Peer to Peer Lending, it's just Fixed Income!

The definition of Fixed Income refers to any type of investment under which the borrower or issuer is obliged to make payments of a fixed amount on a fixed schedule.

Investors in fixed-income are typically looking to receive regular and secure returns on their investment over a fixed time period, with a return of principal at the end of the time period.

Investors are very comfortable to include Bonds (Government, Corporate and Retail), PIBS (Permanent Interest Bearing Shares), Securities and Preference Shares, as traditional forms of fixed income investments within their portfolio.

So why do investors struggle with Peer to Peer investing?

The fixed income definition above perfectly describes the majority of P2P investment transactions; the transfer of value (an interest payment), from a borrower to a lender, over a fixed time schedule at which point the principal is repaid.

Investing in P2P loans is just a form of fixed income investing.

Once we can all get comfortable with that, then we can argue where the risk adjusted returns offered by different types of P2P loans (secured / non secured etc) sit within the fixed income risk / return spectrum.

Brian Bartaby is the Founder & CEO of Proplend , a P2P Platform specialising in sub ï¿¡5m commercial property debt. The views above are my own and not a representation of Proplend or any other platform. Investors' capital is at risk.