How Do You Explain P2p Investing to Friends and Family?
Picture it… Your place, some time in the future.
You’ve earned a healthy return through P2P lending on MyConstant, and friends and family have gathered around to listen to your investment advice.
You’ve got a $10 bonus waiting for you for every person you refer, and 10% of their Flex interest, so this is the perfect opportunity to make some easy money.
But wait – none of your friends or relatives have invested in P2P loans before. Naturally, they’re a bit skeptical.
“P2P lending is risky,” says one friend.
“What is P2P investing anyway?” asks another.
“How do you know your money is safe?” someone asks and everyone nods their approval.
It seems you have some explaining to do!
If that’s got you feeling a little tongue-tied, don’t worry.
P2P investing is a complicated topic and has a controversial history. Add loan originators and cryptocurrencies into the mix and suddenly eyes narrow and wallets close.
Nevertheless, don’t let this put you off.
With a little forethought, you can simply and vividly bring P2P investing to life and get those referral rewards. All you need is a little context and psychology.
#1 Start with a simple analogy
Stories help us make sense of the world, especially complex topics like P2P lending. Which of the following makes more sense to you?
Constant is a P2P lending platform.
Constant connects people to do business together.
I hope you’ll agree the second is easier to grasp. It doesn’t explain exactly what we do but it’s a darn sight better than simply stating what the platform is.
So always start your explanation with a simple analogy. I think the easiest way is to refer to how two friends would lend money. Your conversation might go like this…
You: Imagine you were to lend me $1,000.
You: You could charge me some interest, say 5%.
You: So I’d repay $1,005, right?
You: That’s what MyConstant does, but you lend to people all around the world.
Friend: But I trust you to repay. I don’t trust people I don’t know.
You: That’s where collateral and buy-back guarantees come in.
You: Collateral would be me giving you my iPhone until I’d repaid.
Friend: I see.
You: Only MyConstant uses cryptocurrencies as collateral – a kind of digital money.
Friend: And the buy-back guarantee?
You: That’s like a guarantor. A promise from a guarantor to repay if I don’t.
Friend: Who would the guarantor be?
You: At MyConstant, it’s a loan originator – a company that lends to borrowers. MyConstant
works with the best originators and gives them a rating so you can assess the risk of each one.
And so on…
When you start with a simple analogy, you can slowly introduce more concepts and financial terms. You don’t have to use this specific example, but it’s as good as any.
#2 Give a little context
Once you’ve established the mechanism for P2P investing, you can add a little context. This is especially useful if the person has already heard of P2P lending before. Now you can clarify any misguided notions they might have.
P2P lending started in 2005 with Zopa, so it’s a fairly young investment class. Having said that, MyConstant is newer still. MyConstant offers secured investing only – all loans are either backed by borrower collateral or a buy-back guarantee from a loan originator.
Traditional P2P lenders like Lending Club and Prosper must assess borrowers and set rates and terms accordingly. We don’t. Crypto-backed lending has a liquid asset behind it – a cryptocurrency that is readily sold on multiple exchanges should a borrower default.
Our Loan Originator loans work slightly differently. Here, it is the loan originator’s buy-back guarantee that secures the loan. They’re acting like a guarantor and promise to buy back any investment should borrowers default for 60 days or more.
How much context you give here is up to you. You can explain that cryptocurrencies are typically held for long periods of time, which is why some people quite happily borrow against these assets instead of just selling them when they need money.
Similarly, some people will be familiar with guarantors. If you have little to no credit history, a realtor might ask for a guarantor before renting you an apartment, for example. At MyConstant, the loan originator acts as a guarantor for the borrower.
#3 Zero in on the benefits
Now you’ve explained what MyConstant is and what it does, it’s time to explain why your friends and family should try us.
Many of our customers are new to investing, and are looking to get a better rate on their money. As you know, the top banks in the US pay a fraction of a percent, much less than inflation, and that means your savings lose buying power with each year.
Now, that’s not to say you shouldn’t save – far from it. But if you include investing in your financial planning, you stand a far better chance of achieving your financial goals, and doing so faster.
That said, not everyone wants to trade stocks. Investing can be hard work, but it doesn’t need to be. With P2P investing, you’re in control and can earn a consistent return (no big market swings) without scrutinizing stock tickers, binge-watching CNBC, or falling asleep over company reports.
Here’s a summary of why you should invest with MyConstant…
- A $1,500 30-day trial bonus. When you sign up and pass KYC, we deposit $1,500 into your Flex account. After 30 days, you can withdraw the interest but we keep the $1,500.
- Up to 100x better interest than a bank account. Get up to 11% APR on loan originator investments, all with a buy-back guarantee from the loan originator.
- Up to 7% APR on crypto-backed loans. You invest in loans backed by liquid, readily sold cryptocurrencies.
- 4% APY through our anytime-withdrawal investment account, Flex. You invest in a lending pool managed by Compound Finance – also backed by cryptocurrencies.
- No fees for investing, withdrawing, depositing, or anything else ever.
- Invest anywhere, anytime, with 24-7 customer support across email, telephone, and social media. Our team can handle any query, any time of day, and without passing you from one department to the next.
- Start investing from as little as $50.
- Access to 100s of investing resources – blogs, videos, and infographics – that explain personal finance, investing, cryptocurrencies, and a ton of other related topics.
#4 Be real about risk
Tell them straight off the bat: all investment involves risk.
However, your appetite for risk will determine the type of investment you choose and the potential return on your money.
We do various things to minimize risk on our platform, but it’s there, lurking away behind every investment. It’s important to stress that even with collateral and buy-back guarantees, your money is at risk. Nothing is guaranteed.
That said, if you start small, diversify your investments, and set realistic goals, risk is manageable. And dare I say it, can be quite fun – especially when you see your investments pay off.
If your friends and family have zero appetite for risk, they’d be better off putting their money in a government-backed savings account. No, they won’t earn much interest, and you won’t get the referral reward, but at least their money is insured.
On the other hand, many people can tolerate moderate risk if the rewards are tempting, so long as they know where they stand. So it’s always better to be frank about risk.
I hope these tips have been helpful. It’d be shame to waste all those referral rewards because you weren’t quite sure how to pitch us. Next time you see friends and family, you’ll know exactly what to say.
To start earning referral rewards, please share your unique referral link by email or social media – you’ll find it on your referral page. All rewards are from us (not deducted from your friends’ earnings!), so go out and spread the word!
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