Press release
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September 22, 2022 10:00 a.m. EDT
NEW YORK, September 22, 2022 (Newswire.com) –
Like platforms like yield street continue to expand access to alternative investment opportunities, it is important to evaluate different strategies and asset classes to decide on an investment plan that is right for you. Fortunately, there are more options today than ever before, and advances in technology have led to increasingly innovative and exciting ways to invest.
When evaluating options, it can be helpful to narrow down your choices and compare different strategies side-by-side. To see how this works, let’s briefly look at two particularly interesting trends in alternative investing: the art and peer-to-peer lending (P2P).
P2P Lending – The Pros and Cons
P2P lending is often touted as a valid alternative to credit, allowing lenders to provide personal loans to borrowers without the need to involve traditional financial institutions. The potential benefits of this setup are hard to ignore, as platforms like Upstart and LendingPoint can offer lenders interest rates of up to 30%. Naturally, this is more than attractive to investors looking for solid returns in the form of passive income or regular monthly loan payments.
As for the downsides, P2P lending can come with significant risks. For one thing, many people seeking loans on P2P platforms are those that traditional credit agencies would label as “subprime,” or people with low credit scores or minimal credit histories. Additionally, P2P loans are generally unsecured, which means that if a borrower suddenly defaults, the lender is locked out of the money and has little or no recourse to recover their initial investment.
Art Investing – The pros and cons
Believe it or not, fine art has outperformed popular index funds like the S&P 500 for more than 20 years, but investing in fine art hasn’t always been easy for the average investor. Today, however, platforms like Yieldstreet allow investors to take a more accessible approach by adding art stock to their broader portfolio, generating annual returns that can exceed 12%. Beyond the impressive returns, another benefit is that the value of art is generally uncorrelated to traditional markets, making it a potential hedge against periods of inflation.
And the disadvantages? Well, art is considered a relatively illiquid asset, meaning physical artwork will be harder to sell for a profit than other assets like stocks or cryptocurrencies. Also, there is never a guarantee that a work of art will appreciate, and changing trends in the art world can sometimes lower the value of an investment.
Overall, while both can be great alternative investment options, art lending and P2P are dramatically different asset classes, and choosing between the two will depend on your ideal time horizon and your appetite for risk. P2P is more risky but can generate healthy returns in the short to medium term. Art may be less risky, but might be more suitable for those looking to maximize their long-term profits.
Source: Yieldstreet
