regulatory hurdles will be peeled away. There is no guarantee, but the likelihood is pretty high that a lot of these businesses are on the ground floor of a skyrocketing industry.
As a trader looking at these businesses, you must look at the short term value of owning these stocks, rather than the long term. You are not in it for the long haul, like these entrepreneurs. You are looking to profit off moves that the stock prices may make over a couple days. Search for opportunities in the marijuana industry that come come along quickly and might never come again. The potential for profits is there, but it is up to you how great those profits are.
The following is a guest post from someone experienced in both sides of the investment coin: Patrick Mackaronis. Patrick got his start as a high-stakes trader and serial entrepreneur, eventually pivoting into a powerful career as a co-founder and director of business development for social media startup Brabble in bustling New York City.
A 401k can easily make millionaires out of mere mortals. By investing small amounts in regular intervals (like a percentage of each paycheck) beginning in your early to mid 20’s, your savings can expand tax-free for 40 or more years. Sadly, a lot of people veer towards procrastination, as they find themselves focused on bills due or purchases at the forefront of their mind. As adults, we are inherently terrible at comprehending the concepts of events decades in the future. Luckily, in regards to investments, time is on your side in a big way if you start earlier.
HIGHER CONTRIBUTION AMOUNTS THROUGH THE COFFEE CONCEPT
Small impressions leave large impacts. Think of it as the Coffee Concept. The smaller, less consequential things we purchase on a regular basis over time will add up to a surprisingly large sum. Do you spend $3 on a specialty coffee every morning from your local coffee shop? Do that five times a week for 50 weeks a year for twenty years, and you’ve spent $15,000 on coffee. Instead, make 401k contributions your vice, contributing an additional amount equal to this coffee, and making your own cup at home.
You will be pleasantly surprised how these trivial amounts can add up over the years, and even more impressed at the accumulation as years turn into decades. Three dollars, compounded annually for forty years, is $135.78. The power of compound interest over time is incredible.
NOT TAKING ADVANTAGE OF EMPLOYER MATCH IS LIKE THROWING AWAY FREE MONEY
If I handed you $250, and told you that I would keep handing you $250 every two weeks, with the only stipulation being that you had to hide $250 of your own money every time, would you do it? If you’re making $5,000 per month before taxes and your employer has a 5% 401k match that you aren’t taking advantage of, you are literally saying no to that proposal. An alarming percentage of Americans are failing to take advantage of the concept of the employer match on 401k’s. Latest polls show that over one third of working-class professionals in the United States have nothing saved for retirement at all!
Contribution matching from your employer is as close to free money as it gets, guaranteed investment returns at 100% that skyrocket your own contributions. If you are investing early, this adds up so much over time that it can be mind-blowing. Don’t leave the offer of free cash on the table.
COMPOUND INTEREST: YOUR NEW BEST FRIEND
Want to know the secret to creating personal wealth? Its name is compound interest, and it is an investor’s best friend and secret weapon when it comes to turning money into more money. People tend to not get too excited about compound interest. This rings even more true with interest rates at all-time lows. The truth is, compound interest is the secret formula to bust through those low interest numbers into the stratosphere.
Let’s say you are saving $600 each month. That’s $7,200 in one year. But over time your money is growing as you invest it each month. Once you hit year two, an increase of five percent makes the $7,200 worth $7,560. This, in combination with continuous contributions and appreciation of capital, causes exponential growth as time passes.
INVEST EARLY TO INVEST MORE
The Coffee Concept shows how tiny savings on a regular basis leads to massive growth on a large timeline. Employer matches are literally free money being offered by your employer. And compound interest is the secret to wealth creation that is yet another bonus of investing often and investing early. If you are in your 20’s and you have not yet begun taking advantage of the benefits of 401k investment, now is the second best time to start (the best time being earlier).
Patrick Mackaronis is a veteran of the startup and investing scene in the Big Apple. He can be contacted via Twitter at @patty__mack.
If you have already started your investment portfolio you have probably learned a thing or two about investing. One thing you probably know is that you don’t have to be an expert to invest successfully. Another might be that the younger you start the better. But despite these facts there may be other surprising facts you may not know about investing.