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Peer to peer lending Vs. Mutual funds: Which one is better?

The emergence of peer to peer lending has built the opportunity of new investment for the investors who are willing to do some extra homework. With the Reserve Federal keeping the rate of interest low so now, the fear is that for bonds the price of a market will crash as the rise of internet rates.

The prices of the bond must get declined as its rate will go up, since the newly issued bonds will pay more high rates. This is very painful for the investors who have shares holding in the bonds fund. The price of the shares will fall at its rate will rise, and also there’s no guarantee that you’ll be able to make losses when the rates will fall again. Click here to know more about it.

So, this is why the long-time investors who are getting income are better in holding their papers. How is all of this related to peer to peer lending? Well, because it is the better option for the investors of income-seeking.

What are the advantages of P2P lending?

People who cannot take loans from financial companies or banks can take loans from peer to peer lending. It allows the clients to become lenders and earn interests. But, it also comes with many risks.  The prices of the bond must get declined as its rate will go up, since the newly issued bonds will pay more high rates.

How can the individual make use of P2P lending?

People who are not eligible to get loans from NBFC or banks can make use of these platforms to get loans. So, the consumer can go for these avenues if they don’t have the good credit or are the first-time borrower. Peer to peer lending rates vary between 0% to 36% and its tenure can get in between 3 months and years. The maximum amount of loan that people can apply for is Rs 5 lakh. With the Reserve Federal keeping the rate of interest low so now, the fear is that for bonds the price of a market will crash as the rise of internet rates.

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What are the advantages of investing in mutual funds?

Managers of mutual funds are experienced and trained on a professional level that constantly manages and watches their funds. Since one of the first rules of investing is to diversify the portfolio, mutual funds can be successful and also the simple way to accomplish the goal. With only one investment, you may share the stocks in many companies. The portfolio of the funds combines different stocks, commodities, bonds, and cash. These funds are also diversified by nature. If an asset or stock goes down, there will be others that will also compensate for this.

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