P2P investors can accumulate €1m in just 18 years
Some European peer-to-peer lending investors can accumulate €1m (£0.84m) within just 18 years, if compound interest is used.
A new analysis by Robo.cash found that without compound interest, it would take the average P2P investor 22 years to amass €1m. Swiss citizens can reach this milestone the quickest, thanks to the average income in the country and the favourable taxation regime.
When calculating the process of capital accumulation, Robo.cash analysts compared the average income of European citizens, inflation and taxation levels over the last 24 years.
“We also added the willingness of the population to save and invest,” the analysts noted.
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“In order to maximise capital accumulation, it’s important for an individual to strive for a lower tax burden, invest in high-yielding assets and try to retain more of their income.”
The analysts found that Swiss citizens are best placed to earn €1m the fastest, within 22 years when following a traditional investment strategy. However, the analysts found that with dividend reinvestment shares, this period can reach 20 years, while with P2P and compound interest it can be as short as 18 years.
Swizterland is characterised by a high savings rate and a low inflation, as well as having the highest annual incomes in Europe.
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Romanian citizens would take the longest amount of time to earn €1m, Robo.cash found. Taking all instruments into account, it would take the average Romanian around 489 years to accumulate €1m. A deposit-heavy portfolio would take 728 to reach €1m, while a P2P portfolio would shorten the timeline to 217 years. The analysts believe that the high rate of money depreciation in the country is behind this longer timeline.
“In general, the economic situation in Europe is quite diverse – there are both stable and very volatile countries,” the analysts added.
“The amount of €1m is rather unattainable in a realistic adequate time frame given a number of factors mentioned above.”
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