Tuesday, 23 February 2016

Gold vs. Peer-to-Peer Lending



Gold as an investment is a very popular option, especially in India. Families continue to pour money into gold for every occasion. Gold as an option for investment isn’t really an investment. Rather you can think of it as a hedge against loss in other asset classes such as stocks or real estate. It is a hedge against inflation since the real fear is that the value of the money you hold today will decline tomorrow. With an investment of this scale, it is very important to understand the consequences of investing in Gold.

Why P2P lending is a better option for investment when compared to gold.



Market prices: The profitability derived from any investment in gold depends greatly on the prevailing market prices while investing as well as while resale. This market price is determined by the demand and supply throughout the world. Therefore, it is very important for the investor to keep in touch with all patterns of previous cycles to determine the chances of any further growth and to understand the degree of profitability that is possible.

High making charges: When you invest in gold in the form of jewelry, there are additional making charges which are levied by the suppliers which are not accepted when selling the gold stock.  These making charges result in higher investment from you without any repayment in the future which greatly reduces the total value you receive from the investment. In Peer-to-Peer Lending, this is not a possibility. Market Lenders may charge additional service fees but these additional charges are always transparent and conveyed will before any investment. Often market lenders (such as Rupaiya Exchange) do not even charge lenders any fees.

Physical storage: While most investment options take place virtually, some of them such as real estate and gold do not. Gold being a precious metal requires storage in secure locations which proves to be a disadvantage as it requires extra investment on top of the base investment in the metal itself. Additionally, if the quality of storage is not up to par, it may result in oxidation and discolouration. This is a great advantage if you instead invest via Peer-to-Peer Lending. P2P Lending is a virtual platform. Here all investments are done virtually and no physical storage is required.

No regular income: While investments are a long term commitment, they usually provide regular rent or dividend which provides you with more cash in hand through the tenure of the investment. Unfortunately, investment in gold does not provide any such income. Any investment only reaps benefits once resold in the market. Once an investor invests capital via P2P Lending, he/she starts receiving regular payments in the form of EMIs every month. The principal amount plus total interest is divided to calculate the amount of capital to be repaid by the borrower per month. By the time the tenure of the loan is completed, the amount is fully repaid.

The quality of investment: Trust is a very big factor while investing in gold. While the investor can have the gold samples scrutinized, there is no way to know for sure the quality of the gold itself without being an expert in the precious metal. This may result in dilution of the purity of gold. There can be no shortfall in the quality of a borrower as an investor is provided all documents of the borrower along with an analysis of his credit worthiness which is shown by an allotted credit score.

Gold as an option for investment continues to be a very popular one but it isn’t easy or convenient. Keeping that in mind, investors need to look at other options available in the market. Peer-to-Peer Lending is new and built to be convenient to masses. With ever changing technology to meet market demand, it makes the investment as well as acquiring credit an easy task.

Source : Rupaiya Exchange

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