One of the cardinal rules of any good investment strategy is diversification. The old adage "Don't put all of your eggs in one basket" holds especially true when it comes to investing your money. One way to meet the goals of good return together with a well managed risk strategy is to include a number of peer to peer loans in your investment strategy.
In addition to investment diversification, a major advantage most investors garner from peer to peer loans is the amount of control over each investment. You can distinctly design your investment to suit your investment style and tolerance for risk. You choose individually which risk you are capable of assuming for a given rate of return in your investment strategy. An investor may even include investor conscientiousness in his portfolio, much in the way an investor in stocks may decide to allocate a portion of his portfolio to "green" companies.
Some investors have certain segments they would like to be involved in, for example education. The investor in a peer to peer loan program can review and single out those loans that are intended for educational purposes. If the environment is a concern that you have, you can look for borrowers who are seeking to add solar panels to their homes, or add energy saving measures such as energy efficient windows. Each investor can specifically pick an investment strategy that reflects his own personal concerns.
Another way to design an investment strategy might rely on geographical concentrations. Some may want to invest in a region that needs help. Perhaps loans to people in the hurricane ravaged Gulf Coast area would suit that investment strategy. If an investor concentrates more on economic basics, he may choose to invest in a region because of growth potential, and has targeted a certain region of the country. You can invest in that prosperity by including loans to individuals in that region in your investment strategy.
An added advantage to peer to peer lending as part of an investment strategy is the overall transparency of the transaction. You, as the lender, can view the credit rating of your borrower, the purpose of his loan, and any other important details that would determine your investment. So many investors today feel burned by the sub prime mortgage mess, where they never even knew where their investment dollars were going. This is what happens when investors have little control over their investment strategy because the money is going somewhere other than they direct.
But a major attraction to most investors of peer to peer lending is classic risk diversification. This type of lending permits the investor to allocate his investment into many small loans. This allows for the investment risk to be with different individuals with different risk profiles. Any investor can put together an investment strategy that combines different risks and rates for the perfect plan. - 32383
In addition to investment diversification, a major advantage most investors garner from peer to peer loans is the amount of control over each investment. You can distinctly design your investment to suit your investment style and tolerance for risk. You choose individually which risk you are capable of assuming for a given rate of return in your investment strategy. An investor may even include investor conscientiousness in his portfolio, much in the way an investor in stocks may decide to allocate a portion of his portfolio to "green" companies.
Some investors have certain segments they would like to be involved in, for example education. The investor in a peer to peer loan program can review and single out those loans that are intended for educational purposes. If the environment is a concern that you have, you can look for borrowers who are seeking to add solar panels to their homes, or add energy saving measures such as energy efficient windows. Each investor can specifically pick an investment strategy that reflects his own personal concerns.
Another way to design an investment strategy might rely on geographical concentrations. Some may want to invest in a region that needs help. Perhaps loans to people in the hurricane ravaged Gulf Coast area would suit that investment strategy. If an investor concentrates more on economic basics, he may choose to invest in a region because of growth potential, and has targeted a certain region of the country. You can invest in that prosperity by including loans to individuals in that region in your investment strategy.
An added advantage to peer to peer lending as part of an investment strategy is the overall transparency of the transaction. You, as the lender, can view the credit rating of your borrower, the purpose of his loan, and any other important details that would determine your investment. So many investors today feel burned by the sub prime mortgage mess, where they never even knew where their investment dollars were going. This is what happens when investors have little control over their investment strategy because the money is going somewhere other than they direct.
But a major attraction to most investors of peer to peer lending is classic risk diversification. This type of lending permits the investor to allocate his investment into many small loans. This allows for the investment risk to be with different individuals with different risk profiles. Any investor can put together an investment strategy that combines different risks and rates for the perfect plan. - 32383
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