6 Ways to Maximise Returns from Your P2P Investments

06 April, 2018

When you become a lender with a P2P firm, the first thing on your mind is “How to get the maximum returns from your investment?”. Peer-to-peer lending allows you to diversify your investment portfolio and earn an average return of 18 to 22% per annum. But if you are looking for ways to earn some stellar returns on your P2P investments i.e. to say up to 30%, here we have a guide to help you get there.

Diversify the Loans

Your chances of earning good returns on a P2P investment go down if you are not diversifying your investments. Diversification acts as a cushion against loan defaults. The more the number of loans you are financing, the higher are your chances of earning a good return. For example, if you are planning to invest ₹500,000 then keep your loan investment amounts limited to ₹2,500 (0.5% of the total investment). This brings us to our next point.

Be Selective About Your Loans

While you can earn on your investment in a P2P loan, to earn better you will have to look at the loans individually before investing. Instead of going for loans with higher amounts, invest in loans with a moderate credit requirement as these loans are easier to repay for borrowers.

Never Go All-in

One thing to know about P2P lending is that you should invest slowly instead of getting in the swing of things at once. Investing 1% of your loan portfolio in each loan is advised. Wait a while to see the returns and then repeat the process when you are sure of the ROI.

Investing in Long-term Loans

While conventional wisdom suggests quick investments and returns, you can get a bump in the interest rates by going for longer term loans. Although, there is always a risk of defaults, they are rare on platforms such as Monexo due to a robust borrower screening and collection process. Apart from that, if you have already followed point number two, you have already minimized that risk.

Auto Invest

A smart and easy way to diversify your P2P loans. Simply set your own rules with Auto Invest for lending to borrowers according to their risk rating. You can also assign the maximum amount that can be invested in a single loan account. P2P lending companies like Monexo have a smart auto-invest engine which automatically releases funds for loans that meet your investment criteria.

Reinvest the Interest

Once your investments are streamlined, you will start receiving interest payments. Make sure that you reinvest this amount to raise your investment threshold. However, the money you will receive will have both principal and interest elements, so do keep that in mind when reinvesting.

Lastly, investment is also an art, and you become wiser as you travel down the lane. Implementing these principles will help you understand the marketplace better and become a pro P2P investor.


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