The crowdfunding or “crowdfunding” in French, is a new mode of investment for individuals. It allows you to invest your savings very easily and to benefit from attractive up to 12% per year. The investment in projects of crowdfunding is done through online platforms that connect the businesses and the investors.
The return on the investment crowdfunding is higher than investments financial classic and its level of risk is much lower than the investment in the stock market. So many reasons a growing number of investors to put their money in projects of crowdfunding.
Summary Of The article
A profitable investment
The performance of the investments via crowdfunding is very attractive : between 3% and 12% per year. This performance level is much higher than that of traditional investments such as savings or life insurance.
The profitability of the savings classic has never been so low. At the present time, to place his money on a booklet Has not been reported anything. It costs you the same money because the rate of the booklet A is just equal to the inflation-see below.
So, you have any interest to place a portion of your savings in projects for crowdfunding if you want to not let sleeping your money and benefit from returns on investment attractive.
If you choose toinvest in a project of crowdfunding via a loan paid for example, you lend money to a company that then pays for an interest – all of your investment is not blocked, since the company carrying the project will reimburse you for any long-term borrowing. So you can use or re-invest the amounts reimbursed to receive even more returns.
A level of moderate risk with crowdfunding
Investing through crowdfunding is obviously not without risk, since the projects in which you place your money are not all destined to succeed. It should not be forgotten that most of the businesses are either start-ups in the launch phase or development or SMES wishing to launch a new project. However, the level of risk is substantially lower than that of investments in the financial markets.
The risk of corporate defaults is much reduced by the careful selection of projects by the platforms. Most crowdfunding platforms have recourse to a selection process is highly rigorous : pre-selection of projects, recovery of financial records and forecast, financial analysis, in-depth interview with the management team and validation by a committee of professionals.
Knowing that crowdfunding is attracting more and more investors, the platforms are becoming more relevant and stringent in their selection. They want to limit the default rate of the selected projects in order to expand their business exponentially.
To reassure investors, some platforms make you even benefit from insurance covering death, invalidity of the contractor or bankruptcy of the company. Thus, the contributor will be refunded without any additional cost if such a situation manifests itself. This is what is done enjoy Credit.fr to its investors by offering them insurance, death and disability.
Other methods are also used to reassure investors.
For example, the platform WeShareBonds invested before any other contributor to the tune of 31% in each of its selected projects. Then, independent professionals invest up to 20%. It is only then, when 51% of the project is already supported by professionals and experts, that the projects is open to private investors.
Also, be aware that performance is a function of the level of risk of default of the company. The greater the risk of default is high, a higher return is attractive, and vice versa.
If you want to secure the maximum of your investment, you can choose investments with lower returns, between 3% and 7% depending on the platform. You will benefit even when profitability is much higher than traditional investments !
An investment accessible to all
Unlike the financial market, crowdfunding does not require advanced knowledge or techniques for investing. If you do not know strictly nothing to the stock exchange for example, you will find it difficult to invest intelligently.
Mainly because you will have to understand how to invest, and then consider in what(s) company(s) to invest and finally how to keep track of your investment portfolio.
In addition, the financial markets are decorrelated from reality and difficult to understand for most people. You will probably need to use an intermediary, such as a broker, to help you, which will include additional fees.
On the contrary, if you want to invest through crowdfunding, it is simple and quick :
- You register on the platform in a few clicks and provide the required identification documents.
- You choose the project or projects in which you want to invest. Knowing that these projects have been pre-selected by experts.
- You invest in the project or projects that you have selected.
- You harvest the fruit of your investment directly on the platform. The money is available without a withdrawal charge.
In addition, the projects of crowdfunding are real projects of business so much more easy to understand for a newbie investor. Of course, you have to choose the companies in which you invest the smart way. This, however, requires more common sense than technical skill, since the financial analysis has already been made by the experts of the crowdfunding platform.
A simple means of diversification of your financial investments
One of the rules that must be met by any good investor is the diversification of its portfolio. Invest through crowdfunding, you can apply this rule very easily.
When you are placed on a platform of participatory finance, you have access to many of the projects in which to invest. The sectors in which you can place your money are varied : the fintech, ecology, real estate, or even video games and the cinema.
You have the ability to invest in or companies of your choice. You can even invest small amounts of money. Platforms Lendopolis or Entreprêteurs allow you for example to invest from 20 euros only per project. This allows you to place your money in many companies to smooth out the risk.
In addition, the market of crowdfunding in France has been experiencing in recent years an exponential growth. Between 2011 and 2017, the amount of collected funds with crowdfunding has been multiplied by more than 33 ! The number of projects in which to invest will therefore ceases to grow, which leaves you the choice of diversification.
Finally, register on a crowdfunding platform is free, the same for the management of your account or the withdrawal of your investment returns. Invest via a platform of crowdfunding entails no costs. You have no real intermediary and you can even discuss with the management team of the company in which you place your money.