We are not saying that stock market is a bad place to invest. Just that it is not for everyone and not every day is a good day to invest. Let’s not get carried away with the rally and feel left out. There are other ways of making money and they are safer. Caterpillar will help you identify those and consider your goals are a priority.
When I was a kid, my mother was my tutor. She would often ask me about the chapters I find tricky. Let’s start with that chapter only, she would insist.
I hated it back then, I still hate it today. But over years, that approach became my habit. It helped.
When we do not know where is the life headed, retirement planning for obvious reasons drop to the bottom of our to-do list. But, my learning says, it should be on top of the to-do list. Once you plan your retirement properly, other short and medium term goals fall into place.
We often say: “Abhi toh bohot time pada hai, baad mein aaram se kar lenge.”
But time flies and tomorrow never comes.
Let’s assume that you are 30, married, and living in a metropolitan city. Suppose further that your monthly expenses are Rs. 60,000 per a month and you see yourself retiring at 55, and die by 85. Here’s the money you need to accumulate if you were to live the lifestyle you are envisaging for you in the silver days:
At an inflation rate of 5% per annum, your Rs 60,000 monthly expenses today would be Rs 2,08,000 by your retirement. To earn that inflation adjusted Rs 2,08,000 per month expenses, you need a corpus of Rs 7.75 crore.
To reach a corpus, you need to invest. Suppose you are getting 12 per annum return, which is huge given the prevailing fixed deposit rates. This is what you would be needing to invest monthly today:
After 5 years
Rs. 78, 350
After 10 years
Rs. 1,55, 130
After 15 years
Let’s talk about reducing your monthly expense (no pun intended)
(Numbers have been rounded off for ease of understanding)
As you see, it is necessary to start planning retirement as early as possible because compounding is a process and there is no catalyst to speed it up.
No to forget are unforeseen events such as pandemics and slowdown in the economy, for which some savings are a must.
Moral of the story- Delaying for later or next month or next year is a disaster waiting to happen. Pick your phone and call on 817-827-1045 to get started. We are here to provide help and guide you every step of the way.
You have a lumpsum amount to invest for the short-term, but you are not really sure which instrument to choose. The returns on FDs are too low. PPF is giving slightly higher returns but the lock-in period dissuades you. Need not worry!
There is an investment product that may fetch you double the FD and PPF returns in the short-term. This is P2P lending. All you have to do is sign up on a P2P lending platform which will connect you with a spate of borrowers. You may lend your money to a set of borrowers and earn interest on the same.
This article will cover the returns aspect of P2P pending. Read the following article to get a detailed understanding of what P2P lending is:
Attention millenials! Learn all about peer-to-peer lending
When you register with a P2P lending platform, you will find lakhs of individual or MSME borrowers. Some will have higher credit score while others on the lower side. High-credit-score borrowers get loan at a lower interest rate compared to those with lower credit score. The interest rate may range between 12-36 per cent on an average.
You may lend all your money to a single high-credit-score borrower or among a set of such borrowers. You may mix and match different categories of borrowers. Divide the lending amount among various risk profiles. This will give you better returns.
P2P lending platforms give you two options to build your lending portfolio. Either you can select the borrowers on your own or you allow the system to generate a customised portfolio for you. While the platform does provide you detailed profiles of borrowers, analysing them all could be cumbersome. So far as system is concerned, it allows you to put up return expectations and accordingly build a diversified portfolio for you.
For example, if you wish to earn 13-14 per cent, it will pick up moderate risk profiles. However, if return expectations are more than 20 per cent, the borrowers’ profile will turn riskier. One may choose the return expectations as per one’s risk appetite.
Difference between RoI and net returns
You do not earn the full interest rate on which the borrower is lent the money. The P2P platforms charge nearly 2 per cent commission on the same. RoI is overall return that your investment generates, while net returns are calculated after subtracting the platform charges. You may need to check with respective platforms if the portfolio return visible in your account is RoI or net return. What you should focus on is net returns – not RoI.
Wondering what if the borrowers do not return money? Default risk indeed exists. This is why a well-diversified portfolio among various risk profiles is advisable. If you have Rs 1 lakh to lend, instead of lending 20,000 to five borrowers, you should lend Rs 2000 to 50 borrowers. Even if 4-5 borrowers do not return your money, you may still earn nearly 9-10 per cent net returns. The more money you will have, the wider could be your diversification. The crux lies in customising your portfolio. This is where our role comes. On no extra charge, we help you with creating a diversified portfolio. Give us a call to know more about the product @ 8178271045
Any luck beyond equities, debt and low-yield small savings schemes?
Bitcoins, you say! But don’t you fear volatility? Can you digest 20-30 per cent freefall just every other day?
Most of you cannot. Let us introduce you to a product that has become a rage among millenials!
Peer-to-peer lending, or P2P lending, is a short-term investment avenue that may give you double digit returns in a year or two. Unlike Bitcoins (another popular millennial investment), P2P lending is regulated by the Reserve Bank of India (RBI). The central bank gives licences to P2P platforms that facilitate P2P lending.
Let’s get going.
What is P2P lending?
There are salaried professionals who may need extra cash for emergencies, a gadget purchase or just to survive the last few days of the month before the next month’s salary gets credited. There are small businesses which may need some working capital to get their cashflow intact. Their borrowing needs will not be so much that they approach a bank. Why don’t you be the bank? You can be a lender to borrowers.
Here comes the role of P2P platforms. Such platforms connect the borrowers with lenders. Borrowers easily get the required funding and lenders get to earn decent returns on their lending amount. These platforms are licensed by the RBI, and are called NBFC-P2P.
When did it start in India?
P2P players have been in existence since 2012, when the first platform – i-Lend – was launched. Initially, there was hardly any regulatory oversight. Seeing the potential of the evolving technology and growth of lending to the underserved, the RBI came out with guidelines in September 2017, to convert P2P players into NBFCs by issuing NBFC-P2P licences. It issued fresh guidelines in 2019.
There are around 30 P2P players in the country of which 21 have got the NBFC-P2P licences as of January 2021.
What are the regulations?
Going by the RBI guidelines, one can invest up to Rs 50 lakh across P2P platforms. The minimum amount is Rs 25,000. The central bank has specified that the tenure of a single loan cannot be more than three years and exposure to a single borrower cannot go above Rs 50,000. Besides, different P2P players may fix their lending limits and loan tenures within the RBI prescribed limits.
How to start investment?
You may sign up on one of the P2P platforms and start your journey. Or, you can connect with us. On no extra charge we will take care of your investments and queries. Call us on 8178271045.
Why choose us?
P2P lending is a road less travelled by! Not many people understand the risks involved. With any lending comes the default risk. But if you diversify well across borrowers and platforms, you may control your default risk to a great extent. We help you do that. Not only do we take care of the operational aspect of it, but also the expertise side of it. We emphasise again – no servicing charge! Better to come with us than walk alone.