Last Updated : Jun 14, 2018 06:08 PM IST | Source:

Make your money work even after you stop working

Moneycontrol Contributor @moneycontrolcom

Rajat Gandhi

How to become a millionaire by the time you retire –a question most salaried individual in their 30s and 40s often ponder over. But when the better part of working lives is spent in meeting daily expenses like mortgage payments, holidays, children’s education, and marriages or sudden medical expenses, very little time is left to plan finances for a life after retirement.

In the current day and age, however, planning for retirement is not difficult at all. Consumers today have more avenues to invest their savings and grow their wealth than ever before, thanks in large part to the proliferation of technology, which is making financial planning simpler for consumers. It is never too late to get started on the path to generating wealth, even – and especially – if one is approaching the retirement age.

How P2P lending can be a good investment instrument for senior citizens?

Most retired individuals look for investment options that are stable and offer a steady income stream. For retirees or senior citizens, the primary objectives of investments revolve around building a large enough retirement corpus and keeping tax liability to a minimum. As such, building an investment portfolio with slow-yielding, market-linked investments make little sense for senior citizens.

This is where peer-to-peer (P2P) lending, as a dynamic asset class, steps in as an alternative.

Also Read: What is P2P lending and why has RBI decided to regulate it?

P2P lending is a crowd-funding model (largely online) where people looking to invest their money with people who want to borrow can do so. The concept is centered around savers getting higher interest by lending their money instead of saving in bank accounts and borrowers get comparatively lower interest rates.

P2P lending is transforming the paradigm of investments for consumers by enabling them to capitalise on wealth generation opportunities which were inaccessible to the salaried class up until a few years ago.

For retirees, P2P lending is the perfect investment instrument. It is simple to operate and is manageable in terms of risk. Most importantly, P2P lending yields much higher and steadier returns when compared to those from traditional investments like bank/post office deposits, stocks, mutual funds, etc.; P2P lending, unlike other conventional instrument out there, offers investors gross returns of over 20 percent.

Moreover, P2P loans start generating returns from the following month itself, enabling retirees to easily manage their monthly expenses without any hassles.

Lenders can also keep reinvesting their returns to maximise their potential yields by reaping the benefit of compounding returns. Another key advantage of P2P lending is that it gives lenders the autonomy to take decisions regarding their investments putting them in control.

Most market-linked investments require constant monitoring and expert intervention. Through access to transparent and comprehensive information on each borrower made freely available on the platform, lenders can, on their own, make informed decisions with respect to building a robust investment portfolio.

The key to investing in P2P lending and maximising returns, is similar to the principle that governs other market-linked investments – more diverse the portfolio, lower is the risk, and higher are the potential returns. Hence, investors can mitigate risk by investing smaller amounts across a large number of loans and borrowers from varied risk buckets, backgrounds, loan purpose, etc.

Investors who find the technological aspect and Do-It-Yourself format of P2P lending a little complicated can instead choose to automatically invest in borrowers that match their essential criteria.

With such an opportunity at hand, more and more senior citizens are ditching bank deposits, bonds, and stocks in favour of P2P lending.

With P2P lending now being regulated by the Reserve Bank of India (RBI), the traction for this highly innovative and secure asset class which is expected to see massive growth in the near future.

In the current market scenario, where investments seldom generate expected returns and most of the bank savings are often spent in simply paying service charges, P2P lending is a highly-promising asset class that is giving salaried Indians the opportunity to create significant wealth for a comfortable life post retirement.

(Author is the chief executive officer and founder of, a peer-to-peer lending platform)
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First Published on Jun 14, 2018 05:59 pm
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