IFISAcava
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Post by IFISAcava on Apr 20, 2017 11:45:27 GMT
I have taken the view that diversification is key in p2p investing as i don't think i will ever have the expert knowledge or time to closely study every loan offered, or indeed the the financial stability of the various providers.
This means i have now invested in 29 platforms, between £1000 and £25000 (my current upper limit per platform) on each, with varying risk/return approaches. This gives a projected return of 8.5% pa give or take. Currently about 1/3 in ISA wrapping, aim to increase this over time. And as I get more diversified I may switch out of the lower interest/provision fund offerings. (It takes quite some time to build up a position in the 12% loans).
Many people i read here stick to a smaller number of trusted platforms, and/or aim only for higher returns to cover the overall risk, on the basis that diversification WITHIN platforms is a good as BETWEEN platforms.
What is people's views on the ideal number of platforms to minimise risk? Am I overdoing it?
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elliotn
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Post by elliotn on Apr 20, 2017 12:02:43 GMT
6
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Post by cautious on Apr 20, 2017 12:06:20 GMT
Well now I feel inadequate; I've only got 3 platforms.
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Post by Deleted on Apr 20, 2017 12:08:45 GMT
29 spread over 1k to 25k, too many?
Yep
8.9% (assuming after estimates of bad debts etc) if this was my only investement I'd say too high, if only small parts of my investements I'd say too low.
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Post by nesako on Apr 20, 2017 12:10:37 GMT
Looking after 29 platforms pretty much makes it a part-time job? If you have that much money, you should really diversify outside the P2P, unless you already have substantial amounts in Stocks & Shares etc.
In terms of P2P, I can probably agree with around 6....
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IFISAcava
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Post by IFISAcava on Apr 20, 2017 12:17:13 GMT
29 spread over 1k to 25k, too many? Yep 8.9% (assuming after estimates of bad debts etc) if this was my only investement I'd say too high, if only small parts of my investements I'd say too low. I suppose some of the rationale for the sites with only £1-2000 in is to get a feel, and then to go bigger on those i like and leave those i don't. I am still a little wary of going above 10% of total p2p in any one platform though.
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IFISAcava
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Post by IFISAcava on Apr 20, 2017 12:22:54 GMT
If you have that much money, you should really diversify outside the P2P, unless you already have substantial amounts in Stocks & Shares etc. In terms of P2P, I can probably agree with around 6.... I have 21% (excluding main house/pension) in P2P and thinking that 25% is my cap. Just under 20% in stocks&shares.
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IFISAcava
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Post by IFISAcava on Apr 20, 2017 12:24:22 GMT
Whole thread on it here - and within that links to other similar discussions. Thanks - will take a look
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IFISAcava
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Post by IFISAcava on Apr 20, 2017 12:35:07 GMT
Looking after 29 platforms pretty much makes it a part-time job? Was hoping that after the effort of set up, initial diversification etc would be less effort: maybe i am wrong...
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IFISAcava
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Post by IFISAcava on Apr 20, 2017 12:39:45 GMT
which means around minimum 17% per platform - probably 25% if being flexible with allocations. A bit high for the risk of platform failure?
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Post by tybalt on Apr 20, 2017 13:09:50 GMT
Harry Potter fans 9 3/4 otherwise I have no idea. Provided the platform is profitable,has a plan for wind down and is long established I am not bothered.
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Post by Deleted on Apr 20, 2017 13:20:55 GMT
I'd avoid the business models that
1) cannot work (cash flow cannot generate sufficient to stop the cash burn emptying the coffers)
2) those who demonstrate that they cannot manage critical activities.
3) are working in just one industry sector
That cuts a lot of Portals out and even challenges two of my dead-in-the-water portals, the trouble is I only found out about their weakness after already investing with them, so I understand your need to get "wet". In that particular case one has recognised their weakness and re-shaped the business (and so make it unattractive if more survivable (and making my present holdings much safer) while the other will just slowly release my cash.
I struggle to imagine that there are 29 portals that satisfy these three basic conditions.
Portal failure, you have to ask two questions,
Are all portal failures equally likely?
By spreading my portal numbers am I reducing the overall potential loss from portal failures or expanding from an area of low risk into one of high risk and so increasing my overall potential loss from portal failures?
Given that you cannot manage all the loans across 29 portals, I struggle to see how you can also monitor the management of 29 portals. I think you diversification strategy may be a mistake and also be costly in time, but only time will tell and good luck.
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metoo
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Post by metoo on Apr 20, 2017 13:44:17 GMT
That cuts a lot of Portals out and even challenges two of my dead-in-the-water portals, the trouble is I only found out about their weakness after already investing with them, so I understand your need to get "wet". In that particular case one has recognised their weakness and re-shaped the business (and so make it unattractive if more survivable (and making my present holdings much safer) while the other will just slowly release my cash. I could try to do some guessing, but would be interested which portals you favour and which 2 you are still in but consider reformed / weak. Also your reasoning leads to the thought that platforms dependent on one sector could go under when their sector gets hit, though we can't guess how serious or not the platform collapse would be for lenders, depending on the wind-down arrangements. Of course it would probably take away the ability to sell out in a secondary market, whether or not the platform survived.
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littonowl
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Post by littonowl on Apr 20, 2017 14:10:34 GMT
About a dozen for me spanning: property, bridging finance, pawn items, SME, BTL, Renewables etc.
Good communication from Reps on here is a strong factor for me, amongst other things, such as quality of loans (number of defaults), dealflow, secondary market?, interest rate, LTV, CS.
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Post by wiseclerk on Apr 20, 2017 14:17:10 GMT
I have more than 20 with money invested and many more where I am registered but have not invested.
But that is because I have a professional interest in checking and experiencing platforms first hand.
I think for a "normal investor" 4-8 is more than enough to offer sufficient diversification of p2p lending assets.
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