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P2P Lending Beats The Stock Market, Again, In 2022
In 2022, if you invested in one of the cheapest and best share funds to cover the entire UK stock market, through Vanguard, you'll probably roughly have broken even when taking into account the fund costs, as well as the cost of your share-dealing account, pension or share ISA.
That's even if you include the £80 billion in cash that the UK's largest companies paid directly to shareholders.
It could have been worse. Since P2P lending started in 2005, UK stock-market investors have typically lost money after costs in 1/3 of those 18 years!
Now, the stock market is proven to be a truly excellent place to invest if you have very long investing horizons, a sensible strategy and strong nerves during crashes.
But, with each passing year, more investors and financial advisors are cottoning on to diversifying into stable P2P lending:
Overall returns comparable or better in P2P lending
If you had invested in 2005 in both shares and in P2P lending, after costs and any losses, you'd probably have made more money in P2P. You'd have made in the region of 5%-7% per year.
In shares, after costs, you'd probably have made something like 4%-5.5% per annum.
So that means an initial stock-market pot of £1,000 would be roughly up to £2,500 by now, while it would be up to £3,500 on your initial P2P lending.
What's more, that was earned more stably, with positive returns every year.
It goes to show that it's long past the point where investors should see a big place for P2P lending in their investing portfolios.
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Sources: Vanguard; investing.com; Morningstar