There are many strategies in investing in P2P Lending, several of which were outlined in our last series of posts by New Jersey Guy and his experience with FOLIOfn. You should note that those 3 strategies were just a taste of the secondary market and there are some very dedicated people out there who are trying out all sorts of strategies. Just hop on over to the Lend Academy Forum and I’m sure others could teach you a thing or two. I’ve heard New Jersey Guy mention diversification within peer to peer lending investments several times and it is something I now realize I knew nothing about.
I think a lot of investors when hearing this would immediately think of not just investing in one of the platforms, but rather in Lending Club and Prosper equally. Some likely think about diversifying in lower grade notes along with the higher returning - high grade notes. Of course, there is always making sure you have enough notes (LendingRobot’s Diversification Graph). These are all valid ways to diversify, but the secondary market really opens up many more ways to diversify.
In some ways, using different filters and how the picks are chosen is a way to diversify. Thus, I thought it would be interesting to look at all of my portfolios since I started investing.
Here is a quick key due to the ones that got cut off or might be confusing to some readers:
- FOLIOfn - secondary market notes
- Hand-Picked High Grade - Portfolio I created once I realized the potential for higher returns
- IR = InterestRadar (These were hand invested at feeding times using their ranking)
- LendingRobot - Automation Our coverage here Signup/Automate yourself: here
- P2P-Picks - Some of these are automated with BlueVestment - others were handpicked on P2P-Picks directly
- Riskier Portfolio - Part of my starter portfolio where I began to select slightly riskier notes
- Starter Portfolio - Pretty self explanatory, my very first portfolio
- Test - Who knows
You can clearly see how my strategies have evolved over time and I think a lot of P2P lending investors go through several transitions as they continue to learn.
How I am Investing in Peer to Peer Lending Today
This obviously changes fairly often as new tools are released and I decide to try them to benefit other investors. However, right now I’m giving FOLIOfn a try. After reading and learning so much about FOLIOfn - I just couldn’t resist. As a fallback, I have a threshold on my account with BlueVestment set to $100 so I never really have much more than that available in my account. I do not use the filter feature, but simply use P2P-Picks profit maximizer - top 25%.
My weighted average interest rate is still fairly high at 17.71% and my average age of my portfolio is 5.1 months. So am I diversified? Probably not as much as I could be, but I couldn’t be happier with my returns so far.
Share your thoughts about your portfolio, strategies or diversification in P2P lending in the comments!