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If you’ve already gone through our previous blog posts – let’s join forces and explore some automatic investing strategies that will help you get the highest return! We will divide them into three categories.
Long-term
The real charm of P2P investing is that it can be used as a long-term passive income instrument. Visible results are achieved through consistency and the investment begins to pay off significantly after the first year. Long-term investment strategies allow you to start more conservatively and then experiment as you go, expanding your zone of comfort. Regarding automatic investing, we advise you to keep it as simple as possible.
To set the automatic investment feature to meet your long-term goals, first select the desired interest rate range. It is best to diversify and invest in loans with different risk levels, which will lead to different levels of interest. For an even greater degree of diversification, invest in a number of originators. Don’t aim for setting your portfolio to invest in loans that already have paid instalments. The earlier you invest in a loan, the higher the return you get from it.
Invest in longer-term business, car and mortgage loans, which are also secured. This way, you invest in lower-risk loans since collateral offers another level of security and the borrower has an additional incentive to repay the loan.
Short-term
Short-term strategies are ideal for testing the platform and exploring the profitability that can be achieved. However, short-term strategies may not always be representative and show you the real yield you could achieve in the longer term, so we recommend that this is not your only strategy. Again, it is best to diversify and invest in loans at different risk levels, which will lead to different levels of interest. Leave the “loan status” field blank. This way you will invest in all loans, regardless of whether they are overdue. Investing in overdue loans is a good idea if you want to make a higher profit because, in addition to standard interest earnings, you also receive part of the overdue fees that some of our originators share with investors.
Do not worry about the funds you invest – The buy-back guarantee provided by each originator protects you in case of a default. If this happens, you will get your money back 60 days after a late payment and you will have the opportunity to reinvest it.
Our advice is to divide your funds into smaller portions. For example – invest EUR 15 (or BGN) in each individual loan. If you have an amount, say 10,000 or more, investing € 50 in a loan is not a bad idea.
Two (or more) parallel portfolios
If you really want to diversify your investment and maximize your profit, one auto portfolio is not enough. That is why we advise you to create at least two, one of which could be riskier and allow you to test new strategies and the other one could be the primary one, sufficiently diversified to provide you with the return you seek in the long run.
Take, for example, a hypothetical situation where you have an account with an amount of 3,000 leva. Plan the construction of two portfolios – a riskier one and a long-term one. First, create your risky portfolio and set it up to 300 leva. Then create your second portfolio (the primary one) and set it to 3,500 leva.
When building your portfolios, use the size and order of creation to manage them. How? Through the size of the portfolio, you determine how much money to invest in specific credits. Use the smaller portfolio when you do not have credits on your primary portfolio so the remainder of your money stays invested.
Why is it important to create your primary portfolio after the risky one? When you have more than one portfolio, the last one you created will be activated as the primary one. That is why we advise you to first create the risky portfolio, and then the basic portfolio.
By building a similar strategy, you will collect the profits from both portfolios and invest it in your risky strategy, which could bring you even higher returns. In general, you benefit from two advantages: security and diversification in your long-term strategy + the potential to obtain high interest rates and delay fees from the smaller risky portfolio.
We hope that this material was useful to you and we keep our fingers crossed that your investments are going well! If you have any further questions, check out our blog and FAQ sections or contact the wonderful people from our customer service team: [email protected]!
