Why did I choose to go all into p2p lending?
My investment plan
There are plenty of investment opportunities… Stocks and ETF’s.. Real estate… Obligations… So why p2p lending? Diversification is always encouraged and sure I might not have enough money for real estate, but I could invest in real estate funds. And dividend-paying stocks are also good. So let’s look at all possible options.
First of all, I wanted something that would bring at least some cash flow. Why? Actually, I can’t really tell you why, I could get any stock and just wait it out for 30 years, occasionally get some dividends for some cash flow and enjoy average returns of 6-10% over years.
But I have doubts in the stock market as of right now with everyone talking about a need for huge correction and central banks wanting to increase interests rates. I feel like the market will drop and I have the patience to wait a few years. After all, as a recent graduate, I don’t really have any significant capital saved up anyways. So there isn’t a need to invest right now. Whatever I will miss out on is not much. And it’s way better right now to just learn as much as I can about the stock market before I dive in.
So that’s the stock market out, what about real estate funds?
This one is simple,
Speaking of obligations, yeah I could do that, but it seems like I can just get a bit better returns in p2p lending. So there’s that. Other great things about p2p lending are
And the best part, I can time my exit few years in advance. Just need to stop reinvesting and I will get my money back. Sure it’s not as liquid as stocks, after all its not liquidity if my exit takes 2-3 years, but hey, I doubt I will need that money that fast. That’s why before investing I saved up way larger accident fund.
But that’s not the best part…
No.. P2P lending is great, but there is one reason why I chose it over everything else. Well… I live in Lithuania, and so it happens to be, that from 2018, there is a tax break for yearly profits made from P2P lending. It’s not a big tax break, but I don’t have to pay taxes for interest for 500 euros. Only earnings above 500 euros get taxed. This is s literally tax-free investment. Most platforms don’t tax me. The government does not tax me (yet). Freaking awesome! So I grow my small investment fund while paying 0 taxes for a few years until it gets large enough. So that’s my main reason for it. Without taxes, it should beat any other investment with the capital that I have invested right now.