P2P investing presents a myriad of different approaches for being successful and profitable in the long run. There are many possible combinations depending on the originator, currency, risk-level of the loan, your experience, the investment amount and many other factors. Any combination of these factors will yield different results, and there is no way to tell which one will be more efficient unless you try it out. As we`ve mentioned before, one of the beautiful things about investing in P2P investing is the small amount you need to start. Furthermore, you can be brave in trying out a new strategy because you have the buy-back guarantee protecting your funds. It is also important to mention that every investor should craft his plan based on his own experience. Even if you emulate somebody else`s approach, it may not yield the same results. Luckily, you have the freedom to mix things up and see what works best for you.
New Originator = New opportunities
We recently introduced a new partner – the Romanian originator iCredit, which enabled us to provide new investment opportunities to our customers. Being able to invest in loans that are in Romanian Leu has expanded the possible combinations of factors that make up your portfolio. It means that these loans are subject to variables that are entirely different than the ones affecting loans in Bulgarian Lev or Euro. How you craft and structure your portfolio of investments affects your profitability and overall performance.
By presenting you with a broader selection of loans we are giving you more freedom and flexibility. When you go to the “Primary market” dashboard on the platform and open the filters menu you, will notice that there is an option for selecting a country. You can quickly select “Romania” and browse the wide selection of loans, look at their specifics and determine what kind of opportunities they might present as compared to Bulgarian ones. Perhaps you might notice that the average loan amount is different or that there are more loans with a specific score class, interest rates might also differ. All these little insights are factors which you can incorporate into your strategy. We recommend that you try out different combinations and see which one works best.
Trying Out Different P2P Investing Strategies
Iuvo currently partners with two Bulgarian and one Romanian originator, which all differ in terms of loan portfolio size and while the type of information provided on each borrower is the same, the data itself differs and presents unique insights about the loan. For example, if you compare two C score loans, one from Romania and one from Bulgaria, you will see that the borrower`s salary is provided for both, but the amount will differ. One might be earning 200 Euro a month, while the other can be earning 400 Euro a month. By considering this, you can make a decision about which loan to invest in.
If you want to get into the depth of P2P investing borrower information is of vital importance. While the auto-invest feature negates the need for looking into the borrower on a more detailed level it is necessary if you want to craft a comprehensive strategy with higher than average profitability.
This is the next level of investing where you really delve into the details and consider which loans have higher return percentages based on analysis and critical thinking. You can expect well above average returns if you manage to create a strategy based on concrete data. When you look into the loan details, you will notice all the available information about the borrower, which enables you to take into consideration factors like salary, education and occupation area which are all directly related to the loan`s rating and return.
The availability of more information gives you more significant control over your portfolio and allows you to be flexible in case things don`t go according to your predictions. For example, if you see that a specific set of similar loans is yielding unsatisfactory results, you can deduce that a collection of opposing credits might have a higher chance of performing better. Even if some loans have very close ratings and returns, if the originators are different you can expect that the results will most likely also be different. It`s all about combining the right loans and making adjustments based on the outcome.
Iuvo presents investment opportunities in three currencies – EUR, RON and BGN, and all originators offer the option to invest in Euro. Investing in Romanian Leu loans is an especially lucrative opportunity due to their recent introduction to the platform. Loans provided by our Romanian originator are relatively newer and thus more exclusive – there are smaller competition and a significantly high return, up to 14.88%, which turns it into another great opportunity.
What You Should Test
In case you`re still feeling a bit confused about trying out different p2p investing strategies, here are three specific ones that you can try out. See which approach works best for you and structure your investments around it.
1. You can create different portfolios with each originator and invest in loans that have a similar interest rate. For example, try and invest in loans with 10% interest rate, but diversify your funds in a different originator. Track the performance of each portfolio and see which one does best. For best results keep the investment amounts the same.
2. You can invest in loans that have the same or similar score class but have a different country of origin and track how they differ in terms of performance. Maybe you will decide to invest only in score classes E and HR, but iCredit or Viva Credit may give you different returns. You can try a similar strategy with the various currencies on the platform. Create a separate portfolio in each currency and see how it will perform.
3. Try investing in loans that are very similar to each other – same or similar score class, interest rate and country of origin. Then track performance by looking more deeply into criteria such as salary, education and how they differ among the borrowers.
Although many of the loans offered by our originators might seem similar on the surface, many subtle differences distinguish these investments. You have the freedom to craft your investment portfolio as you wish and explore different bold strategies based on all the information, variables and factors. It is testing time, do not hesitate to try to find the best solution for your funds.