Investment Portfolio for P2P Lending

5 reasons to add peer-to-peer (P2P) lending to your investment portfolio

23 September, 2016

As a leading peer-to-peer market place in India, we at Monexo find more and more investors getting drawn towards lending as a form of investing. Investors normally look for high returns, flexible terms and safety when considering investment opportunities. In this regard, peer-to-peer lending is proving to be a chosen investment option in comparison to other investment options such as fixed income instruments as well as equity investments. Research finds that at present China is the largest P2P lending market in the world. In India, P2P lending is just starting.

If you are an investor, here are some reasons why you should add peer-to-peer lending to your investment portfolio:
1. Portfolio Diversification.
The first and most important reason why you should consider peer to peer lending as an investment option is to diversify your portfolio.

Every investor knows that a good portfolio is one that is diversified across various investment avenues. If you have not done this already, P2P lending is definitely something you should add to your investment bouquet. P2P lending offers you a lucrative portfolio diversification option that goes beyond traditional short term investment choices such as stocks.

P2P lending normally uses an online platform to bring borrowers and lenders together while maintaining their anonymity. The borrowers are always pre-screened to ensure they meet our requirements making them safe to transact with and have a good credit history. Investors can start with lending as little as Rs. 1,00,000/- (Rs. One lakh) and work their way up as they get more comfortable with the system and process of P2P lending.

2. Better returns on investment.
Normally, when one thinks of peer-to-peer lending we think of it through the shoes of the borrower as it offers a fast, easy and convenient way to borrow money. However, for investors, peer-to-peer lending is a good option too as it gives a consistently high return on investment.

With peer-to-peer loans investors can earn up to a maximum of 18% per annum on diversified loan investments on This is much higher than the interest earned on most traditional forms of investment. In fact peer-to-peer loans garner average interest rates of over 2x-3x higher when compared to savings bank accounts or fixed deposit earnings.

3. Safety:
Contrary to notional beliefs, P2P investments are actually safer than they are perceived to be. With P2P investments, the biggest fear in the mind of the investor is the possibility of the borrower defaulting on the repayment of the loan. To mitigate this risk, there are systems in place to make P2P lending safe for the investor. In P2P lending, loans are only given to borrowers after thorough checks are carried out to ensure that the borrowers have a good credit score and will pay back the loan as contracted. All efforts are taken to keep the loan procedure efficient and easy, while at the same time keeping the chance of loan default to the minimum.

4. Regular monthly income
In a P2P investment, the interest rate is fixed and so is the repayment schedule for both the principal and the interest. The principal is normally repaid on a monthly cycle along with the interest. This is convenient for investors as well as the borrowers. In this way investors can avail of high and regular returns through peer-to-peer lending without having to deal with waiting for quarterly interest payouts or varying dividend payouts from equity investments.

5. Flexible Time Schedules for your investments.
If you are looking for a term investment to suit your convenience and investment schedule while at the same time offering a high fixed return, P2P lending is perfect for you. Terms of P2P loans vary depending on each transaction and the individual preferences of the lender and the borrower. This makes P2P lending a personalized and popular mode of investing. The term of a peer-to-peer loan with Monexo can range from 6 months to 4 years. This flexibility enables investors to time their investments in such a way as to suit their investment and liquidity needs.