New Age Investments: What helps millennials grow financially?



Jun 23, 2022

Sure, you must be aware of the traditional investment options like Fixed deposits. But, do you know nowadays, investors have started moving from traditional investment options like fixed deposits to new-age investment options like P2P lending investment? Now, you must be wondering why? 

There are two main reasons behind this trend – firstly, it helps in the diversification of their investment portfolios, and secondly, it helps them create wealth faster by enabling them to earn high returns on their investments. Moreover, new-age investment options offer greater flexibility to investors. 

In this blog, we will talk about LenDenClub and how they have emerged as a leader in the P2P investment market in India over the years. We will then discuss the shift among Indian investors in prioritising wealth creation over savings. Furthermore, we will see how new-age high-return investments in India help better diversify investment portfolios. Finally, we will see why P2P is a better new-age investment. 

So, let’s dive in and learn about LenDenClub and how it has been proven to be the best new-age investment, and its growth over the years.

About LenDenClub

LenDenClub is a leading and most secure Peer to Peer(P2P) Lending Platform in India. It is an RBI-registered NBFC-P2P (Non-Banking Finance Company-P2P) that fosters greater collaboration and relationships between the investors and the borrowers for achieving high returns at a considerably lower risk. 

Peer-to-Peer Lending is a new-age investment option that promotes direct lending and diversification of funds in multiple loans. When it comes to diversification, LenDenClub allows the investors to distribute their funds among multiple borrowers, which helps minimise the risk of default — the only major risk in P2P lending investments

One of their biggest USPs is their borrower screening process, which involves 200+ data points to select only the most creditworthy borrowers for their platform. Their robust borrower screening ensures good repayment behavior and peace of mind for the investors. 

Another great thing about LenDenClub is the rate of returns. On average, P2P lending on LenDenClub can bring in annual estimated returns of 10-12%. This rate is higher than many traditional investments, such as fixed deposits, where the return is not even enough to beat the rising inflation rates. 

Now, as mentioned above, defaulting can be a major risk in P2P loan investments. But at LenDenClub, our screening process helps us keep the default rate below 4%, which is way better than many major financial institutions. 

You can use LenDenClub to calculate your estimated returns and the RBI Escrow mechanism we adopt helps you keep your funds secure and stress at bay. It is an RBI-administered account that is used for routing the transactions between the lender and the borrower. This Escrow account helps ensure the privacy of your personal information. 

Moreover, P2P investments with LenDenClub are not affected by the market-induced volatilities, unlike other asset classes such as mutual funds, stocks, and other equities. 

LenDenClub has emerged over the years as one of the best new investments in India. You can get a better idea of their success through the following numbers and figures: 

  • LenDenClub has disbursed loans worth more than INR 2500 Crore since its inception. 
  • The platform boasts of a family of more than 20+ lakh happy investors. 
  • It offers one of the highest returns on investment to the tune of 12% per annum with the help of its robust screening process, AI-enabled portfolio diversification capabilities, and low default rates. 

India’s New-Age Investors Are Moving From Savings To Wealth Creation

A recent report by NSE(National Stock Exchange) provides a snapshot of the Indian savings market today and describes how new-age investment options are being used to help consumers build wealth. The analysis shows that the use of new-age investment options has increased substantially over the past two years, with more than one in three Indian investors now using such products to create wealth instead of just saving money. 

New-age investors in India are turning their attention from the traditional mindset of leaning towards savings to wealth creation. Consequently, their investment strategy today includes measures that enhance their lifestyle in addition to securing the future.  

Today, investments have become more than just a means of preserving for emergencies. They are now being used to meet the needs of today’s investors for present needs while simultaneously laying the groundwork for a brighter future. 

For the same reason, new-age investors have a higher risk tolerance than previous generations. And that’s why, in contrast to the typical uni-directional approach, they are also much more inclined to have a diversified portfolio approach.

In recent times, it has become clear that investment in ‘safe’ assets like real estate, equity, or fixed deposits does not actually provide adequate returns. Traditionally, we have been advised to diversify our investment portfolio by investing across asset classes. Now that banks have limited interest rates and inflation is higher than before, investors have begun looking at new avenues to invest their money. 

One such avenue is peer-to-peer lending. At first glance, P2P lending may seem risky because it is a relatively new concept in India. But those who understand P2P lending thoroughly – including how it works and how to mitigate risk – feel comfortable investing their money here.

Moreover, new-age investment options such as P2P lending offer great returns, case in point, the annualised returns are in the range of 10-12% on LenDenClub. These return rates can be a great opportunity for millennials who seek to grow financially and create wealth. 

For these reasons, new-age investments such as P2P lending can rank among the best types of investments for beginners today. 

How do new-age investment options help in diversifying portfolios better?

Not everyone is an expert at managing their finances. Diversification, if done right, can be a great technique to help you minimise your risk and earn stable returns.  Let us understand how new-age investments such as P2P lending can help you diversify your portfolio. 

Complementarity measures the degree to which two or more assets move in different directions in given contexts or scenarios, which is the basis for portfolio diversification. 

You can reduce a portfolio’s risk profile by selecting complementary investments, regardless of the risk profiles of the investments it contains. Assume you’re a portfolio manager who has the option of investing in one of two asset classes: Forex trading or mutual funds. Even if both investments are extremely risky, the fact that they are two completely different types of asset classes reduces the overall risk of the portfolio. 

In the above example, forex trading is a type of a new-age investment and a relatively risky one at that in terms of the volatility of the market. The same goes for mutual funds, a traditional investment option. 

But at the same time, when you invest in low-risk new age investments such as P2P lending, you minimise the risk of losing your money to fluctuating trends in the market. We know that the markets are dictated by unforeseen circumstances such as the pandemic and otherworldly events. But P2P lending is not affected by market volatility and provides high returns at the same time. 

Most of the people investing in peer-to-peer lending follow a diversified investment approach. P2P lending, in combination with other investments such as bonds, stocks, and real estate, can create a solid portfolio. For example, many P2P lending investors use their returns from peer-to-peer loans to pay off other loans or credit cards. This way, you will lower your interest rate and reduce debt at a faster pace than investing only in peer-to-peer loans.

When it comes to investing your money in peer-to-peer loans through trustworthy platforms like LenDenClub, you diversify your overall portfolio by investing in a completely new asset class. P2P lending provides the option of lending money to multiple borrowers rather than dealing with a single borrower. The risk of all the borrowers defaulting is much less than that of a single borrower defaulting, thus, reducing the risk of default. 

When your money is invested in multiple borrowers, the risk of defaulting reduces even more, and even in the worst-case scenario; you don’t lose a significant chunk of your investment. When you combine this with the already low default rates at LenDenClub, it adds an extra layer of security to your portfolio. Therefore, it’s an excellent way to diversify your portfolio. 

How is P2P better?  

P2P Lending with LenDenClub is a better new-age investment option because of the following reasons: 

Low Entry Costs: 

Adding P2P investments to your portfolio doesn’t require you to break your back by putting in a huge sum of money to begin with. You can start small and eventually increase your investment as you start making profits or some extra money from other avenues. 

Ease of Investment:

P2P lending is primarily a digital operation. This means that the complete process is conducted through digital means, from thoroughly screening borrowers to executing legal agreements with them for receiving repayments. 

All transactions are processed through an escrow account overseen by the RBI. An escrow account acts as a safety blanket for investors as it ensures that LenDenClub or any other party has no access to the funds invested. In other words, the loans are processed through the escrow account, and the repayments also reach the investor through the same. On top of that, LenDenClub tracks and updates your portfolio’s performance in real-time.

Low Volatility(No Market-related Volatility): 

Unlike many other market-linked investments, such as systematic investment plans and mutual funds, the returns from P2P lending are not determined by the market forces of supply and demand, and the prices do not change so often. 

Lower Default Rates: 

The thorough borrower screening process of LenDenClub ensures that the default rates remain below 4%. Isn’t that just fantastic?

Higher Control over Investment: 

The lender can manage their investment by diversifying it across gender, age group, stay-type, salary range, and credit score. Additionally, LenDenClub has put in place safeguards such as extensive borrower screening based on 200+ data points to ensure that only the most trustworthy borrowers are listed, assuring legal agreement between both parties, and allowing for a planned collection and recovery procedure. 

Why do people prefer new-age investment options more than traditional ones in recent times?

In this world of tough competition, we are always on the lookout for new-age investment options that can help us secure our future while at the same time giving us financial freedom and better returns than traditional investment options. New-age investment options are gaining immense popularity in India in recent times as they ensure the safety of funds as well as positive returns on investments.  

Nowadays, there are plenty of new-age investment options available in India that make it easier than ever to find an investment that suits your personal preferences and needs. With the help of new-age investment options like peer-to-peer lending, you can diversify your portfolio much more effectively and achieve greater returns on investments than you might be able to with traditional investments like real estate or stocks and bonds. 

In addition, with many new-age investment options like P2P lending, you don’t need to come up with large sums of money at once to get started; you can start small and work your way up if you choose.

There are several reasons, as mentioned above, that make investing in P2P lending your best bet at diversifying your portfolio, especially if you’re looking to take control of your finances and minimise the risk associated with investing in the stock market or other volatile investments. The bottom line is that peer-to-peer lending are undoubtedly one of the safe investments with high returns in India, and one should consider adding them to their portfolio. 

LenDenClub is a leading new-age investment platform with unparalleled expertise, security, and success rate among the P2P asset class of new-age investments. Avail of the excellent functionality of our platform and strengthen your investment portfolio. Register with us now!