Many Lending Club investors are looking for advice and investment strategies to help them reduce the risk of defaults and thereby ensure a good return on their peer loan investments. There are many articles and blog posts with advice from investment professionals. While many of the principles are the same, there are some significant differences as well. More importantly, there is some information that we believe is inaccurate and may actually hurt your loan portfolio performance.
The analysis below looks at some of the advice available to investors as well as theoretical assessment of some criteria. In addition, our extensive analytic analysis is cited in order to help you determine the best way to evaluate loan investments. PeerLoanAdvisor.com has evaluated over 1,000,000 peer to peer loans in order to develop our proprietary loan rating system. We are happy to share some of our findings with you.
Peer to Peer Loan Investing Strategies
The first step in developing an investment strategy is to determine your risk tolerance. Risk tolerance is based on how concerned you are about the possibility of losing money on your investment. Investors expect a higher return on risky investments in order to compensate them for the additional risk. What makes an investment risky? Normally, it is the possibility of losing some or all or your investment. United States government bonds are considered safe investments because it is extremely unlike that the United States government will be unable to pay interest on its debt.
Lending Club investors can adjust the riskiness of their portfolios based on the grade associated with each loan available to investors. Loans have a grade from A to E, with A being the least risky and E being the most risky. Risk averse lenders will normally select A and B grade loans. Investors with a high risk tolerance will likely select loans in the C to E grade range. Investors using Lending Club’s automated investing tool can choose to accept all grades (with the loans spread out across grades A through E) or they can set the mix of grades that they want their portfolio to reflect).
Why choose PeerLoanAdvisor.com?
You choose the loans you invest in.
You decide how much to
invest in each loan.
You maintain control of your
account and investments.
You do not share your personal
financial data with anyone.
You determine your investment
strategy and risk level.
The loan ratings provided by PeerLoanAdvisor.com is an opinion and is for information purposes only. It is not intended to be investment advice. Seek a duly licensed professional for investment advice. Analysis on this site, including ratings, and and information provided are statements of opinion as of the date they are published and not statements of fact. Loan ratings are not recommendations to invest any loans or to make any specific investment decisions. PeerLoanAdvisor.com assumes no obligation to update the loan ratings for content following publication in any form or format. Loan ratings and information on this site should not be relied on and are not a substitute for the skill, judgment and experience of the user and their investment advisors when making investment decisions.