Here It Is, A Suitable Investment for Millennials and Generation Z, Read it Carefully!

TRIBUNBATAM.id - Who says that investment is only for adults who are already established, even have excess funds?

Now, there are also investments that are staying digadang suitable for young people, namely millennial and generation Z (Alpha).

There are many kinds of investments. However, in this technological era, investments are increasingly diverse, one of which is the emergence of Peer to Peer Lending (P2P) investments.  

For millennials, P2P Lending investment is certainly familiar. This investment provides maximum benefits, both for the investor and the borrower.

Although P2P investment in Indonesia has not been as large as in China, the United States, or the United Kingdom, its growth rate is expected to continue to increase over time. 

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The investment work system is not as difficult as imagined. Before investing in this sector, it is better to first identify what P2P investment is like, including its advantages and disadvantages. 

What is P2P Investment?

Peer to Peer Lending (P2P) is an investment that brings investors and borrowers directly. The mediation function that has been carried out by the bank will not be found in P2P investments.

Everyone has the right to apply for loans to investors for various purposes, especially business. But, on condition, the use of funds must be clear so that investors are willing to lend capital to you.

When compared to applying for loans to banks, cooperatives, or other private sectors, the process of applying for loans on the P2P platform is very easy. Requirements are also simple, such as business financial statements and the intended use of funds.  

If the loan application is accepted, you will receive a notification on your P2P account. As a borrower, you are required to pay installments every month, including loan interest.

The amount of interest paid depends on the amount borrowed with what was invested. 

P2P Lending Rated Suitable for Rising Generation

Considering the easy way and also having a lucrative profit, it's no wonder that P2P lending is considered as a suitable investment for young people. Then, what are the advantages and disadvantages of this P2P lending investment?

As quoted from Cermati.com, the following advantages and disadvantages of P2P lending investment that can be a reference material for millennials in investing. 

Advantages of the P2P Lending Investment

1. Many Borrowers due to Relatively Low P2P Credit Interest

For those who need large funds, but don't want to pay exorbitant interest fees, P2P is the most appropriate place.

How much is the interest? If the interest rate from an official financial institution, such as a bank is 12-15 percent per year, the P2P interest rate is much lower than that. 

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The percentage could be only 8-10 percent per year.

So this will tantalize borrowers who really need funds. With so many borrowers, there will also be great opportunities for channeling your investment funds. 

2. Greater Interest Benefits for the Lenders

What about the benefits to be obtained for lenders or credit in P2P lending? Well, investors in this one investment are more profitable because the interest is greater than the bank interest.

Investors will get twice the profit even three times greater than the capital lent. Joining a P2P investment is certainly more attractive than saving at a bank, right? 

3. Fast Fund Distribution because Submitting Loans is Very Easy

The loan application mechanism is not as rigid and formal as in the bank. On the P2P platform, both the investor and the borrower, can apply for or lend whenever and wherever.

For the conditions themselves are also very easy. With just three steps (register, apply, and wait), the loan will be disbursed in an instant. Requirements submitted in the platform no need to be excessive. 

4. Enabling Investment Diversification

In P2P lending, you can diversify capital to more than one borrower with different interest rates. For diversification to succeed, it is best to offer capital to borrowers who need small funds. 

What are the characteristics of P2P Lending?

1. More suitable for short-term investments

In contrast to bank loans that repayment can be dozens of years. Whereas in P2P, the longer the loan repayment time, the higher the bills that must be paid to investors.

The P2P platform will be better suited for small loans. In addition to preventing high bills, small loan repayment times are also faster than large loans. 

2. Cannot withdraw money for a moment

The loan repayment period varies. Can be 1 year or 2 years, and so on. That means, the money cannot be withdrawn arbitrarily before the repayment time is up.

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In this case, P2P is like a deposit, where the money can be withdrawn when the due date has arrived. In contrast to savings whose money can be withdrawn or used whenever and wherever you want.  

3. The Risk of Failure to Pay is Quite High

As explained in the sub-advantages, the P2P platform provides loans without collateral. So the risk to run away from responsibility is huge.

Indeed, the P2P platform guarantees your capital. However, the percentage of guarantee provided depends on the grade you choose. 

If you want to be safe, you should choose grade A, which offers a full guarantee. Unfortunately, grade A interest rates are very low, so the profits that investors get are less than optimal. 

Know, Learn, and Understand the Investment Platform You Choose!

All investments offer different benefits. But behind that advantage, there are also losses that must be borne.

Better to recognize, learn, and understand the investment instruments that you will choose, so that the benefits can also be maximized. (*) 

This article is the result of a collaboration between Kompas.com and Cermati.com. The contents of the article are the full responsibility of Cermati.com 

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