The world has changed. A lot.
And if the past 18 months have taught us anything, it’s that we’ve had to get really creative in all areas of our lives.
Imagine being back in January 2020 and being told you’d be working from home for the foreseeable future — not even allowed to leave your house!
And not only that;
You won’t be able to go on holiday, see your friends, or visit family.
You wouldn’t have thought it possible!
With savings rates at 0.01% or even being negative, many of us are having to look elsewhere to grow our hard-earned money, which has allowed for new strategies – such as micro loans – to gain momentum.
Let’s find out what micro loans are and how you can make money with them.
What are micro loans?
Micro loans are short-term loans where you invest a small amount, say between €100 and €2,000, for a short amount of time. The term is usually from as little as a few days to a couple of months.
If you’re new to peer to peer (P2P) lending, micro loans are a good way to get started. Due to the low amounts of money and time involved, they can be considered less risky than other types of loans.
Most micro loans mature within 30 days and offer a good return to investors.
How does microlending work?
An individual borrower goes to a lender (also called a loan originator) and asks for a loan.
Once they pass the checks and their identity is verified, they are then issued the loan.
These loan originators partner with an investor platforms like Swaper, and investors can buy that loan from the loan originator, essentially becoming a “micro lender”.
The loan originator and P2P platform are in charge of managing the borrowers and setting up a platform for investors (acting as middlemen). As an investor, you just need to deposit your money.
What if a borrower defaults?
With Swaper, we offer buyback, which means as an investor, you get your money back along with the interest for the whole period you funded the loan.
Can you make money with micro loans?
Micro loans carry high interest rates and can bring potentially very high returns for investors.
If you use the right platform and deposit money regularly, you’ll be making higher returns than with the stock market or other asset classes.
4 Benefits of investing in micro loans
1. Easy to get started
In P2P investing you have various types of loans you can invest in: short-term, business, property, etc. If you’re new to this world, micro loans are a great way to get started since you only have to wait a month to receive your payment and you can begin investing with a very small amount (as little as €10 with Swaper!).
2. High level of liquidity
The short-term nature of micro lending means that your capital is only tied up for a little while. This gives you great flexibility as you can usually withdraw your investments within weeks.
At Swaper, you can expect to receive your interest payments once per month. That makes it a lot more predictable and allows you to build a steady monthly income.
3. It’s a stable investment
Sure, cryptocurrencies and forex offer even higher returns — but would you be able to sleep well at night? The high volatility means your heart will skip a beat every time your investments fluctuate.
That doesn’t happen with micro-loans. Sure, some of your loans could default which means you may need to wait a while to get your money back. But on average, returns are consistent every month and you don’t have to worry about losing your money overnight.
4. Good diversification
There are thousands of micro loans available to invest in, which makes it very easy to split your investment over a broad portfolio of loans.
With Swaper’s Auto-Invest feature, your deposits are invested automatically across various loans to ensure your portfolio is well diversified.
How to get started with micro loans
The best way to get started with micro loans is to invest through a P2P platform.
P2P platforms will help you connect with the right borrowers and manage all the backend admin. You just need to deposit your money, set up your Auto-Invest portfolio and we’ll do all the rest.
Getting started with Swaper is easy:
- Create a Swaper account
- Verify your identity
- Deposit at least €10
- Set up your Auto-Invest portfolio
- See your interest payments rolling in every month!
Our Swaper platform has been managing P2P loans since 2016, and our team has extensive experience in finance, fintech and investment banking.
By investing through Swaper, you can rest assured you’re in good hands.
Ready to get started? Join now.