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Having a fat savings account is an attainable feat for all. But building long-term wealth? That is not child’s play.
It takes adequate income over the years, monthly surplus, high return investments, favourable market conditions, and most importantly – a lot of patience. It is essential for investors to not disturb the ‘wealth creation process’, or spend this ‘accumulating wealth’ before tenure.
Let’s look at some of the best tools for long-term wealth creation. If you’re equipped to invest in the stock market, experts suggest a balanced mix of frontline large cap & mid-cap stocks. If you’re looking for something a bit more conservative with minimal risk, equity funds are a good bet.
Seen AMFI’s (Association of Mutual Funds in India) latest campaign promoting investment in mutual funds? Their efforts have not gone in vain. Combined with tax benefits, the Equity Linked Savings Scheme (ELSS) is becoming a popular choice for many.
But there is a new asset class that’s making the headlines. This asset class is already making waves within the investor’s circle & raising eyebrows within the regime. So much so, that RBI put regulations in place only within 5 years of its existence in India. Investing in P2P lending is now among the viable options to accrue long-term wealth with minimal risk.
Peer-To-Peer Lending – A Background
When P2P lending saw the light of day in 2012, it looked like nothing more than a regulated version of lending money among peers. People were skeptical at first, but when peer to peer lending became a high return investment, it turned many heads. In fact, investing in P2P is so much more than just the returns. The convenience of lending online, the pre-mediated background checks, the power to make informed decisions & create balanced portfolios – it is too much & too hard to resist. According to inc42.com, as an industry, peer to peer lending is poised to develop into a $4 Bn-$5 Bn industry by 2023.Currently, several consider it the face of the fintech space in India.
Moreover, peer to peer lending is hailed as a prized alternative to FDs & real-estate investments, especially post demonetisation.
How can it help build long-term wealth?
As with all lucrative investment tools, investing in P2P lending will thrive upon the power of compounding. Peer to peer investing starts to build immense capital only after a couple years, with considerable re-investment, & rebalancing of the P2P portfolio. Here’s how you can make the most of it:
The key to a steady income from P2P lending is a diverse portfolio. Invest in loans across risk categories to ensure high earnings, while combatting any loss from defaulters.
2. Informed Choices
While it’s profitable to have high risk/high return borrowers in your P2P portfolio, make sure to run a thorough background check on them. Examine borrower history, monthly/annual income, reason for loan application & details on the co-signee. If investing in a business, research the industry you’re investing in.
3. Invest Slowly
Don’t take your chances in the nascent stages. Start investing in small amounts & opt for long-term loans (enjoy a bump in interest rates).
4. Regularly Reinvest
Investing in P2P lending will render monthly returns. But if not re-invested, it sits in your savings account at 0% interest. There goes your chance at building long-term wealth.
Why is P2P lending a worthwhile investment?
To begin with, peer to peer lending is now a high return investment. Lenders are earning up to an interest of 25% in returns with a diversified borrower portfolio. It spares the operational costs related to brick & mortar banking & translates the savings into higher returns for those investing. Furthermore, it is immune to movements in the public stock market, as it is uncorrelated to it. Therefore, even if the economy plummets, your loss will be minimal.
It’s time for you to jump off the savings account boat & jump aboard the ship of long-term wealth accumulation. Start your voyage with P2P lending today! Join TachyLoans today, visit: www.tachyloans.com