4

A common argument to get involved in peer-to-peer lending (at companies like Lending Club, Prosper, Peerform etc.) is that savings accounts have an ROI that may be even lower than inflation, thus you should invest your money at a Peer-to-peer loan platform to put the money you could be losing to inflation at use.

Are there any counter arguments to this? should they even be compared in the first place?

6

I don't think you can compare savings accounts and peer-to-peer lending. The former is a liquid way of stashing some money away (IOW you can get at it pretty much any time you want) whereas the latter is extremely illiquid (you only get your money back if and when the loan has been repaid). Also, as mentioned by the other posters, there is a risk attached to p2p lending, even if the borrowers are vetted by the p2p lending platform. You're essentially taking the same risks that a bank would take when writing a couple of personal loans, and that's quite far removed from a safe haven for your cash.

If you have enough money to invest (not save, invest) then it might be worth putting a small amount into p2p lending, but it's anything but an alternative to a savings account.

5

That argument is an argument for investing generally, not peer-to-peer lending per se, and the argument as phrased ("thus you should invest your money at a Peer-to-peer loan platform") is a false dichotomy.

That said, as soon as one is investing as opposed to just getting a small but guaranteed return, then risk comes into play. In that sense, any savings account is fundamentally different from any investment, and, in that reading, the two shouldn't be compared as different approaches to "investing". Peer-to-peer lending as an investment could be aptly compared with stock market investing, for one.

4

Peer to peer lending isn't FDIC insured. You can lose all your investment with peer to peer lending, whereas you will not lose your deposited money in a savings account, even if it doesn't grow very fast.

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