Robocash: P2P can alleviate economic pressures
Peer-to-peer lending can help to alleviate current economic challenges while serving as a sustainable income source over a 19-year horizon, a new analysis has found.
According to a report from Croatia-based P2P lending platform Robocash, P2P lending is emerging as a viable solution to address inflation pressures, strengthen purchasing power, and create opportunities for individuals to thrive on passive income for the long term.
The platform noted that for the last 20 years, the real purchasing power of Europeans has been declining. On average, prices for all goods and services across Europe rose by 57.4 per cent across this period, outpacing real wage growth.
Read more: Low market cap countries drive European P2P growth
“We believe that building passive income is the most optimal way to tackle inflation,” said Robocash analysts.
“While traditional savings methods may be insufficient to keep pace with it, especially for large purchases like housing or cars, fixed-income instruments are well-positioned to counter inflation.”
Robocash’s analysts compared the performance of P2P, bonds and bank deposits, and learned that P2P lending has a better chance of delivering strong capital growth.
“Over the past 10 years, the nominal yield of the P2P market has surpassed other instruments by 11 times,” the analysts added.
“During this time, the real value of new residential real estate has increased by 61.4 per cent, cars by 23.8 per cent, and education by 20.5 per cent.
“The capital accumulated through P2P investments could almost double, making large purchases more feasible.”
Robocash found that it would take the average European about 13 years to buy a new apartment if they invested 22.4 per cent of their savings in P2P lending at 10.4 per cent per annum.
Read more: European P2P lending market sees cyclical wave of activity
By contrast, saving through bank deposits or government bonds wouldn’t even make this possible, as the average annual increase in new real estate prices is 5.5 times higher than the average deposit rate over the last 10 years.
Furthermore, the analysts found that it would be possible to live on a passive income within 19 years with P2P investments at the current savings rate.
“The time frame can be reduced to 16 years if the saving rate is increased to 30 per cent,” Robocash’s analysts added.
“Saving up to 75 per cent, it is possible to reach the optimal passive income in nine years.
“Reinvesting the interest from P2P investments every month could further accelerate the process by about one year, which is also a nice bonus.”
Read more: European P2P investors expect 2025 returns of 10.64pc
