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SMSFs lead as P2P lenders

SMSFs were the early adopters of peer-to-peer (P2P) lending and also the cohort lending the largest amount, according to the latest analysis from RateSetter.

The data, released yesterday, revealed SMSFs lent an average of $68,751, an increase of 20 per cent on the average $57,300 invested six months ago.

Investors over 55 years old were also investing more at an average of $45,814, which represented an increase of 35 per cent on the average amount of $33,956 invested six months ago.

In contrast, when it came to all RateSetter lenders, the average investment amount was $13,890.

Commenting on the SMSF findings, RateSetter Australia chief executive Daniel Foggo said: “A significant amount of growth in P2P is coming from SMSF investors, retirees and pre-retirees who are crying out for attractive, stable returns from an established asset class as they near retirement.

“P2P is ticking all the boxes for this group, as well as the many thousands of investors who are fed up with the poor returns offered by the majority of bank savings accounts and term deposits.”

The research found that in order to participate in P2P lending opportunities, 61 per cent of RateSetter investors had withdrawn money from a high interest savings account, while 28 per cent had withdrawn funds from term deposits.

Those withdrawals represented at least $7500 every hour, according to the P2P lender.

The new figures also revealed 86 per cent of investors would increase the amount they invested in P2P over the next 12 months, with the majority of existing investors expecting to invest amounts between $5000 and $25,000.

Furthermore, almost 6 per cent said they would invest $50,000 or more in P2P investments.

If bank interest rates were cut further, more than half of investors would increase their P2P amount, and if the stock market experienced greater volatility in the coming months, a quarter of investors would divert money away from equities in favour of P2P investments, the analysis found.

Foggo said the strong appetite for P2P investing marked a real turning point for the asset class.

“We have reached the 5000 lender milestone far sooner than anticipated and, more significantly, this shows that the whole P2P industry is gaining momentum, providing competition to the banks and giving everyday investors a genuine alternative to traditional investment options,” he noted.

RateSetter was officially launched to the Australian public in November 2014 and currently has $75 million invested on its platform.

It was the first P2P lender licensed to provide services to retail investment clients, as well as wholesale and sophisticated investors.

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