LenDenClub | P2P Investment | Best Investment Options in India

Apr 30, 2022

Do you also look to invest in the options that provide a high return on investment? It is the first thing that every investor looks for  before making any investments. But, is it the best way to select an appropriate investment strategy? Looking at the bigger picture, many factors should be considered before making an investment decision.

With multiple investment opportunities that are available in the market, it can be tricky for investors to choose the best option for them. This blog talks about the importance of investment, what are the investment types in India, and how you can select the best opportunity for you. It also makes you familiar with the concept of P2P lending and how the top online lending platform, LenDenClub can help you achieve your investment goals.

 

Why is it Important to Invest Your Money?

You must have heard about investing from your elders since childhood. It is almost customary in Indian households to save and invest instead of spending the entire amount. An investment, in plain terms, means acquiring an asset to earn profits. Hence the main motive is the appreciation of wealth.

But, have you thought about the importance of investing your money? Why should you invest your money besides the return on investment? Here’s how you can benefit by investing your money.

 

1.1 Helps You Achieve Your Goals

You need money to pursue your dream career, travel across the world, provide education to your children, improve your living standard, or even build your capital. Whatever your goals are, you can easily achieve them by investing surplus money. Isn’t it true? All the investments you make grow over the investment tenure, helping you generate sufficient funds to pursue and achieve your goals.

Let’s take a simple example. Mr. A works in a 9 to 5 job and lives in a rented apartment. His goal is to build his own house. Now, even if he wishes to take a home loan for this purpose, he should have the capital to pay the downpayment portion. Apart from this, the return on investment can also help him repay the loan.

 

1.2 To Earn Additional Passive Income

With limited income and increasing expenditures, investments help you build a passive income. Once you invest your money, the best part is that you can sit and see it growing. Hence the word, passive income. You only need to make the effort of investing in the right investment plan, and your investment starts earning for you. Suppose you earn ₹ 50,000 p.m. as salary income and invest ₹ 15,000 per month. @ 10% p.a.

Year	Opening Capital	Invested Amount	Return @ 10% p.a.	Cumulative Capital
1	NIL	₹ 180,000	₹ 10,054	₹ 190,054
2	₹ 190,054	₹ 180,000	₹ 29,955	₹ 400,010
3	₹ 400,010	₹ 180,000	₹ 51,940	₹ 631,950
4	₹ 631,950	₹ 180,000	₹ 76,227	₹ 888,178
5	₹ 888,178	₹ 180,000	₹ 103,058	₹ 1,171,236

In this example by investing regularly, you can build a capital of almost ₹ 11.71 lakhs over 5 years and start earning around ₹ 10,000 passive income per month.

 

1.3 Secure Your Future

The economic and political scenario of the world keeps changing regularly. It is hard to predict the future. So, what can ideally become your support system in times of distress? Of course, the money that you earn and invest. You can grow your capital and secure your future by investing your funds.

People even make investments to earn enough passive income to retire early. If your savings and investments generate enough return on investment to sustain your needs, you can take early retirement and enjoy your life or pursue your dreams. Hence, investing in the best high-return investment plan can help you secure your future.

 

1.4 To Save Your Taxes

Who doesn’t want to save taxes on their income? The government also wants individuals to invest their money to maintain liquidity in the market. Hence, the Indian government provides various tax reliefs under the Income Tax Act, 1961 for specified investments made by an individual investor. This is done to promote a culture of investment. It’s like icing on the cake because you can earn additional passive income on your investment and save your income tax.

 

1.5 Grow Your Wealth

Everybody wants to grow their wealth in life. It helps you in securing your future and also accomplishing various objectives. While an investment plan for the short term is good for achieving short-term goals, investing in the long term can help you build healthy capital.

 

1.6 Time Value of Money

Idle money loses its value. This means that if you do not invest your funds, they depreciate. It’s because of the time value of money. Many factors affect the value of your funds, inflation and interest rates being 2 of the most important factors. For Ex: Assuming that you have a savings of ₹ 10 lakhs in cash and the inflation is 7% p.a., here is the table that shows how its value will depreciate in 10 years:

Year	Opening Value	Closing Value after Inflation @ 7% p.a.
1	₹ 1,000,000.00	₹ 934,579.44
2	₹ 934,579.44	₹ 873,438.73
3	₹ 873,438.73	₹ 816,297.88
4	₹ 816,297.88	₹ 762,895.21
5	₹ 762,895.21	₹ 712,986.18
6	₹ 712,986.18	₹ 666,342.22
7	₹ 666,342.22	₹ 622,749.74
8	₹ 622,749.74	₹ 582,009.10
9	₹ 582,009.10	₹ 543,933.74
10	₹ 543,933.74	₹ 508,349.29

 

Given the inflation is 7% p.a., the value of ₹ 10 lakhs idle money reduces to half in 10 years Investing not only helps to retain the value of your money but also helps you to grow it.

 

• What are the Best Investment Options in India?

While there are various types of investment platforms and many lucrative opportunities on offer, here are the most popular investment options in India.

 

2.1 Equity Shares

• Investing in Direct Equity is gaining popularity among the masses
• As a shareholder, you get the ownership of the business
• A shareholder can earn three types of income from equity shares, namely, dividends, bonus shares, and capital appreciation
• With the opportunity of earning extraordinary returns in the short term, equity shares can also help you grow your capital over the long term
• Equity investments come with very high risk and the market movements are almost unpredictable. You can either earn huge profits or lose your wealth
• The fate of your investments depends on the market forces of demand and supply

 

2.2 Mutual Funds

• Mutual Funds are companies that pool the investors’ money and invest in bulk in both equity and debt-based securities
• Due to the different investment patterns, Mutual Funds can be grouped into Debt, Equity and Hybrid Mutual Funds
• Investing with Mutual Funds means that an experienced fund manager appointed by the fund takes investment decisions on your behalf
• Although Mutual Funds are largely seen as less risky compared to equity shares, they do invest a portion of the funds in direct equity that operates with market risk
• The charges of Mutual Funds are too high due to the fund managers’ salary and you also have to bear the risk if the s/he makes a wrong decision

 

2.3 Start-Up Investments

• You can invest your money in startups by providing them equity capital if you are an ambitious investor
• There are various startup investing platforms that provide the option to invest in the startups online
• You can get a portion of the equity and a share in future profits of the company by investing in a start-up
• Hence, you should always assess your risk appetite and earning opportunity before investing in a start-up

 

2.4 Fixed Deposits

• The most popular form of investment opportunity in India are the Fixed Deposits
• FD investment is very stable. It is considered to be the least risky ones
• You can earn a fixed interest income per year that gets compounded over the tenure of the FD that ranges from 7 days to 10 years
• You can easily earn between 5-6% p.a., on your FD investment
• FDs provide less returns because the risk involved is lower. Due to this benefit, FDs are an extremely popular investment option in spite of the lower returns
• With FD interest, it might be hard for you to even cover the inflation let alone the goal to grow your capital

 

2.5 Public Provident Fund

• PPF provides the opportunity to invest your money for at least 15 years @ 7.1% p.a.
• The minimum lock-in for a PPF account is 5 years
• Thereafter only limited withdrawals are allowed from this account
• You can avail of a loan against the collateral security of your PPF account balance
• PPF is backed by the government and hence carries negligible risk
• 2 big drawbacks of a PPF investment are the long tenure of investment and a lower return on investment

 

2.6 Gold Exchange Traded Funds

• Gold ETFs are the dematerialized form of gold investments
• You can invest in them using your Demat Account and hold them as securities
• The prices of a Gold ETF depends on the market value of gold commodity
• It reduces the difficulty of purchasing physical gold and storing it. Hence, it is gaining more and more popularity among investors
• Although it is a good investment option, your money depends on the market prices of gold
• You also cannot diversify your investments as Gold ETFs are focused on only one commodity

 

2.7 Real Estate

• If you purchase a property apart from the one that you use for living, it is called a real estate investment
• The prices of real estate have skyrocketed during the last couple of decades
• Backed by more and more commercialization of land, it is a good investment to make
• Investing in Real Estate can also earn you rental income along with value appreciation
• It requires heavy capital investment and the market operates on very less liquidity

Confused about How To Shortlist an Investment Option? – Check Out These Best Practices

If you are a business investor i.e., you want to create your investment portfolio, it can be tricky for you to choose the best high return investment plan. So, here are the key elements based on which you should take your investment decisions:

 

• • Investment Objective: It is important to plan your financial goals in the short and long term. Taking investment decisions that support your investment goals can help you achieve them. Even your risk appetite depends on the purpose of investment. For Ex: If you want to save for your kids’ education, your risk tolerance is low and hence, FD investment can be the best for you.

• Risk Appetite: It is important to understand the amount of risk you want to take. While higher risk provides higher returns, if you are a risk-averse investor, you should invest more in debt-based investments.

• Cost of Investment: The cost of acquisition is the main expense while making your investment. But, there are other costs as well for handling the investments.

For Ex: Group investment platforms like Mutual Funds charge an expense ratio every year that covers all the maintenance expenses including the fund manager’s fees. Additionally, they might also charge an entry and exit load on the purchase and sale of units.

• Fund Requirements: You should always maintain your liquidity by keeping a contingency fund that you keep intact. This can help you avoid cash crunch and distress.

• Taxation: There are 2 parts of taxation on investments that you should consider before making an investment decision:

• The tax rebate allowed by the government on some types of investments
• Taxes on the return on investment

Apart from the above, you should also follow these best practices to ensure that your selection of investment is in alignment with your preferences:

 

• You should conduct adequate research before investing
• Don’t fall for quick and impractical returns promised by new investment platforms
• You should review your investments periodically
• Consider the Taxation Angle. Some investments are taxed at much higher rates than the normal individual slab rates
• Make a simple investment strategy that suits you

 

Understanding P2P Investment – Meaning, Eligibility, Features, & More

Online peer-to-peer lending is based on the concept of direct lending between individuals. It provides an alternative financing method to those in need of personal loans and those who want top invest their money. P2P investments are powered by technology and can be easily accessed through online investing platforms like LenDenClub. P2P platforms act as a marketplace for P2P investments. You can receive all the information on an investment prospect and make your investment decision.

P2P lending is quickly filling the void in the market and emerging as a popular source of funds due to the following reasons:

• Borrowers are avoiding banks: With numerous compliances and tedious application process, the borrowers are refraining to get a bank loan. Additionally, banks charge huge sums as processing fees. Alternatively, P2P lending provides online borrowing and lending facility that has minimum requirements aiding the lending process.

• Investors are getting lesser returns – With lower-paying bank FDs and savings accounts, these investment opportunities are becoming outdated and the investors are avoiding them.

• Volatile Investment Options: Any other form of investment is not purely debt-based. To earn higher returns, you need to bear the market risk. On the other hand, P2P lending is purely debt-based and you can easily earn in double digits.

 

Features of P2P Investment

Here are the main features of P2P investments:

• RBI Regulated: P2P platforms are regulated by the RBI. Hence, all P2P platforms have to maintain the minimum quality standards of the RBI.

• Monthly Repayments: Since P2P lending is a debt-based investment, you can earn regular monthly repayments throughout your investment tenure. Usually, the returns are higher than the other fixed interest securities like FD, PPF, etc.

• Compounded Returns: By reinvesting the interest earned on P2P investments, you can enjoy the benefits of compounded returns.

• Flexible Tenure: While the tenure of a loan is fixed, you can invest in multiple small ticket options to spread your investments across the short to long term.

• Small Ticket Size: The minimum and maximum investment amount per borrower is very low. RBI guidelines regulate the market of P2P platforms.

• Regular Stream of Income: You receive repayment in the form of EMIs from the borrowe₹ Hence, you can get a regular stream of cash flows every month from your P2P investments.

• No Market Risk: Since P2P investment is debt-based, your capital and the returns are unaffected by market forces like supply and demand.

 

How LenDenClub Simplifies Your P2P Investment?

LenDenClub is the fastest-growing online P2P platform in India. It provides a seamless investment experience to the investors across platforms including the website and mobile apps. LenDenClub maintains certain investment standards that make it very popular and trusted among investo₹ Here’s why LenDenClub is the best P2P investment platform for you in India:

 

• An RBI registered NBFC-P2P: LenDenClub is an RBI registered NBFC-P2P. This means that it holds a valid license to carry on this business in India. This makes the platform trustworthy among investo₹

• Transactions through Escrow Account: Another safety net provided by LenDenClub is that it appoints a trustee for carrying out your transactions. Since all the transactions are routed through an Escrow account, your money remains safe.

• High Returns up to 12% p.a.: By investing through the LenDenClub P2P platform, you can expect much higher returns compared to FDs and PPFs. Usually, your return on investment can be in double digits going up to 12% p.a., after providing for the default risk.

• Low Default Rates between 3-4%: The default rates faced by LenDenClub are much lower than its peer platforms ranging between 3-4%.

• Low Ticket Size and Diversified Investments: The minimum investment amount per borrower is just ₹ 500 and the maximum exposure per borrower is ₹ 2,000. With this benefit, you can enjoy the maximum possible diversification of your investment by choosing multiple borrowe₹

• Creditworthy Borrowers: Before selecting a borrower, the LenDenClub investment platform checks their creditworthiness based on 200 unique data points. This ensures that borrowers who are more likely to default are filtered out and only creditworthy investors are available for the investo₹

• • Easily Accessible across Platforms: You can access the LenDenClub platform across different devices. LenDenClub is accessible to investors through its website and mobile apps on both Android and iOS operating systems.

• Trusted by 1.5 million Users: The user count of LenDenClub is increasing at a faster pace. As of today, close to 1.5 million users are actively investing through the LenDenClub online investing platform.

• AI-powered Auto Investment: Based on your preferences, the AI-powered interface automatically matches you to potential borrowers and invests your money. It even reinvests the interest received on your investment so that you can earn maximum compounding benefits.

The best part about LenDenClub is that it is an RBI registered NBFC-P2P. This makes it a genuine platform. Apart from this, a lucrative return on investment that can go up to 12% p.a., makes it the favorite for investment. Its presence across platforms and easy user interface make it convenient for investment. So download the “LenDenClub” app using Playstore or App Store and Start Investing Now!