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“An investment in knowledge pays the best interest”, a famous quote by Benjamin Franklin
We all can relate to this quote in a greater sense in today’s world as it highlights the significance of how an investor should know where one is putting their money in, what are the risks involved and how much return their investment will make in the best and worst case scenarios.
With variety of options available to invest, it is important to judiciously decide which set of combination will suit your risk appetite and will provide you better returns for a better future. Today, including all the traditional options like fixed deposit, post office deposits, provident funds, luxury goods and real estate, other lucrative options are also available like stocks, mutual funds, p2p lending, crypto currency, retirement annuity plans which can provide an investor higher than standard returns with comparatively higher risk levels.
Investors can develop a portfolio of assets that react differently to changes in market circumstances by spreading their investments across diverse types of financial instruments, industries, and enterprises.
Looking at p2p lending as an investment opportunity:
P2P lending is a modern tech-based financial approach that has managed to keep operational costs and expenses low while challenging traditional yet non-inclusive banking practises. The major objective is to ensure that its lenders make greater returns and borrowers’ access faster financing at comparatively cheaper costs by passing intermediary profits on to end users. Peer-to-peer lending can be viewed as a means of diversifying and strengthening your financial asset portfolio.
After seen as a successful asset model in developed countries like UK, US, Canada, China, Singapore, India is also adopting this new asset class model to diversify their portfolio and increase their investment options.
As per a study published in business standard, P2P lending achieves 10-fold growth with returns as high as 25% in 1 year. Such tremendous growth can improve the individual investment portfolios and strengthens economy as a whole.
P2P lending systems link borrowers and lenders and facilitate them in conducting their transactions go smoothly. They function similarly to a stock exchange in that they operate as an online loan exchange. Other market-linked investments can be likened to investing in P2P loans. P2P loans, unlike stocks, are a fixed-income investment with predictable returns. P2P returns, on the other hand, are more consistent and immune to daily market volatility. Moreover, unlike other similar investments, lenders have greater control over peer-to-peer loans since they may establish their investment criterion according to their risk appetite.
P2P lending benefits investors in a variety of ways. They also have a better rate of return. Operational Costs are reduced because they leverage cutting-edge digital platforms, and the websites usually charge lower fees than traditional financial institutions. Furthermore, investors gain from increased flexibility, as they can vary their monthly investment amount easily while also tracking their monthly receipts from the loans for better liquidity management. Finally, using an internet platform allows deciding what to lend on and how far to spread your risk easier.
Reference links:
1. https://www.business-standard.com/article/finance/in-last-1-year-p2p-lending-achieves-ten-fold-growth-with-returns-up-to-25-120021201166_1.html
1st Image Link: https://www.moneycontrol.com/news/business/economy/budget-2018-10-long-term-capital-gain-tax-to-benefit-p2p-lending-players-2497749.html
2nd Image Information Link: https://www.verifiedmarketresearch.com/product/peer-to-peer-p2p-lending-market/
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