5 reasons P2P lending must be a part of your investment portfolio
Why you should invest in Peer to Peer lending?
Peer-to-Peer Lending or P2P is emerging as an alternative and a sought after investment avenue. This is not without reasons. The benefits offered by p2p lending make it a relatively superior investment option compared not just to its fixed income counterparts but also to equity investments.
World over p2p lending has emerged as a solid opportunity not just for borrowers but also lenders as an investment. Countries such as US and UK have led the growth of p2p lending. Currently, China is the largest p2p lending market in the world. The opportunity is now knocking doors in India too.
Here are 5 reasons you should consider having p2p lending as a part of your investment portfolio.
1. Higher Returns
When you make a p2p loan, you stand to earn interest rates of as high as 30% per annum. i2ifunding.com data shows that p2p loans are offered on an average interest rate of 16% per annum. That is a significant number compared to the interest offered by a Bank Fixed Deposit (6% to 8%).
By offering loans to borrowers through an online lending platform such as i2ifunding, you get to earn significantly higher returns. Compare this to a Bank Fixed Deposit or Post Office Deposits; the returns could be as much as double or more.
2. Low Risk
You understand the relationship between risk and return. Simply put, if you want higher returns, you have to take higher risk.
Several investors fall prey to this correlation and to earn higher returns, they invest in equity through stock markets. Now, you don’t know if in a particular year your favorite equity will give you a dividend or not. And if the overall sentiment of the market is bad, you may even see your original investment dropping significantly in value. Worse, it could even lose value at times.
This is too much to handle in the name of higher risk for higher returns.
But that is not the case with p2p lending. The risk is far lower and that too only of default. Default means that a borrower may not repay the loan.
But there are practices in place to ensure that it does not happen. The loans are offered only to verified borrowers that have been run through various checks including their credit history and physical address verification. This reduces the chances of loan default. In fact, in the experience so far with i2ifunding.com, there have been no defaults.
P2P indeed offers the best of both the worlds – the safety of debt and the returns of equity.
3. Regular Fixed Income
Unlike other financial investments, where the interest is paid out quarterly, half yearly or yearly, you earn interest every month on your p2p loan.
As you would realise by now, p2p loans are offered at a fixed rate of interest starting from 12% going up to 30% per year. The loan is repaid on a monthly basis including the interest. As a result, the interest amount reaches your bank every month, regularly.
No more waiting for quarterly interest payouts from fixed deposits or dividend cheques from your equity investments. Earn interest every month, regularly. Talk of creating a passive income!
4. Flexible Tenures
There are no long-term commitments with a p2p loan. You can offer loans to borrowers for a few months as well as for a few years. You can spread your investment across loans of various tenures such as 6 months, 1 year, 2 years, etc.
You may never have to keep your funds idle as opportunities exist across time frames. The flexibility also ensures that you can time your investments in a way that you have the money available to you when you want it.
We all know that diversification is important to reduce the risk of a portfolio and to generate better risk optimized returns.
P2P lending offers you a wonderful diversification option. Within fixed income instruments, you get to add one more lucrative investment, that is, p2p lending and diversify your investment portfolio; you also create diversification against your risky investment such as equities.
Your portfolio stands optimized for risk and return. Didn’t the wise grandmother say “don’t put all your eggs in one basket!”
How can you start investing through p2p lending on i2ifunding?
i2ifunding.com is one of the foremost players in p2p lending in India. It offers an online platform where you can start making loans to a pre-checked and verified list of borrowers.
I2ifunding also takes care of the entire process for you so that you can invest without a hiccup.
It’s time that with a platform like i2ifunding, make p2p lending a part of your investment portfolio.
The best part, you can start with as low as Rs. 5,000.
Sign up for an investor account now.