LenDenClub launches fixed maturity P2P investment plan that may give 10 to 12% returns. Should you invest?

P2P Lending platform LenDenClub today (29 July) introduced a Fixed Maturity Peer-to-Peer Plan (FMPP), a term-based P2P plan

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P2P Lending platform LenDenClub today (29 July) introduced a Fixed Maturity Peer-to-Peer Plan (FMPP), a term-based P2P plan that will enable investors to get an expected return of 10-12% p.a. for a minimum of Rs 10,000 per investment, the company said in a statement.

LenDenClub is an RBI-approved NBFC-P2P serving more than 2 million investors. The company is aiming to onboard 1 million investors and clock in an AUM of Rs 10 billion from FMPP by the end of FY23.

The statement said that FMPP has been designed in a way that an investment amount is diversified into a vast pool of borrowers to minimise the default rate.

What is FMPP?

According to the statement, FMPP is a term-based plan with flexible tenures of 1, 2, 3, 4 or 5 years. The invested funds are reinvested several times throughout the tenure, giving the investors the power of compounding along with an expected annualised yield of up to 12.21 to 15.25% p.a.

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FMPP is a non-market-linked alternate investment option, making it immune to the risks of capital erosion on account of market volatility and therefore offers investors enhanced returns along with an added layer of protection to their invested principal.

Commenting on the launch of FMPP, Bhavin Patel, Co-founder and CEO of LenDenClub, said, “FMPP is a customer-first investment offering in this era of low FD rates and volatile stock-market conditions. It has a completely new algorithm for capital allocation. It has been under development and testing for the past 18 months and it is finally live. LenDenClub’s FMPP investment plan is truly an ‘alternative investment avenue’ for all classes of investors, whether retail or HNI.”

“Technology is at the heart of everything we do. By introducing key technology-enabled features such as hyper-diversification, auto-investment, and reinvestment into our platform, we are eyeing to drive a pivotal shift in the way investments are planned and executed, especially by the younger and tech-savvy audiences,” he added.

Should you invest?

Investors should be wary of putting their money in P2P lending. It is not a proper investment in the conventional sense of the term. There are multiple risks as well. While the risk of default is always there in P2P lending, there is no proper redressal mechanism, or a guarantee that you will get your money back, currently available to P2P lenders in case of default. However, if you still want to risk your money in P2P lending, you should first take advice from your financial advisor.

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