Five Reasons Why P2P Lending is The Right Choice for Millennials
Anya, a 26-year-old at her first job, is anxious. She just received her monthly salary and is now wary that she might spend most of it to pay for her regular coffee shop hopping or dinner dates with her fiancé. “I’ve been working for over four years now, but I only have a little bit of money in my bank account,” she told MEKAR recently.
She doesn’t shop often, but she spends elsewhere. “I don’t give a lot of thought to spending my money on food,” she said. On top of that, like many of her peers, Anya sometimes feels that the burden falls on her to support her family members financially. “I try to send pocket money to my parents at least once a month and sometimes to my sister too to help her with expenses for one of her children,” she added.
For Anya, setting aside her money even just for saving is hard. So it is almost expected that the soon-to-be bride finds investing almost unthinkable.
The right choice for millennials
Indonesian millennials like Anya often find themselves struggling with keeping a habit of saving and investing. A large part of millennials are working their first job and, young as they are, are earning minimum wage, or maybe a little bit more. Indonesian millennials are also well on their way to becoming the next “Sandwich Generation”, pressured to support both aging parents and growing children. This is why millennials, as young investors, tend to be risk averse and cautious about losing their money on an investment.
Today, a highly increasing number of millennial investors are getting more and more drawn to growing their money with peer-to-peer lending. In MEKAR, one of the most popular peer-to-peer lending platforms in Indonesia, more than 70% of its lenders are millennials, those who are in the age group of 21-37 years old.
There are many reasons why millennials are increasingly attracted to the idea of growing their money by funding P2P loans. Today, we’ll discuss about five main reasons why P2P lending is the right choice for millennial lenders who want to grow their funds.
1. Easy to Start, Easy to Manage
One of the best things about P2P lending is that everything can be done online. From registering yourself as a lender (just click here) and selecting the borrowers and loans you want to fund to receiving your monthly repayment, the whole process of lending can be done via an online dashboard on your computer or smartphone. That’s why, for millennials who are just beginning to learn how to grow their money, P2P lending is a great option.
“Lending via a P2P lending platform is much like shopping online,” Pandu Aditya Kristy, the COO of MEKAR, said. He was speaking in a recent discussion titled ‘Learn about investing for millennials’ held by MEKAR in cooperation with Halofina, a financial planner mobile app provider.
“You pick the loans that you want to fund, put those in your cart and checkout. This simplicity definitely appeals to millennials because most of them are already very familiar with online shopping,” Pandu added.
2. High Returns
If your money is just sitting there in your bank account, it will earn you 1-2% a year. For most of us, this translates to a decrease in our money after the monthly administration fees. So you go ahead and put your money in a time deposit instead. You now earn 5.75-6.25% a year before 20% in taxes on your returns. In MEKAR, your projected return starts from 7.18% and goes up to 12.5% a year (in Indonesian Rupiah). What’s more, the tax on P2P lending is lower than that on time deposit at only 15%.
“P2P lending does offer quite attractive returns, especially for millennials who have many years ahead of them to build their portfolio and reach their financial goal. Just remember to lend regularly and make sure you compound your returns,” Halofina CEO, Adjie Wicaksana, said during the discussion.
3. Safe and Protected
P2P lending is relatively safer than forex or stock trading, which are prone to market fluctuations. Furthermore, if you fund peer-to-peer loans via MEKAR, your money is protected with a guarantee from MEKAR’s lending partners.
MEKAR’s lending partners are financial institutions that act as loan originators for MEKAR. The platform currently partners with four big savings and loan cooperatives. All of MEKAR’s partners have agreed to provide MEKAR’s lenders with a protection guarantee on their principal.
Furthermore, some loans in MEKAR are also covered with a credit insurance, thus further protecting your money.
4. Low Capital
You’re young, some of you may just started your first job a while ago and earn just enough to get by plus a little bit that can go into savings and investment. If you’re low on capital, P2P lending is a great place to start growing your money. In MEKAR, you can fund a loan with as low as IDR 100,000 (around US$ 7), if you have an Indonesian bank account.
5. Social Impact
Millennials like you love a life of indulgence, but you also care a great deal about creating change and making an impact. That’s why an opportunity that lets you grow your money while creating social impact is the one that ticks your boxes. And that is what you’re getting in MEKAR, where your money is put to good use by your borrowers who are all owners of micro, small and medium-sized businesses from many different regions in Indonesia. They are in need of business loans and when you fund their loans, you help them grow their business, thus improving their welfare and driving the local economy.
So, are you ready to grow your money with MEKAR? Head to MEKAR’s website and start lending today!