Re:The Rise of Airbnb's Full-Time Landlords
by redblacktree on Wednesday November 11, 2015 @04:47PM
(#10549574)
Never mind that individuals can't lend other people's money on a fractional-reserve basis. Once you factor that in, the P2P lender is at a huge disadvantage.
Re:The Rise of Airbnb's Full-Time Landlords
by HiLo on Saturday November 14, 2015 @10:49PM
(#10568404)
Can you elaborate? This isn't necessarily true.
Re:The Rise of Airbnb's Full-Time Landlords
by redblacktree on Wednesday November 18, 2015 @12:37PM
(#10589267)
I have to actually have cash in order to lend it to someone, right? A bank can lend out more cash than it actually has (since this cash is the depositors', and they could not return all depositors cash if they asked for it all at once, having lent 90% of it out)
How could an individual operate similarly?
Quite frankly, you have zero predictive ability to outperform the market, particularly over an extended timespan or multiple credit cycles.
Furthermore, even if you were to "average out" / index your portfolio of P2P loans, your transaction costs would be way higher than simply going through a financial institution that streamlines that process for you so as to minimize transaction costs.
Aside from legal reasons, this is one reason stocks and other financial instruments aren't sold P2P. Considering transaction costs are probably the biggest controllable variable affecting your portfolio's returns, particularly over time, I just can't see how this makes the cost of borrowing go down for the system as a whole.