Even Staff

2016-02-11

Ditch the Stocks, Earn Better Returns as a Marketplace Lender

ditch-the-stocks,-earn-better-returns-as-a-marketplace-lender

The stock market has historically been hard to beat when it comes to long-term returns. However, there are several reasons why the growing world of alternative lending could be better for long-term investors than the stock market at current levels.

 

What Is Alternative Lending?

 

Traditionally, the best way for lenders to gain returns on their cash in fixed income has been to “lend” it to banks or other financial institutions by investing in CDs or other fixed income investments. However, the new trend toward online lending allows lenders to lend directly to borrowers by browsing online databases and hand-picking preferred borrowers. Rates, terms and risk levels are all determined without the involvement of a traditional bank, and loans are made directly through an online lending platform.

 

What To Expect From The Stock Market

 

For decades, investing in the S&P 500 has been one of the best sources of long-term returns. In fact, since 1928, the S&P 500 has returned an average annual yield of 11.5 percent. While it’s true that this type of return is hard to beat historically, the current market environment is far from typical. Following a huge, six-year post-Financial Crisis bull market, the S&P 500 is up about 200 percent since March 2009 and is currently more than 25 percent higher than its pre-crisis all-time highs. There are very few valuation metrics that indicate that the S&P 500 remains undervalued at this point. The index’s price to earnings ratio (PE) is currently 20.0, well above its historical mean of 15.5. Even though the S&P 500’s current 12-month forward PE of 17.4 is slightly lower, it’s still hard to argue that the market is currently undervalued.

 

A Lost Decade?

 

John Bogle, founder and former CEO of The Vanguard Group, said earlier this year that he sees very little upside for traditional investors over the next decade. He projects 2-3 percent bond yields and about 4 percent overall returns from the stock market over the next 10 years. “When you factor in the costs associated with index funds, inflation and taxes, you are actually looking at real returns of nominal to zero,” Bogle explained. If Bogle’s projections are correct, “nominal to zero” is a far cry from 11.5 percent annual returns, and stock and bond investors could currently be staring down the barrel of a lost decade.

 

The Alternative

 

According to the latest numbers from Lending Club, an alternative lender, the average two-year aged portfolio is currently yielding average returns of between 6.2 percent and 8.7 percent. Depending on risk tolerance, even higher rates of return are available for lenders. While there is certainly always risk of borrower default, these types of returns are less volatile than stock market returns. For example, the S&P 500 recently dropped 11 percent in less than a week, eliminating more than a year of gains in a matter of days. Investors that have chosen quality borrowers can sleep much easier at night than stock market traders, who live in constant fear that one bad economic headline could wipe out years of progress overnight.

 

Creative Solution

 

At many times throughout history, the stock market has been the best place to go for large returns on investment. Unfortunately, it appears as if the next decade may not be one of those times. If you are looking for a creative solution to a potentially stagnant stock market, want access to higher returns than you can get from a bank and understand the risks involved, you should consider dipping your toes into the world of alternative finance.  

Disclamer: The material provided on this site is not intended to provide legal, investment, or financial advice or to indicate the suitability of any Even Financial product or service to your unique circumstances. For specific advice about your unique circumstances, you may wish to consult a qualified professional. Any information or statistical data sourced by Even Financial through hyperlinks, from third-party websites, are provided for informational purposes only. Although we promote products and services form our partners, our opinions are our own.

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Goldman Sachs-backed Even Financial, a digital matchmaker between banks and customers, just bought an insurance startup as life insurers are seeing policy applications boom

Even Financial has acquired LeapLife, a leading insurtech platform. The addition of LeapLife allows Even to immediately commence its insurance capabilities, aimed at simplifying and enhancing the way consumers search, compare, and get matched with insurance policies (LeapLife’s existing platform will continue to operate from leaplife.com). Business Insider wrote an article about it, interviewing our CEO and Founder Phill Rosen.

Even Financial Launches Insurance Offerings With Strategic Acquisition of LeapLife, a Leading Insurtech Platform

Pioneering B2B Fintech Expands its Industry-Leading Financial Services Monetization Platform to Help Insurance Carriers Find and Connect with Consumers New York, New York – April 22, 2020 – Even Financial (Even), the leading API for financial services search, acquisition, and monetization, announced today that it will be launching services for the insurance industry through the acquisition of LeapLife, an insurtech platform and digital life insurance agency.  The addition of LeapLife allows Even to immediately commence its insurance capabilities, aimed at simplifying and enhancing the way consumers search, compare, and get matched with insurance policies (LeapLife’s existing platform will continue to operate from leaplife.com). Even and LeapLife now offer the only full end-to-end, multi-carrier digital life insurance marketplace experience. Over the coming weeks, Even will further integrate LeapLife’s technology and insurance offering into its industry-leading API, making turnkey insurance marketplaces programmatically available to a vast network of channel partners — when and where their consumers are most in need — while also enabling the company to expand to other insurance sectors, including homeowners, renters and auto insurance. This adds to Even’s peerless breadth of real-time, personalized financial product offers — an expansive suite that already includes loans, savings, credit cards, and more.  “Even’s goal to evolve how financial institutions find and connect with consumers is not limited to loans or credit cards, but applicable to all financial products and services, including insurance,” said Phill Rosen, Even Founder and CEO. “Despite its importance, purchasing life insurance is often an overwhelming and inconvenient experience. With more than $600 billion in premiums paid each year, and only 6% of policies sold completely online, we see tremendous opportunities to help modernize the life insurance industry and offer solutions that solve challenges for consumers and carriers alike.”  LeapLife is an established insurtech platform and digital life insurance agency that utilizes data science, deep underwriting knowledge, and proprietary technology, enabling consumers to apply for instant-decision life insurance policies with real-time quotes. LeapLife works with many best-in-class insurance carriers to offer consumers a seamless experience from beginning to end. This approach made Even and Leaplife a perfect match. As a digital insurance broker, LeapLife offers personalized life insurance recommendations based on a consumer’s unique needs. Paired with the Even API, which enables customer acquisition for insurance to be native and programmatic, consumers benefit from a more streamlined, transparent, and highly personalized experience when shopping for life insurance.  Just as Even’s 2018 acquisition of Birch (the award-winning credit card rewards app) allowed the company to accelerate its expansion into credit cards, the addition of LeapLife will similarly put Even at the forefront of consumer insurance offerings.  Charles Svirk of MassMutual Ventures, an investor in Even, said “The Even and LeapLife teams share a vision that the future of insurance acquisition will rely on the power of data-driven, programmatic distribution. We are thrilled to support them as their industry experience, impressive technology, and trusted relationships will help scale Even’s insurance offering and build partnerships to provide these critical innovations in insurance acquisition.” The Even API and platform solve significant, long-standing pain points in financial services acquisition by seamlessly connecting supply and demand. Even has continued its rapid growth trajectory in 2020, surpassing over $1.5 billion in credit issued through its API and expanding its platform to over 400 partners. Even has secured over $55 million in funding from major financial institutions, venture capital firms, and fintechs to back its goal to evolve the financial services acquisition ecosystem.   About Even Financial Founded in 2015, Even Financial is a B2B fintech company that is transforming the way financial institutions find and connect with consumers. By seamlessly bridging financial institutions (including American Express, Goldman Sachs, and SoFi) and channel partners (such as TransUnion and The Penny Hoarder) via its industry-leading API, Even turns any consumer touchpoint into an ROI-driven, fully customizable, programmatic acquisition source for financial product offers with full compliance, security, and scale across loans, savings, credit cards, insurance, and more. Even is backed by leading financial services firms and VCs including American Express Ventures, Canaan Partners, Citi Ventures, F-Prime Capital (Fidelity), Greatpoint Ventures, Goldman Sachs, LendingClub, and MassMutual Ventures. Even is the leading search, comparison, and recommendation engine for financial services. Media Contact: media@evenfinancial.com

Even CEO/Founder Phill Rosen quoted in Protocol Braintrust Newsletter

Our CEO and Founder Phillip Rosen was included in the most recent Protocol Braintrust newsletter along with answers from some thought leaders from Plaid, Slack, and DuckDuckGo!