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Post by dutchman on Nov 22, 2017 14:22:39 GMT
hi,
Just curious what investment size you (on average) choose per 1 investment and why?
Do you choose small amounts to spread out risk over many investments, or bigger amounts for another reason?
thanks,
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jonno
Member of DD Central
nil satis nisi optimum
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Post by jonno on Nov 22, 2017 14:37:31 GMT
Not sure whether you're referring to P2P or stock market etc (or both) in which case it would be difficult to answer as generally my P2P individual investment level tends to be much lower than stocks and funds.
Also re P2P my investment amount varies widely depending on the platform. So, not sure I can vote 
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SteveT
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Post by SteveT on Nov 22, 2017 14:38:24 GMT
In isolation, the question is utterly pointless. Investing £100 in a loan when you only have £1,000 is wildly different from investing £100 out of £1,000,000
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Post by dutchman on Nov 22, 2017 14:38:54 GMT
yes p2p
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Post by mrclondon on Nov 22, 2017 14:47:42 GMT
Agreed, this is a fairly pointless poll ... p2p forum members range from those who routinely make bids per loan of £20/£25 through those making bids of a few thousand pounds to those making £100,000 and the odd ones who prefer blocks of £400,000 plus per loan.
You really need to consider a "normal bid" in terms of a percentage of all p2p investments. Unless you do a lot of due dilligence (DD) on each loan to weed out those that appear to be higher risk, it is wise to diversify across lots of loans so invest no more than 0.25% or 0.5% of your p2p investments in a single loan. With some DD, 1% of p2p investments per loan is fine (and is my limit, more normally I'm at 0.75%), above 1% IMO really needs a greater level of disclosure of risk factors than p2p platforms (and their borrowers) are willing to provide.
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rick24
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Post by rick24 on Nov 22, 2017 15:06:28 GMT
It depends on the platform but I would usually invest 0.2% or less of my total p2p investment in each loan. My largest percentage is 2.3%.
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Post by dutchman on Nov 22, 2017 15:08:34 GMT
In isolation, the question is utterly pointless. Investing £100 in a loan when you only have £1,000 is wildly different from investing £100 out of £1,000,000 Hi Steve, Sure there are many options... Somebody with £1,000,000 may want to invest £10 via autobids to create a smooth income stream or invest £1000 because he/she wants to do it manually and somebody with £1,000 may just be playing to see if p2p works so manually picks 10 £100 investments or prefers to set it as low as possible... i'm just interested to see why people choose larger or smaller amounts to invest per loan... perhaps i can learn, missed something...
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Steerpike
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Post by Steerpike on Nov 22, 2017 15:10:33 GMT
Agreed, this is a fairly pointless poll ... p2p forum members range from those who routinely make bids per loan of £20/£25 through those making bids of a few thousand pounds to those making £100,000 and the odd ones who prefer blocks of £400,000 plus per loan. You really need to consider a "normal bid" in terms of a percentage of all p2p investments. Unless you do a lot of due dilligence (DD) on each loan to weed out those that appear to be higher risk, it is wise to diversify across lots of loans so invest no more than 0.25% or 0.5% of your p2p investments in a single loan. With some DD, 1% of p2p investments per loan is fine (and is my limit, more normally I'm at 0.75%), above 1% IMO really needs a greater level of disclosure of risk factors than p2p platforms (and their borrowers) are willing to provide. Perhaps the poll might have been more useful if it related to maximum and/or average % of total p2p investments, I have strayed up to 5% but usually stay below 1%. Another problem with this type of poll is that the amounts are likely to vary widely according to platform.
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Post by dutchman on Nov 25, 2017 11:51:07 GMT
Regarding % ("normal bid" in terms of a percentage of all p2p investments)
Couldn’t you make the same arguments as for loan size amount?
Since, a person who is investing €1,000,000 will almost automatically have a lower % than a person investing €1000
And also this would depend on platform used due to minimum investment.
And why would you want to invest your €1,000,000 in 0,25% parts (€2500) instead of €10 (assuming the minimum is €10)?
As mentioned above “is wise to diversify across lots of loans”… so isn’t more better?
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hazellend
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Post by hazellend on Nov 25, 2017 12:26:16 GMT
Regarding % ("normal bid" in terms of a percentage of all p2p investments) Couldn’t you make the same arguments as for loan size amount? Since, a person who is investing €1,000,000 will almost automatically have a lower % than a person investing €1000 And also this would depend on platform used due to minimum investment. And why would you want to invest your €1,000,000 in 0,25% parts (€2500) instead of €10 (assuming the minimum is €10)? As mentioned above “is wise to diversify across lots of loans”… so isn’t more better? Because you would never get fully vested and if you did would have complex mess to monitor
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SteveT
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Post by SteveT on Nov 25, 2017 15:12:49 GMT
And even if you did manage eventually to become fully invested, by buying £10 of everything you guarantee to do no better than the platform average, which is often pretty poor. Put another way, you’ll have a share of every default as well as every performing loan.
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Post by Deleted on Nov 25, 2017 15:34:42 GMT
I have two strategies but only one vote................... 
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Post by munchydave on Nov 25, 2017 15:39:20 GMT
And even if you did manage eventually to become fully invested, by buying £10 of everything you guarantee to do no better than the platform average, which is often pretty poor. Put another way, you’ll have a share of every default as well as every performing loan. I agree, however the platform average will give a reasonable probability of a positive return. Putting it all on one horse may give great returns but you can also loose the lot. Your choice, A small but reliable return or risk total loss of capital. I try now to follow the FC advice of no more than 1% of capital in any one loan.
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SteveT
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Post by SteveT on Nov 25, 2017 15:56:57 GMT
And even if you did manage eventually to become fully invested, by buying £10 of everything you guarantee to do no better than the platform average, which is often pretty poor. Put another way, you’ll have a share of every default as well as every performing loan. I agree, however the platform average will give a reasonable probability of a positive return. Putting it all on one horse may give great returns but you can also loose the lot. Your choice, A small but reliable return or risk total loss of capital. I try now to follow the FC advice of no more than 1% of capital in any one loan. No-one is suggesting putting it all on one horse but there comes a point (be it 10%, 1% or 0.1%) where further diversification does more harm than good. I’d much rather have funds in 100 loans I’ve looked at individually and consider “better than average risk for the rate” than in 1,000 loans I’ve no option but to invest in blindly.
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Post by charlata on Nov 25, 2017 17:23:55 GMT
Agreed, this is a fairly pointless poll ... p2p forum members range from those who routinely make bids per loan of £20/£25 through those making bids of a few thousand pounds to those making £100,000 and the odd ones who prefer blocks of £400,000 plus per loan. You really need to consider a "normal bid" in terms of a percentage of all p2p investments. Unless you do a lot of due dilligence (DD) on each loan to weed out those that appear to be higher risk, it is wise to diversify across lots of loans so invest no more than 0.25% or 0.5% of your p2p investments in a single loan. With some DD, 1% of p2p investments per loan is fine (and is my limit, more normally I'm at 0.75%), above 1% IMO really needs a greater level of disclosure of risk factors than p2p platforms (and their borrowers) are willing to provide. I'm always amazed by the number of loans people have. I spend perhaps 10 hours a week on P2P, and struggle to stay abreast of a portfolio of 50 loans. 500 hours a year for a portfolio in the lower six figures is already a pretty crazy amount of time, but I figure some people spend more time than this on suduko or candy crush. From a perspective of smoothing annual returns 50 loans is sufficient to keep within +-2% of the mean, and I see little reason to diversify further. I don't really follow the connection between risk disclosure by platforms and diversification. I can see how risk disclosure effects the amount one might want to put in to P2P, but not how much you put into each loan. I might even argue that the limited information supplied by platforms allows greater scope for active investors to beat the market, and as such would favour a lower level of diversification with more time spent on each loan.
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