Finder launches crypto high-yield investment

How am I paid?

Interest rates will vary, but Finder says it will give investors two weeks’ notice before any change to the interest rate – whether up or down.

Investors will be able to get back the same amount in Australian dollars as they put into the investment, plus accumulated interest, on demand.

What about the risks?

Earning 4.01 per cent when money on deposit with banks earns next to nothing will likely make this new offering highly popular, particularly with millennials.

However, there are more investment and other risks than simply having your money in the bank.

Deposits made at banks and other authorised deposit-taking institutions (ADIs) are guaranteed by the federal government up to $250,000 for each account holder in the event the ADI fails.

Finder is not an ADI and is not covered by the guarantee.

However, the fintech has been operating successfully for 15 years and has been trading bitcoin and ethereum on its Finder App since May.

Are there restrictions?

Investment in Finder Earn is capped at $10,000; though that could eventually be increased.

Finder is initially offering Finder Earn to 12,000 app users who are on a waiting list.

It is likely to be made available to everyone else from the start of next year.

Crypto-yielding alternatives

Australian crypto exchange Swyftx offers cryptocurrency “staking”, where returns of up to 20 per cent a year are promised. Swyftx is not an ADI.

While the interest rate is higher than with Finder Earn, investors leave themselves exposed to the volatility of cryptocurrencies.

Any fall in the price of the assets being “staked” could easily outweigh the interest earned on them. Higher returns always entail higher risk.

Non-crypto options

Non-crypto related ways to earn interest include peer-to-peer fintech lenders, who pay higher rates than banks.

Plenti is the market leading peer-to-peer lender, with more than $1 billion in loans.

The fintech matches its lender/investors with credit-worthy borrowers.

Plenti has fixed terms of between one month and five years. It is offering interest of up to 4.3 per cent for a month and 6.5 per cent over five years.

Plenti is not an ADI and those who lend/invest are not covered by the federal government’s deposit guarantee.

However, Plenti has a “provision fund” from which investors can be compensated should a borrower be unable to repay a loan.

Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

Source: | This article originally belongs to smh.com.au