5paisa Loans Blog

Is there any investment option which gives higher returns than equity?

Most of us have grown to believe that equity is the best form of long term wealth creator. In a way that is true, because a disciplined approach to investing has stood the test of time. A sustained investment in equity mutual funds over 8-10 years can generate annualized returns of around 14-15%. Something like sector funds or thematic funds can give you more but come with higher risk. But, are there any alternatives?

P2P lending can be a good option to earn higher returns if you have a slightly higher risk appetite. P2P lending is like investing in bonds, the only difference being that you actually are giving a loan to another person after thorough online verification. There are some clean advantages of returns and flexibility that P2P lending offers. For example, you get regular monthly returns (in EMI format), you have a wide choice of borrowers, the process is very transparent and you can lend for periods of 6 months to 36 months. You can also choose whether you want to give a personal loan or a business loan. Returns can range from 25% to 35%, depending on the borrower.

How attractive is this return of P2P lending for you? Just to give you a perspective, an investment of Rs.1000 in Reliance Industries in 1977 would be worth Rs.10 crore today. That is an annual return of nearly 31.5% compounded over 42 years. That is the kind of returns you can look to earn in P2P lending, with a managed level of risk. The choice is yours!