An investment is an economic asset that is purchased with the expectation of future increase in value. Value appreciation in investment is due to several economic factors. Time value of money is an economic concept which states that a bird in hand is better compared to two in bush. This law states that value of same amount of money will reduce with time. A 100 Rs in hand today will not worth same after 1 year. The basic concept in investment is that it will prevent your money to get depreciated with time. There are several investment options available in the market depending on the risk taking ability of the customer.
Every investment has two sides to it, Risk and Return. Higher the risk higher should be the returns with the investment. It can be classified into three categories according to their risk profile like High risk, Moderate Risk and Low risk.
Low risk investments would include assets like government backed securities like T- Bills, Bonds etc. These investments are at lowest risk as Government is backing these securities. Other low risk investments would include investments like Saving Accounts, Fixed Deposits, PPF etc. These investments earn returns after a certain period of time. You have to put in money for longer period of time in these assets to generate average returns from them. Moderate and higher risk investment assets would include options like Stocks, Gold, Real Estate, Mutual funds etc. These investments generates returns that are higher than inflation but with an increased risk.
With new innovations in Indian economy a new class of investment option has given opportunity to investors to generate above average returns with lower risk compared to other riskier options. P2P lending is a new investment option available to lenders. It is based on social lending technology where a group of lenders can lend to borrowers who are not able to avail financing from banking industry due to rigid policies in banking. You can invest in them and can generate spectacular returns.
An investment portfolio should be a balanced one with adequate weight age to each class of assets depending on risk profile of individual. P2P lending should be a part of investment portfolio of investors along with all other investment assets.