The fast growth of p2p lending in India and it's advantages have made thousands of investors reconsider their investment choices. To help them decide better, today we#39re comparing Stocks with p2p lending.
Stock market as an investment is immensely popular in India and is one of the mainstream investment avenues in the country and P2P lending while still being in early stage is growing faster than ever. Which one is a better investment option depends completely on the knowledge of the investor and their risk appetite.
Peer to Peer lending offers great numbers of advantages when compared to any kind of conventional investment options like stock market or mutual fund. Let us have a look at a quick comparison between Peer to Peer lending and stock market and decide which one is a better investment plan for today's India.
Comparing P2P Lending And Stock Market
Options For Diversification
Peer to peer lending
Peer to peer lending is a fairly new concept in India which allows lenders to lend money directly to borrowers seeking loans. It is done via a P2P lending platform like Lendbox which provides the lenders with a wide list of borrowers to choose from. It is not very different from informal lending but it's a lot more safe and rewarding. As an investor, you can quickly assess the profile of the borrower on the platform and decide whether to give the person a loan or not while the platform takes care of all the formalities and even collection of EMIs for the investor.
Leading p2p lending platforms like Lendbox have the advantage of a wide array of borrowers of different income classes and backgrounds that allow investors to diversify their investments across various interest rate categories, reducing the risk of loan default effectively.
With the advent of Peer to Peer lending, it has made the whole process much more transparent and thus makes it easier for people to invest.
The whole idea of stock market is not everyone's cup of tea. Your capital is usually managed by a stock broker or a portfolio manager who in turn decides how much money is to be invested and where. The stock market is a much more volatile investment option - depending on various external factors which we do not have direct control over, when compared to peer to peer lending, it is far less transparent and democratic.
Return On Investment
Peer to peer lending
The returns that the investor gets can be entirely chosen by him/her depending on the risk appetite in case of Peer to peer lending. Whenever an investor lends money to a borrower for a fixed duration of time, He gets back the return in the form of interest on the total investment.
Peer to peer lending return rate does not depend on the volatility of the market like other investment options and thus it does not fluctuate. So, the investor can be assured of getting a fixed amount of return after the tenure of the investment which can vary between 6-36 months per loan.
Stock market returns depend heavily on the market. It depends on market risks and is thus very volatile. The return that an investor gets fluctuates heavily and is not at all fixed. When the market condition is good the investor can expect to get a fairly good amount of return but when the market condition is down the rate of return also becomes low.
Which one to go for- Peer to peer lending or stock market?
The investment choice that you make depends ultimately on the type of investor you are. If you are that kind of investor who is willing to invest a good amount of time and energy along with money into your portfolio and if you have the capacity to properly point out the trends in the stock market then stock market is the best choice for you. You will also be getting healthy high returns with good research on the market.
On the other hand if you want to get relatively higher returns of 18%-30% which is most of the time higher than stock market and that too without the risk of volatility, then Peer to Peer lending is the preferable option for you.
Wanna know more about p2p lending? Use the button below to register now with Lendbox for free and our support executives will briefly explain you about the process.