P2P consumer loans, crypto and gold become the most promising assets in 2021
Our analysts predict that gold, cryptocurrencies and P2P consumer loans will perform better than other popular assets in 2021. In the middle of the crisis, more traditional assets are more volatile and less profitable.
The researchers analysed 10 popular assets and ranked them in 7 different criteria. In each criterion, all assets were given a score of 1 to 10, and it was then multiplied by a coefficient of 1, 2 or 3 depending on the importance of the criterion. In the view of the ongoing crisis, risk probability, returns, and forecast for 2021 have become the most important indicators with the weighting coefficient 3 in the final score. Other criteria included liquidity, pandemic resistance (weighting coefficient 2), entry threshold, and complexity of the tool.
The rating is topped by P2P consumer loans, cryptocurrency and gold, where each scored 101, 112 and 122 points accordingly. Gold is traditionally stable and it demonstrated good growth in the past 2 years, so its forecast for 2021 is promising too. Cryptocurrencies, despite their tremendous returns in 2020 and promising forecast for 2021, remain extremely volatile and are associated with big risks. Thus, during the crisis last spring, the asset fell by 86% and then recovered within one month. P2P consumer loans are more even in this sense. The volatility of this asset is very low, whereas risks are moderate and tied to a platform's ability to fulfil its obligations, or to the borrower’s reliability. However, many platforms offer a Buyback guarantee which protects investors from the latter. At the same time, returns from this asset are stable and relatively high, giving on average 10-13% of annual income.
“The top 3 assets on the list may look surprising, as young assets like P2P consumer loans and cryptocurrencies scored higher than more conventional ones, such as stocks or bonds,” the authors of the research comment. “The explanation is simple: these assets generated higher returns during 2020, and they are more likely to deliver a better risk-reward ratio in 2021. Stock markets are very sensitive to changes in political and economical spheres, e.g. at the beginning of the pandemic, they reported their biggest one-week drop since the 2007-08 financial crisis. The market became extremely volatile over the following week, with fluctuations of 3% or more in the daily session. Crypto is less dependent on the situation in the world, whereas risks at P2P lending can be minimised by investing in reliable lenders and platforms.”