This is a user generated content for MyStory, a YourStory initiative to enable its community to contribute and have their voices heard. The views and writings here reflect that of the author and not of YourStory.
This is a user generated content for MyStory, a YourStory initiative to enable its community to contribute and have their voices heard. The views and writings here reflect that of the author and not of YourStory.
Often the discussion around peer-to-peer (P2P) lending is around what borrowers’ benefits. However, this is also an investment potential that can diversify the portfolio while adding to your retirement fund.
According to the Mercer's 23rd Annual Cost of Living Survey, India has seen a significant rise in expenses with Mumbai, New Delhi and Chennai ranking 57, 99 and 135 respectively. When you need to reconsider your retirement plan options owning to high costs of living, inflation, and health issues, P2P lending can help you build better.
1. Compound Power
There is no better way to earn than compounding your investments. The compound rate of interest offers huge investment opportunity while you also get the option to keep reinvesting the interest. Most lenders earn on both principal and return, which allows them to tackle inflation and keep compounding their retirements savings for better.
2. Low Risk Option
Chances are that you have already invested in some of the high risk- high return options. Peer-to-Peer lending is all about putting some of your eggs in other basket, a more secure basket that offers guaranteed income with minimum risks. While market fluctuations can impact your retirement savings negatively, P2P options give you fairly straight deal with fixed rate of interest, verified borrowers, and options to diversify across different loans. After all, lending is traditionally one of the safest asset classes.
3. Zero Market Dependency
Unlike stocks, mutual funds and other investment instruments, P2P lending platforms are not dependant on how the market is performing. You are immune to most ups and downs or the economy, which again emphasizes on the security of these options. While market investments are better at returns lingering at 12% to 14% a year, they often carry higher risks. There is no way to know how much you will earn through the markets due to risks. Guaranteed income options like PPF offer low rates of 7.8% On the other hand, with P2P lending investors can accumulated 18% to 20% by diversifying their funds across different loans. Think about it:
It is critical to note that there are no guaranteed returns. Investment options deliver on how you manage the portfolio and real-time decisions. However, with careful planning and diversification P2P lending can help you maximize retirement savings.