Financial independence is not possible by working all day. Individuals can only achieve their personal goals if they have multiple income streams. Many people have been investing for years as a way to achieve financial success. However, thinking of investing only as buying and selling stocks is outdated when there are so many other options.
Online lending has opened up a variety of investment opportunities for Indian investors, regardless of their risk appetites and class. Online lending is easy for anyone with no prior experience. Even millennials who are not professionals can make regular investments.
What is the reason for this surge in online investments? These are five possibilities.
1. You can lend in a controlled environment
The RBI has now recognized P2P lending firms in India as Non-Banking Finance Corporations. This regulation was necessary due to the rise in personal loan applications made on these platforms. Your money would not only compound, but it would also be doing so within a safe environment that is facilitated by the country’s highest financial institution.
2. Investing with the best borrowers
Investors on such platforms had a common misconception when they first started. They believed that borrowers on these platforms were people with low credit scores and who don’t have access to personal loans elsewhere. At least, this is not true for P2P lending platforms in India. P2P loans are preferred by borrowers over traditional loans from public or private banks because of the many benefits such platforms offer, such as fast processing, paperless approval and quick disbursement.
3. You can invest on anyone, anywhere and anytime.
Each platform assigns borrowers according to their risk level and sets the interest rates accordingly. Investors can choose and select their borrowers individually when building a portfolio of P2P lending investments. Investors can now invest on vacation or while stuck in traffic because of the increase in borrower listings. It is easy to see why online lending markets are so popular.
4. Zero volatility and negligible default rates
Online lending is more stable than the volatile and dangerous equity market. Online lending is much more stable than stocks because there’s very little volatility in investments at the top P2P lending firms in India. P2P lending is often viewed as risky due to high default rates. P2P platforms have done a great job in mitigating risk when investing in strangers.
5. Highly profitable:
Good investors care only about making money, no matter what avenue he takes. All investors can access multiple investment options through Peer to peer platforms in India. Returns range from 20-35% depending upon the profiles of the borrower. The power of compound interest is used by P2P lending platforms to multiply an investor’s capital. This involves adding the interest from the first month to the principle for the second month and so on.
Ten years ago, such an arrangement between money lenders or borrowers was almost impossible. It is possible today thanks to technology. P2P lending platforms allow everyday investors to become banks, and thus earn high yields by investing in this well-established asset class.
