If P2P investing is something relatively new to you, you probably have a lot of questions. We were looking forward to gathering the advice of some of the top experts in the field to help you not only start your investments but also start generating steady returns.
Take a look at the business model of the platform and see how it matches your expectations and expectations about the risk-to-profit ratio. For example, business lending is often seen as riskier but with higher returns. Some platforms have “safeguards” that provide additional protection against bad credit. Giles Andrews, Co-Founder & amp; CEO of Zopa
Automate. The best platforms provide reliable data, powerful analytics, and automated investment tools. The key to achieving a maximum return is reinvesting both the principal and the interest you receive. Sometimes, if you do not use the option, this can mean manual credit selection hours. Charles Moldow, General Partner at Foundation Capital
Be aware of what type of investor you are and what your tolerance is to risk. If you just want to save on a slightly higher yield, A-rated loans and an annual return of 6% are a better choice for you than HR credit with an annual return of 22%. If, however, you are looking for the maximum possible return, then a credit with HR rating is more suited to you, along with the risks of deflation that it brings. Stu Lustman, Editor-in-Chief at p2plendingexpert.com
Do not save yourself a proper check. No matter how good historical data or collateral is, any investment risks losing some or all of the funds invested. Check all documentation and all the data you can find. If you have a question about any aspect of the investment, do not invest until you have a response that suits you. If you do not get your answers answered, take it as a red flag. Jason Fritton, CEO & amp; Co-Founder of PatchofLand.com
Write your homework. Not all platforms are the same, not all credit ratings are alike. Credit rating A is not necessarily better than B or C and credit rating A on one platform is not necessarily the same to another. Explain in detail and understand what you invest in. Don Davis, Managing Partner of Prime Meridian Capital Management
Diversify. Once you’ve determined the amount you want to invest, start determining your earnings based on your investor profile. Diversify as many as possible: in a different number of credits, different types of loans, different repayment periods, different credit ratings. Charles Moldow, General Partner at Foundation Capital
Keep in mind that the return of the invested funds takes time and the liquidity is still quite limited, so do not invest funds you may need in the next few months, at least until there is a way for a portfolio to be automatically liquidated. Emmanuel Marot, CEO, and Co-Founder at LendingRobot.