Peer To Peer Lending Vs Stocks: Which Is Better?

p2p lending

Investors all over the world are looking for ways that can provide high returns. The inflation rates are increasing day by day, and traditional investments like bank saving accounts fail to offer enough interest to beat inflation. Therefore, many new investment opportunities are present in the market, such as peer to peer lending that attracts investors due to high-interest rates.

P2p lending and stock investments both are popular ways to grow your money. When you buy shares in the stock market, you get a tiny bit of the company you invest in. You can benefit from shares in two ways: either you can sell them at higher rates or receive dividends after a specific time. However, p2p lending is different from stocks in which you offer your money to the borrowers and get profit in the form of interest. Therefore, it can be challenging to choose one option that can provide you with more benefits. 

Let’s take a deeper dive and compare p2p lending with stocks so that you can make an informed decision. 

Why Is Peer To Peer Lending Great?

Peer-to-peer lending offers many benefits, such as you can invest through online platforms without the hassle of going to the market and earning higher returns.

Safe Investment

When you invest in stocks, there is always unpredictability and extreme volatility. Moreover, it is always stressful as you do not know what will happen to your money in the coming time. You can earn profit over the years and then lose it within a matter of days. Seeing your investment disappear can be challenging to handle, and some people get so disappointed that they sell all their remaining shares. On the other hand, p2p lending carries less risk and also less short-term volatility. Therefore, it offers better returns compared to other safe investment options such as bonds and bank saving accounts. In addition, you can get monthly returns and bring more stability. Thus p2p lending saves investors from stress and a lot of headaches. 

Shocks Resilience

The prices of stocks are highly affected by the changes in the economy, turmoils in financial markets and geopolitical turbulence. In contrast, peer to peer lending is highly resilient to these external factors. Studies prove that p2p loans remain stable throughout the economic cycles and can play a role in improving your income portfolio. Even the Covid-19 crisis does not severely affect the p2p lending sector as compared to other investments. Although many borrowers failed to repay debts on time due to delayed salaries and loss in business, the industry remained relatively stable due to the joint efforts of platforms and investors. 

Friendly Environment For Beginners

If you are a beginner and thinking of building your investment portfolio, peer to peer lending can be the perfect option. You do not need a huge capital to invest and can start from a small amount. However, each p2p platform has a minimum investment limit. There is a wide variety of p2p loans that can help you in diversifying your portfolio. Moreover, p2p platforms are easy to use. You just need to make an account and transfer deposits to start investing. You can choose borrowers according to your risk appetite.

 Why Is It Difficult To Beat Stocks?

Long Term Benefit

If you have goals to invest your money in for a long time, stocks can be a better option. Although there is year to year, month to month, or even day to day volatility, stocks can make money for you. Stocks are better than all other long term investments in terms of returns.


If you are in need of money, you can withdraw your money from stocks within a matter of days. While in peer to peer lending, you get monthly payments, but it takes a long time to get all your funds back. In addition, many platforms now offer a secondary market where you can sell your loans to other investors, but it also takes a lot of time if you do not find a lender ready to invest these loans. 

Proven Record  

Investors find stocks an excellent investment because the stock market has been around for a long time. You can analyze the record to find the patterns of fluctuations and average performance. In contrast, the p2p market is relatively new, which makes it difficult to predict where the p2p market will be in the next 10 to 20 years. 

Peer to peer lending and stocks both are popular asset classes and have their own merits and drawbacks. P2p lending is a short-term investment and offers high returns, while in stocks, you need to invest for a long time to get profit. However, you can choose one that meets your investment goals. 

Moreover, p2p platforms are easy to use. You just need to make an account and transfer deposits to start investing. 


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