In addition to mutual funds, another investment alternative that investors consider is P2P Lending. Both can indeed be started with low capital and are relatively safe (for P2P Lending that is properly registered and supervised by the OJK).

In mutual funds, the money you invest is distributed across several other investment instruments in the capital market to generate returns over time. The value of your investment can increase or decrease depending on company performance and the prevailing economic and political situation.

Meanwhile, in P2P lending, the money you invest becomes funding for the development of SMEs in Indonesia. Typically, these funds are used as working capital to carry out projects that have already been secured, or as operational costs until invoices are paid by their clients.

So, what is the difference in terms of returns?

Mutual fund liquidity is quite high because they can be sold at any time using the NAV (Net Asset Value) applicable at the time of sale

The investment you deposit in a mutual fund is managed daily across various company shares, so its performance can be updated daily, unlike P2P Lending which can only provide definite results when the business is completed.

In a mutual fund, your money is held by a Custodian Bank as a third party, so it is safe from fraudulent companies

The Custodian Bank is also supervised by the OJK and is generally one of the prominent banks. Meanwhile, the money you invest in P2P Lending will be managed as operational funds of the business with various risks from that company's operations.

Mutual fund growth is managed by an Investment Manager, while in P2P Lending a Lender manages their own investment portfolio (loan disbursements).

The performance of a mutual fund can be calculated by the Investment Manager's research team by considering macro and micro economic conditions, while the performance of P2P Lending is determined by the Lender's skill in maximising the capital lent.

Mutual funds invest in companies listed on the exchange with proven track records and risk mitigation in accordance with standards, while P2P Lending is generally for SMEs

The risk for each P2P Lending investment varies depending on the business sector and regional challenges. A detailed understanding of each business field is required to understand P2P Lending reports and projections

Both mutual funds and P2P Lending have their own merits. The choice is yours as an investor to invest with whichever option suits you best :)

Also read:

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Which is More Profitable: Mutual Funds or Deposits?

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