4 Reasons Why You Should Invest In Loans | Raise

4 Reasons Why You Should Invest In Loans

By Ryan Osborne | RaiseHQ | 21 Aug 2020

For many years, investment has been about an exclusive group of rich people getting even richer, playing a game that no one else knew the rules to.

Without the money to get started or the technical knowledge to wrap their heads around the jargon, most people were left out in the cold. But the financial world is changing fast.

Nowadays, there are new ways to invest your money that are accessible to just about anyone. One of the easiest and rewarding ways to invest in 2020 is investing in loans.

€249 million invested this last month in Europe alone just goes to prove it.

Peer to peer lending is giving investors a safe, secure way of investing their money. It connects them with lenders – from individuals and local businesses to large businesses and entrepreneurs in emerging markets – giving them a chance to make money while injecting cash into projects they believe in.

With peer to peer platforms like Raise, these investments are decentralized – meaning no one else is involved in the deal (check out our infographic to get a better look at decentralized revolution). Using a decentralized currency to invest in a cause you care about and sealing the deal in a smart way is now the sensible choice when it comes to investing your money.


But wait. Do you even need to invest money? Can’t you just squirrel away your earnings? Stash them away safe and sound, ready for a rainy day?

Well… no.

Let’s take a look at why it makes sense to invest.

Why invest? Why not save?

First, let’s figure out the difference between investing and saving.


When you trade the money you have today to get more money in the future, this is known as investing. You can invest in equity – like stocks and shares – which means the ROI is based on the performance of the company.

You can also invest in debt, which means that instead of buying an asset, you loan money, receiving a fixed ROI.

Debt-based investment might produce a slightly lower ROI, but if you loan through a platform you trust, it tends to be a lot more stable and low-risk.


Since money became a thing, people have been putting it away for a rainy day. From old school, primitive forms of saving – think piggy banks and money under the mattress – to savings accounts with big name banks, saving for the future has always been a part of our lives.

Which is the best option to help your money grow?

Saving money certainly seems to make sense. But when you scratch below the surface and have a closer look, you begin to wonder whether you’re actually ‘saving’ at all.


When you invest your money, it has the potential to grow a lot faster than if you put it in a savings account. If you have long-term financial goals, you might be waiting a long time for a savings account to deliver results.

With investing, your money ends up making you money. It’s called a passive income. Making smart investments means you can set up an income stream, then sit back and watch your money grow. This is something you could never do with a simple savings account.

In fact, when you put your money into a savings account, banks take your savings and invest them, making a tasty profit and throwing you a crumb in the form of interest. How nice of them.

Ultimately, with a savings account, you’re losing money. The value of your savings will dwindle year by year. This is because of the way inflation works.

Investments, on the other hand – particularly investments in loans – bring a high ROI. Once you’ve created a good investment portfolio, your money will do the work for you.

Why diversify your portfolio with different types of investments?

The old saying “don’t put all your eggs in one basket” is as true today as ever and it applies to investment as much as to anything.

Investing in one type of investment with an amazing ROI might seem tempting. But if things go wrong, that ROI could fall in a flash, leaving you with nothing.

To diversify your investment is to spread them out. That way, if a market crashes or an investment fails, you’re covered. What you’re looking for is portfolio variance. This is a measure of how spread out your investment portfolios is and how much return you’ll make over a set period of time.

Knee-jerk decisions rarely pay off in the investment world. Good investments are made over a long period of time. A diverse investment portfolio with a good balance of investment types and a long term strategy in place is definitely the way to go.

Why invest in loans?

Investing in loans is becoming an increasingly popular way to create and retain money. Traditional asset classes, such as stocks and bonds, are losing traction and interest rates are still struggling to recover after the financial crisis of 2008.

Let’s take a look at these 4 solid reasons to invest in loans:


1. Low risk

Investors want more stability. In an increasingly volatile world, equity investments like stocks and shares look more and more risky. Who wants to bet their hard earned money on a house made of sand?

Investing in loans – a form of debt investment – is a lot more secure. Especially if you invest in a company that you trust. Do your research and spread your bets. You’ll be making a good ROI in no time. And all with low risk.

2. Simple and accessible

In days gone by, getting into the investment game seemed pretty intimidating. With so much jargon, red tape and hours and hours spent in grey boring banks, there’s no wonder so many people were put off. That’s not to mention the amount of money you had to cough up, just to get your foot in the door.

Things are changing fast. Modern investing is slick (sign up and start investing in minutes) intuitive, inexpensive (some investment platforms like Raise are free) and accessible. Anyone can start investing in loans. It’s a straightforward process – you lend ‘X’ amount, you get ‘Y’ amount in return – in stark contrast to the mind-melting complexity of the stock market.


3. A great way to set up a passive income

Whether you want to put away money for the future, put down money for a house, buy a new car or afford yourself a life of freedom, setting up a passive income is a great idea.

Investing in loans can give you that passive income. Start slow and steady, with plenty of research and patience, and you can build up a strong, stable, diversified investment portfolio.

So, if the worst should happen and your main income dries up, instead of being up shit creek without a paddle you’ll sail along nice and easy, biding your time until the storm passes.

4. Put your money into something worthwhile

Investing in loans gives investors the chance to make a difference in the world, as well as make money. While having a good ROI is always going to be the key driver, investment markets like peer to peer lending give an extra dimension to the whole concept of investing.

Instead of throwing your money into the stock market – basically a glorified slot machine – investing in loans – especially in the age of DeFi – opens up a whole new way to do things.

Socially responsible investing is on the rise and, with decentralized peer to peer platforms like Raise connecting investors with up-and-coming entrepreneurs in emerging markets, it’s easier than ever before to invest in something you care about.

Are loan investments here to stay?

The most popular form of loan investments – peer to peer lending – has enjoyed staggering growth in recent years and only shows signs of building upon its popularity.

Take a look at the figures. There are now around 250 registered peer to peer platforms in the world. The top ten peer to peer lending platforms in the world have created total funding of almost €100 billion.


With loans ranging from consumer loans and business loans to originator loans and real estate loans, peer to peer platforms are reshaping the investment landscape.

It’s a landscape that’s open to all and it’s setting off a wave of financial opportunity that’s rolling across the world in a way that’s completely unprecedented.

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Ryan Osborne
Ryan Osborne

Originally from the south coast of England, I moved to Barcelona to pursue the good life. As a tech and lifestyle writer, I help companies and startups develop their brand, locally and internationally.


Raise is a loan marketplace that connects individuals with investment opportunities primarily in emerging countries

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