P2P lending vs Stocks


07 July, 2020

By Kankatika Mondal

Peer to peer lending and mutual funds are two financial instruments among a vast array of other investment options that savvy investors invest on, hoping to earn optimum returns. For an investor with a considerable amount of capital, the most salient objective is to make an informed decision in order to earn maximum returns. To make a wise decision one would require to study, contrast and compare the list of pros and cons of these investment options.

What is peer to peer lending?

Peer to peer lending is considered as an unconventional and comparatively new investment option. It is an online marketplace that is regulated by the Reserve Bank of India (RBI) which works as an important aid to connect potential investors/lenders to creditworthy borrowers. It uses the concept of crowd funding and is a fast emerging investment avenue in the Indian market. Basically, it is an online platform that connects borrowers to lenders so that they can secure personal loans for various purposes.

Monexo is India’s most trusted and leading Peer to Peer (P2P) lending marketplace that connects people who are looking for instant personal loans and people who wish to lend money.

What are mutual funds?

Mutual funds are professionally managed investment platforms which involves pooling of your money with other investors. A portfolio manager is vigilant and takes care of the total capitals and invests it in various securities on their behalf. Depending on the fund cap, the portfolio manager earns his share of profit. Mutual funds can be invested or withdrawn at any point of time depending on the convenience of the investor. Its objective is to reduce the risks that are associated with the stock market investments.

Now that we know the rudiments of these investment instruments, let’s peruse and try to conclude which is a better investment option for you


Returns is the principal key which is taken into consideration while making an investment.

Peer 2 peer lending: The rate of return is invariable in the case of p2p lending and it does not fluctuate as it is unaffected by the volatility of the market. The return rate is decided upon right at the time of lending the money and the lender/investor is inevitable to get fixed returns at the end of the tenure.

Mutual funds: The rate of return is essentially variable in the case of mutual funds and fluctuates easily as it gets highly affected by the volatility of the market. Mutual funds are in fact subject to market risks and it is difficult to earn a fixed profit margin on them.

Liquidity and exit criteria

The liquidity of a financial instrument is another important criteria that is to be kept in mind while investing.

Peer to peer lending: Peer to peer lending has low liquidity, which means one cannot withdraw the money before the end of the tenure and has to adhere to the duration of the investment. However, in the case of p2p lending one gets repayments in the form of EMIs at the end of every month. In some cases, withdrawing the money before the duration ends can be subjected to different consequences that are totally contingent on the platform invested in.

Mutual funds: Mutual funds have a very high liquidity in comparison to p2p lending, which means one can easily withdraw the money before the end of the tenure. In this case, one does not have to adhere to the tenure of investment and can withdraw whenever the value goes up or when one is in dire need of money due to some sort of an exigency.


Diversity is a factor that investors take into consideration before investing on financial instruments.

Peer to peer lending: In the case of p2p lending, the investors can choose from a number of borrowers depending on their credit details. Correspondingly, the borrowers have the liberty to choose from a number of lenders to borrow money from. Thus, there remains trust between both parties and the process is transparent. Borrowers and lenders can choose online platforms like Monexo to check the features of the potential lenders and borrowers and make an informed decision.

Mutual funds: It involves pooling in of the capital with a lot of other investors and investing the capital in various avenues. The portfolio manager is in charge of the capital and decides on the avenues where the capital is to be invested in. As a result, the investors have very less control on their invested capital.

Investing in any financial instrument has its own pros and cons. The investment totally depends on the amount of risk the investor is willing to take and how much return the investor is willing to fetch. However, in all certitude, investing in peer to peer lending is the most logical choice one can settle on if he/she is looking forward to high returns accompanied by low market risks. Monexo is an online peer to peer lending marketplace that connects astute investors with creditworthy borrowers in order to make credit more accessible and investing more rewarding.

So if you are looking forward to invest in a financial instrument that has low risk and high returns, Monexo is an unerring place to be!