rambler
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Post by rambler on Dec 19, 2017 11:15:06 GMT
What do other investors here think is a good amount of diversification on this platform?
i.e. out of your total investment here how many % would you consider putting into one loan?
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susan
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Post by susan on Dec 19, 2017 14:53:25 GMT
I do not invest more than 2 % in any one loan and my average is around 0.5 %. This is my favourite P2P site at the moment but I know things can change very quickly.
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james21
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Post by james21 on Dec 19, 2017 14:56:57 GMT
My average is 0.7%, I dont do second charges or assets that I think may be an issue on the valuation in the event of a default, eg boats, cars, land without planning permission
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ashtondav
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Post by ashtondav on Dec 19, 2017 17:21:57 GMT
1% for me rising to 2% if I think it looks tasty and is under 60% LTV. I Don't touch sites without planning permission. Unfortunately in my early days I didn't realise all this and lent several chunks to model railway collectors - well you learn from your mistakes!!!!
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bod
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Post by bod on Dec 19, 2017 18:58:26 GMT
Normally 0.5% rising to 2%. Usually only invest in first charges. If invest more than 0.5% I do so in 2 separate loan parts and only renew the part that will keep me at 0.5%. Tend to this more with new loans and first tranches.
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syalith
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Post by syalith on Dec 19, 2017 19:18:04 GMT
I don't have any maximum investment. If a loan is good enough for £100 then it is good enough for £100,000. If I'm not 100% sure about it then I won't invest at all.
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rambler
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Post by rambler on Dec 19, 2017 19:49:36 GMT
I don't have any maximum investment. If a loan is good enough for £100 then it is good enough for £100,000. If I'm not 100% sure about it then I won't invest at all. It's not the amount I was interested in. After all, £100 to one person might be as risky as £100,000 to another. The question is, if you had a fixed amount available to lend via FS, would you risk it all (100%) on one loan, if you thought it was a good loan, or would you divide it up?
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rambler
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Post by rambler on Dec 19, 2017 19:53:00 GMT
I asked this question having recently put 5% of my FS total into a single loan.
Although it seems a very good investment to me I am already getting cold feet and wondering whether to sell off some on the SM.
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bod
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Post by bod on Dec 19, 2017 20:37:49 GMT
It's probably worth considering in light of the total investment across all platforms, rather than FS alone. It is easier to diversify on paltforms with more loans. I have a higher % invested in individual loans on some other platforms with fewer recent loan offerings eg MT and Ablrate.
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Dec 19, 2017 20:41:40 GMT
I don't have any maximum investment. If a loan is good enough for £100 then it is good enough for £100,000. If I'm not 100% sure about it then I won't invest at all. It's not the amount I was interested in. After all, £100 to one person might be as risky as £100,000 to another. The question is, if you had a fixed amount available to lend via FS, would you risk it all (100%) on one loan, if you thought it was a good loan, or would you divide it up? NO, I wouldn't put it all in one loan. I would bide my time and duly spread it across several loans, possibly slightly proportionate to how "good" I feel each loan is. This is not advice, it is what I would do. 
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Doc
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Post by Doc on Dec 19, 2017 20:57:23 GMT
Even though it sounds a tad arrogant, I like the quote from investor Warren Buffett on diversification - “Diversification is protection against ignorance. It makes little sense if you know what you are doing.” link
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ozboy
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Mine's a Large One! (Snigger, snigger .......)
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Post by ozboy on Dec 19, 2017 21:15:27 GMT
Didn't Buffet buy LOADS of Tesco? |
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guff
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Post by guff on Dec 19, 2017 21:19:42 GMT
Didn't Buffet buy LOADS of Tesco? I usually buy from Tescos if I'm having a buffet.
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Doc
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Post by Doc on Dec 19, 2017 21:30:02 GMT
Didn't Buffet buy LOADS of Tesco? Even the best investors/lenders can get it wrong ... that said I would be happy to get close to Buffets average return on investment (Over 52 years ... 20.8% per year, or slightly double that of the main market)
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kermie
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Post by kermie on Dec 19, 2017 21:51:00 GMT
Anyone thinking diversification is silly would be wise to review all the "Unredeemed" loans on FS, and try to convince themselves that they would have "avoided" each and everyone without the benefit of hindsight.
It is true that diversification will tend towards the average return (which for some is not sufficient) - but Buffett also says that for most people "index trackers" are the way forward - the equivalent in P2P is extreme diversification and/or automated lending that takes a small slice of each loan.
Even if a loan looks wonderful on paper, there is always the chance of (a) security perfection cock-up, (b) fraud, (c) platform failure
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