Why P2P Lending business model is the new Passive Income Stream in the Philippines? In Filipino culture, it's like Juan Dela Cruz always has an 'utang' list longer than a telenovela script! But fear not—here are some options for ordinary Filipinos and Filipino investors looking to maximize their ROI.
How does this working to you? Let me detail each exciting feature of P2P lending business model.
Better Rates of Return for Your Money
The average interest rate for a typical bank savings account is 0.25% per annum. If you had Php100,000 invested, your ROI (return on investment) in a year would be just 250 pesos. That’s enough for an Amazing Aloha burger meal from Jollibee.
While that burger is great, it’s hardly a compelling return for an investor. Contrast that with the average return rate of 10-15% from P2P platforms like FundKo. With a 10% return, a Php100,000 investment could yield Php10,000 in a year. That’s a lot of Amazing Aloha burgers!
While rates aren't guaranteed, the potential is clear: P2P platforms can offer significantly better returns compared to traditional banks.
1. Diversify Your Investments and Reduce Risk
P2P platforms let you spread your investment across multiple loans. What does this achieve? A diversified portfolio balances risk, so even if some investments don't perform well, others can offset the losses. This approach leverages the law of averages to even out your returns.
2. Potential Passive Income Stream
With regular savings or mutual fund accounts, your money is essentially tied up, especially if you’re starting with a small capital. P2P lending platforms offer monthly payouts from your investments, providing a faster route to a steady income stream. While mutual funds can do this too, the higher ROI of P2P lending makes it a more attractive option for generating passive income.
3. Low Barrier Entry Investment Option
How much do you need to start investing? With as little as Php5,000, you can begin funding loans and gradually build your investment as your ROI grows. Compared to stocks, this low entry barrier makes P2P lending enticing for first-time investors looking to test the waters.
4. Faster Gains Compared to MF or Banks
P2P platforms often provide faster returns compared to mutual funds or savings accounts. The current rates from the best personal savings accounts offered by banks can’t compete with the yearly ROI from P2P lending, based on averages posted on P2P sites.
Pros & Cons of P2P Lending Investments
Wrapping up, P2P lending platforms offer more than just the potential for better returns. They provide an opportunity to diversify investments, generate passive income, and start with a low entry barrier. For Filipino investors exploring new avenues, P2P lending is a compelling option.
Explore the possibilities with caution and see how P2P lending can transform your investment strategy and financial future.
-------------------------------------------------
Disclaimer: This is a financial options insight. Please exercise prudence and make informed decisions before investing. Any loss or damage incurred in your investment will not be responsibility of Your Ledger.
