The last few days saw the curtain come down on the much-hyped ICO, only to be shut down by regulators. Recently, Huobi and OKcoin announced that they would stop all digital asset trading business before October 31. In other words, Bitcoin as an asset has lost all legitimacy in the country.
In China, after all, there are only a small number of people who invest in virtual currency assets such as bitcoin. However, according to informed sources, as long as people play Bitcoin, the amount of investment is by no means in a small number, and the funds needed to buy mining machines and mining are not affordable for ordinary people.
As the tide goes out of one type of investment, there is bound to be a rush of money that has fled to another. Depending on risk appetite and investment returns, presumably most of those getting out of Bitcoin will pile into stocks, bias funds and private equity.
Investors with small amounts of capital will choose relatively safe investment varieties. In their eyes, bank financing, money funds, P2P and so on are good choices.
But because money funds are linked to banks, returns are also affected. The chart below shows the income of Yu 'e Bao in recent January. We can clearly see that the income of Yu 'e Bao has shown a significant downward trend in recent months. Currently, its 7-day annualized yield has fallen below 4%. It can be seen that the rate of return of the entire money fund industry is falling. Although the result is difficult to change due to the influence of financial policies and economic environment, this indisputable fact has told us that the rate of return of money fund is going downhill.
Chart of Yu 'e Bao's annualized income on 7 days in recent January
Similarly, bank finance is not optimistic. Bank wealth management returns have fallen a notch since 2015. At the time, bank WMPS yielding 6% a year were common; today, returns of more than 5% are hard to find.
Peer-to-peer yields, on the other hand, remain firm at around 10% annually. The following figure is the overall interest rate trend chart of the online loan industry from January to August 2017 given by the third-party agency Wangdaizhijia. From the chart, we can clearly see that in the past 8 months, the net loan comprehensive expected rate of return has been maintained at about 10%, and has a slow rising trend in the past 4 months.
Industry experts offer an explanation for the high and relatively stable returns. As can be seen from the P2P lending model, the peer-to-peer, person-to-person transaction makes most of the interest rate belong to the investor. Therefore, it is not surprising that the interest rate paid by the borrower is roughly equal to the return paid by the investor, which is higher than that of ordinary financial products.
In addition, almost every platform will take the form of discount interest to attract more new users. Therefore, generally speaking, the profitability of P2P platform is very good.
Take the online lending platform Cloud Qianbagao for example, its 360-day Yun 'an Xin products, the historical annualized income is 10.5%. This figure is also in line with the industry-wide average interest rate and has increased slightly. The same 30-day beginner campaign generated 9.6% on an annualized basis. Generally speaking, the shorter the term, the lower the yield, and novice campaigns have significantly higher yields in order to attract new users.
For investors, no matter what kind of financial products they invest, the fundamental purpose is still to get interest. Therefore, the principle of income maximization is the most important principle of investment and financial management. Comprehensive comparison of virtual currency, bank financing, money funds and online lending products, I believe that smart you must have the answer.
