Everyone wants to be a successful peer to peer lender, but there are many who simply cannot avoid mistakes. That is why today everyone wants to know the biggest mistakes that the investors make and how to avoid them. As the marketplace lending industry tends to grow continuously, the lending platforms will also grow. Money lenders are ready with the money but are careful about the investing options in peer to peer lending in India. LenDenClub is a safe and simple Peer to Peer lending platform for investor, making it easy to invest and get high returns on investment. However, it is significant that you as an investor know the basics of investing; where and how to invest when you enter the peer to peer lending platform.
1. Diversification is the key
This rule should be accepted by all to avoid an unpleasant experience. Diversify and do not put all your money in just one option. Spread your risk as widely as possible. There are hundreds of loans here, and you can study them carefully to make your choice. You have to minimize the risk of defaults and protect your money. Diversification will increase your profits than the defaults. At LenDenClub you can get wide range of borrowers with different interest rates so that it will be easy for you ti diversify your investment in different borrowers.
2. Start slow
If you are just starting out to invest, go slow; you do not have to rush and invest a large amount into loans. Smaller amounts will be better, to begin with, to know how the market responds and how your money is repaid. With small loans, you can be satisfied and will not panic in case of dreadful events. This can also be a good lesson for beginners.
3. Risk tolerance
Everywhere there is a risk tolerance, and everyone has a certain level of tolerance. You need to know yours as well before you invest the amount. Money lenders have to know the risk attached to it before investing. A low-grade borrower will bring higher yields but greater risks as compared to a high-grade borrower. LenDenClub makes it easy for you to understand the risk by segregating the borrowers in different risk categories, this will surely help you to invest wisely and safely.
4. Reinvest your payments
The moment you start receiving payments, you can sit and think of reinvesting. You do not want the cash to earn 0% for a longer period. At LenDenClub you can get your returns on monthly basis so now you can choose a better borrower and reinvest in new loans. With a diversified loan, you can earn more often, and this will give the benefit of reinvesting in other bigger or smaller loans. Do your own analysis and study the market and the company you are investing in carefully. Always check the borrower from time to time if you want to reinvest in the same company.