Saving for Retirement with P2P Investing

Sep 12, 2019

Not too long ago, if someone needed money, he or she only had to borrow it or ask from friends or family directly. It was a matter of transacting face to face. If this failed, people would go to other traditional lenders like small town cooperatives, pawnshops, or in worse cases, loan sharks.

Today, there are more options for borrowers. If you have good credit or have an active bank account with a considerable amount of money under your name, you can turn to your bank to borrow cash. Or let’s say you need to pay for emergency medical expenses. You can sign up on platforms such as to get immediate funding for your needs. Application is done online, and all you have to do is to produce digital copies of the documentary requirements. Within days, you’ll get the money credited to your account.

P2P investing is a great way to generate extra retirement income.

Of course, there’s another side to borrowing using these alternative schemes. P2P investing, also referred to as peer-to-peer or person-to-person lending, is the modern-day, technologically advanced equivalent of personal lending.

With all the discourse around early retirement and making smart decisions when it comes to young people’s money, there is obviously a growing number of investors engaged in P2P investing. Lenders on the Blend platform, for instance, can even start with a PHP 5,000 initial investment, followed by a series of reinvestments once they start recouping their money.

Most retirement plans are designed to cover basic needs, but they would be inadequate for other expenses.

According to Expatistan, Manila is the 10th most expensive city in Asia out of 26 major cities, with housing expenses going as high as PHP 65,000 a month for the more expensive areas. This, coupled with the high cost that comes with paying for all your necessities and wants, is steadily contributing to the rising costs of living in the metropolis.

By the time you retire, this price will be so high up. Your ability to access basic services such as healthcare will also go up. You need to remember that your insurance – that is, if you already have it planned – won’t cover all the medical expenses you’ll incur.

Your retirement benefits from SSS would more or less be able to cover your groceries if you don’t require much, but it wouldn’t be able to cover eventualities such as emergency expenses, medicines, or even the occasional entertainment expenses (which a necessary cushion that all senior citizens deserve).

The worst thing about it is that income levels are not going up – but let’s save that for another topic.

Traditional retirement saving schemes might have the advantage of guaranteed principal, but when you look at it from the point of view of getting maximum value for what you invest, you’d be looking at minimal returns.

Remember that because a lot of people are becoming more and more concerned about investments, competing products will continue to crop up. It’s a classic case of having too many options, but not having an option that truly stands out. What you’ll get is similar interest rates across the board.

P2P lending has the potential to become a viable income source for lenders who want to grow their retirement funds.

In this case, it’s important to find a product or service that can beat the looming rise of costs involved with funding your retirement. Peer-to-peer investing, with its high ROI and flexibility, can provide you with a better means of funding your retirement.

Some of the benefits of P2P lending as a way to boost your retirement funds:

P2P investments can help you diversify your portfolio. A healthy portfolio is composed of a good mix of stable and high return options. For your retirement, you need to strike a good balance between guaranteed (yet low-yield) and risk-laden (yet profitable) investments. With research and a great understanding of what the market has to offer, you can be successful in both.

P2P investing provides a good way to compound your earnings. You’re earning back your investment composed of your principal and the interest every month. While you continue to receive this money, you also have the ability to reinvest it. You don’t have to wait five years to recoup your money and invest it again like you would normally do with a time deposit.

P2P marketplaces aren’t linked to the stock market. Most investment options these days are linked to the stock market, which can be unstable. When your timing isn’t right, you’re bound to lose your money. With P2P investments, you won’t have fears about the stock market crashing before your eyes.

It’s important to note, however, that any form of investment involves a level of risk. The risk of default is always lurking in the corner with online P2P platforms. Remember that banks have been giving out loans forever, and they have been dealing with defaults all the time, but they earn enough to cover the loses, so they must be working! If it didn’t work, then all of the banks around the world would have shut down eons ago.

This is why Blend keeps repeating over and over again that lenders should manage and mitigate these risks. It often starts with taking simple yet smart steps like understanding the borrower’s details, diversifying investments or investing small amounts across a large number of borrowers, and reading the fine print all the time.

For instance, a good strategy would be to lend out PHP 5,000 on different loans. It would take time to study each loan application, but if you’re not in a hurry, then why not? Your goal must be to eventually generate a big combined interest per month after investing parts of your money on these multiple loans. This should you a little diversification.

P2P investments will continue to grow and thrive especially when people keep trying out ways to earn money for various purposes such as building their retirement fund.

Try it today to see if it’s for you!

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