« Pasta Maker Basics | Home | How and Where to Seek Prescription Medicine Help »
A Unique Investment Strategy: Put Peer To Peer Loans In Your Portfolio
By Louise J. Mares | February 28, 2010
A first principal of a well designed investment strategy is to make sure your portfolio is well diversified. Spreading your risk out over several kinds of investments makes more sense than ever in today’s economic environment. For a profitable and interesting means of adding diversification to your investment strategy, each investor should look into peer to peer loans.
There are many advantages to peer to peer lending, but one of the most important advantages is the unique control the investor has over his portfolio. Each investor reviews and chooses the exact loans, and consequently the risk and rates for those loans. Each investor has total control over where his loans go according to his investment strategy, as you will see in a moment. An investor may even include investor conscientiousness in such a portfolio, much in the way an investor in stocks may choose to allocate a portion of his portfolio to “green” companies.
Some investors have given segments they would like to be involved in, for example education. By reviewing the borrowers’ purposes, you can offer specifically on loans that will be used for educational purposes. By the same token, anyone with a strong interest in helping the environment may want to invest in loans that will make a difference in that area, for example, home improvement loans for improvements that will save energy. In this manner, you can design an investment strategy that is in tune with your civic conscience.
Perhaps you have a goal of investing in a certain area of the country. Your rationale may be altruistic, to assist an area that is trying to grow or reestablish itself. Perhaps loans to people in the hurricane ravaged Gulf Coast area would fit that investment strategy. Or perhaps your research tells you that the southwest is an area that is going to prosper in the future. You can invest in that prosperity by including loans to people in that region in your investment strategy.
And more than any other aspect of this kind of lending, the transparency of the transactions holds a great deal of attraction for jaded investors. Each lender picks the mix of loans in his investment strategy, and knows to whom, where and why the loan is being granted. So many investors today feel burned by the sub prime mortgage fiasco, 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 the real attraction for many investors of peer to peer lending is classic risk diversification. This type of lending allows the investor to divide his investment into many small loans. The risk is extended over a variety of individuals, with many different credit ratings. Any investor can put together an investment strategy that combines different risks and rates for the perfect plan.
Get a loan today with engagement ring financing or investment strategies
Topics: Fund Raising | No Comments »