This company came across my feed and seems pretty cool – they make loans to small (?) businesses in the US and provide a fixed 5% return.
I wouldn’t put my whole savings into it but seems like it might be good as a way to diversify and get better returns on part of my savings.
Anything I’m missing here? What should I be looking out for other than that it’s not FDIC insured?
Thanks for sharing your thoughts!
My worries would be twofold:
They’ve got to be charging massively high interest rates if they’re guaranteeing you a 5% fixed return. I know my index funds are invested in all sorts of shit, but I feel uncomfortable directly investing when I know it means there’s some serious usury going on. This is a moral thing, not a hit-to-your-portfolio thing; will not be an issue for all people.
I think it’s very likely these bonds are a little junky (presumed high interest rates + if you need to borrow through a company like this you’re probably not a great loan bet overall, whether for credit history, purpose of loan, whatever). As the economic fuckery of the pandemic continues, that means there’s a higher possibility of some serious widespread default for these loans. If all that goes poorly, that’s not great for your savings.