Percent is an alternative investment platform offering investments in private credit opportunities. Unlike the stock market (and broader equities market), our investments do not trade on an exchange or work similarly to more well-known investment types.
At the same time, alternative investments — including the investments on Percent — help millions of investors to diversify and balance their portfolios. Alternative investments like private credit opportunities have the potential to hedge against stock market losses. They may even generate a secondary source of capital gains or income for investors.
But how do these investments work? What do new investors need to know to understand them?
The answer is easier than you might think.
What are alternative investments?
To get a better idea of what investments Percent offers and how they work, you must first dive into the greater world of alternative investments.
Alternative investments are investments that are not common investment and asset types. Stocks, bonds, and currencies are among the most common investment types. When we hear someone is an investor, we often assume these are the asset classes they work with.
Yet alternative investments (and alternative investors) exist in a rather broad world of investment types. These can include (but are not limited to) venture capital investments, private equity, cryptocurrencies, hedge funds, real estate, commodities, and private debt.
Simply put, if an investment does not involve a publicly-traded stock or bond, it is often labeled as an alternative investment.
What kind of alternative investments does Percent offer?
Percent offers alternative assets in the form of high-yield, short-term investments into private credit.
Private credit is an asset class of privately negotiated loans and numerous other forms of debt financing from non-bank lenders. They can include (but are not limited to) small business loans, venture debt, consumer loans, invoice factoring, and various other forms of private debt.
Small and early-stage businesses, as well as individuals, seek this form of financing when public credit markets are not accessible. Private credit lenders and investors provide borrowers much-needed capital in exchange for both the return of the capital borrowed plus some interest or other returns over a set period.
When investors invest in private credit opportunities like those on Percent, they invest in the funding of these loans with the aim to receive their investment plus interest in return. For instance, if you are investing $500 in a private credit investment with a 12% APY and a one-month term, you expect to receive $504.74 — your original $500 plus $4.74 in interest — at the end of that investment.
Like all investments, returns and success are never guaranteed with private credit, and there are always risks associated with your investments. This can include potential partial or total loss of your initial investment. The best way to mitigate these losses is to understand the risks before you invest and perform comprehensive research (or due diligence) before you invest. For Percent investments, this means reviewing deal pages and the offering documents supporting a particular investment.
How could alternative investments like those on Percent help diversify a portfolio?
Since private credit investments typically operate independently from the ups and downs of the stock (equities) market, investors may choose to add private credit investments to their portfolio to offset any potential losses in traditional markets. This specific alternative investment type is less likely to trend downward when stock indices face declines. This provides a potential way for investors to balance their portfolio and potentially save it from further losses in less-than-optimal market conditions.
How can I invest in Percent’s private credit investments?
To invest on Percent, you must be an accredited investor. If you meet accredited investor qualifications, you can simply sign up here to start investing in private credit today.