gc
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Post by gc on Mar 9, 2015 23:44:49 GMT
I decided that I wanted to learn a little and get in on p2p/p2b loans as when done correctly, it can actually end up being an earner over time.
Being quite wet behind the ears when it comes to this sort of investing, I made the classic mistake of investing quickly and heavy and not building up a nice little spread portfolio over time. (
Granted, so far it isn't a mistake as nothing has bounced, but "eggs in one basked" and all that!)
As I have learnt a little more, it seems obvious that one should invest little and often (spread diversification is the key) instead of charging in like a bull in a china shop.
I am intrigued to know how many folk made this classic mistake in their early investing days, or is it just me that is the complete idiot here and everyone just diversified from day one (i'd probably rather you didn't answer the idiot part ;-) ). Basically, what were the mistakes you made in your early days?
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paulgul
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Post by paulgul on Mar 10, 2015 8:54:33 GMT
This is interesting, I'm at that early stage, investing in P2P for less than a week. Being only a small investor to start with, my aim is a total of £2000 until I know what I'm doing.
I've been asking myself how much should I invest in each loan, at the moment I've done 2 investments at £100 each but I read on a site yesterday that you should invest no more than 1% in each loan, so I've gone way over that.
It would be nice to know from others what do they invest in each loan either as an amount or as a percentage of their total investment.
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bigfoot12
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Post by bigfoot12 on Mar 10, 2015 9:53:20 GMT
This is interesting, I'm at that early stage, investing in P2P for less than a week. Being only a small investor to start with, my aim is a total of £2000 until I know what I'm doing. I've been asking myself how much should I invest in each loan, at the moment I've done 2 investments at £100 each but I read on a site yesterday that you should invest no more than 1% in each loan, so I've gone way over that. It would be nice to know from others what do they invest in each loan either as an amount or as a percentage of their total investment. Each of us will have our idea of risks are acceptable. You also need to consider how much you are likely to lose on each loan. And how P2P fits into your overall portfolio. If the loans you have made have a low expected loss then 5% in each loan might not be crazy. If the loans are risky, and unsecured with no provision fund then having 20 might seem too few to many. You need to consider how much effort you can put into this. Reading the documentation can take time. It might be better to read the documentation and fully understand and lend in 20 loans, rather than skimming the front page and investing in 100. You will soon get quite good at rejecting loans without reading everything. You also need to consider P2P as part of your overall portfolio. It sounds like you have other money to invest. If you invest in 20 loans you might be unlucky and a few more than you expect might lose money. Is that going to be a problem for you?
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Post by davee39 on Mar 10, 2015 10:08:46 GMT
Someone completely new might want to consider Zopa/RS where a lump sum investment is relatively low risk.
I have been in and out of FC several times. The first time I used the secondary market to buy loans, last time I only placed small investments across many loans at rates I found attractive. This allowed me to gradually diversify across my current 200+ loans.
It has been suggested that FC is time consuming because you have to read up on the accounts and analyze the companies. For modest investments I think that's like the days when people thought entering the football pools was a game of skill. Dishonest borrowers will lie, accountants will massage the figures and FC will probably make mistakes on the listing. I consider it to be a game of chance. Whatever you do some loans will default so don't just pile into one or two.
I am new to Assetz and have been sending them £100 every few days and gradually increasing my targets across several loans as they pick up tiny loan parts. So far it seems to work and I am fully invested across normal loans and the green account.
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gc
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Post by gc on Mar 10, 2015 16:12:33 GMT
It is a slow process and multi-diversification (try saying that after a few drinks) as in lots of smaller amounts placed and across multi-platforms.
The good thing about boards like this is that after reading around, one soon sees ways of improving their investing portfolio, especially for relatively new investors.
I did see an article that listed a suggested formula for investing and it was explaining that a good idea is to have ones portfolio spread over around 130 or so investments. I will try to look for it again though if anyone knows which one I mean and the url to this, this would be handy.
My tip is to read as much as you can absorb and feel comfortable with before going for it. Though that said, there nothing wrong with playing with tiny amounts and get a feel for how things work as this way if there is any loss, it is just peanuts and it serves as a great learning experience before you invest bigger amounts.
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paulgul
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Post by paulgul on Mar 10, 2015 16:58:38 GMT
Funding Circle suggests spreading over at least 100 loans - www.fundingcircle.com/investors scroll down to minimizing risk - I read this yesterday and it's what made me start thinking my £100 were on the high side for the total amount I want to invest |
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gc
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Post by gc on Mar 10, 2015 17:43:02 GMT
As a beginner I would probably advise starting with much lower amounts and learn how the systems you are using work, plus it is a cheap lesson as you hone your technique.
I made the error of jumping big and hoping for better returns, and though this could work, it really isn't advisable whilst one is learning the ropes.
I can understand that sometimes one may think it isn't worth doing all the homework on a specific investment especially if you are going to invest small amounts and if this is the case then it is probably better to play with safer lower risk investments.
Playing with small amounts, you will come to develop your own style and as you get a feel and feel more comfortable with it you will start to invest larger amounts.
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