At the start of what promises to be a very exciting year with lots of forward movement, we take the opportunity to go back to basics. Below is an excerpt from the Money&Co. Knowledge Hub - we believe this is essential reading, the intellectual foundations of building an asset base via a crowdfunding platform.
Take the trouble to understand what you're putting money into. The things that you can gain access to via a crowdfunding platform such as Money&Co. are typically different from traditional bank accounts and savings products. They are a different type of asset, an alternative way of deploying money in what is known as the alternative finance sector.
Avoid the common confusion between equity crowdfunding – which gets a lot of attention in the media – and debt or loan crowdfunding. Money&Co. is simply a way of bringing people and businesses together through the mechanism of our internet platform. We are a peer-to-per (P2P) business-lending platform.
Bear in mind that you're lending to a borrowing company. You're not lending to Money&Co. We vet the borrowing companies using a rigorous credit-analysis process. We're an intermediary, charging a fee. The P2P loan is directly between you and the company, and is facilitated by us.
Examine the borrowers' proposals in detail. We use our best endeavours to ensure that every representation of the borrower is true – about the market, the prospects, the company's track record, the reason for the loan, the veracity of the audited accounts, etc. But we cannot and do not warrant that this is so.
Don't be seduced by yield. The returns can be attractive, but a high yield can mean high risk.
There's more money coming in from lenders for our latest loan offering. The webuyanyhome.com loan is A+ rated and is property-backed – ie, it is secured against property. It is currently 79 per cent funded, with a gross indicative yield of around 8 per cent. The auction closes in six days.