Investment

Auto Invest Through A Peer To Peer Investment Platform

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The most efficacious utility on any trading platform for the seasoned investor is the “Buy” “Sell” action button. Ingenious investors study the market, set their buy – sell target, and wait for the result. This is a resourceful tool for new investors who are leery of trading and its benefits. But wouldn’t it be gratifying for a peer to peer investor if they had such an option of auto invest. An option that lets them set targets — sit back and relax — and reap the benefits of investments. What if we told you that P2P platform also gives you the benefit of auto investing? What if you could set your preferences and — sit back and relax?

Auto Investment

Peer to peer investing is no longer a nascent industry. Its growth has been exponential, and what is astonishing is the fact that both loan applications and investor registrations have advanced at a breakneck pace (based on data from RupeeCircle).

Just like a trading platform, due diligence is needed before using the Auto-invest feature in the peer to peer platform. First and foremost it is imperative to use the P2P platform and understand the nitty gritty and the P2P jargon before setting auto invest.

How to set auto invest?

Purpose of loan

The first parameter that the auto invest feature has is the purpose of loan. There are 10 options to choose from vis-à-vis travel, debt consolidation, home improvement, medical bill, etc. Based on your experience and judgement you can set this parameter. You have the option of choosing one or all.

Borrower grade

This is the most important (and the one that needs careful deliberation) parameter as far as an investor is concerned. Every borrower on (any) P2P platform is categorized on their risk profile; ‘A’ being the least likely to default and hence has lower interest rates assigned to them. Choosing this parameter is not as easy as it seems as it affects the overall return on investment. Before setting this category an investor should also calculate his/her ROI on investment. For example, an auto invest preference with all ‘A’ category borrowers will most certainly guarantee one’s principal but the ROI will be less. At the same time selecting all borrowers from ‘F’ category will ensure a high ROI (as high as 36%) but the risk on investment will be higher.

An investor needs to diversify funds to mitigate risks and maximize returns. This is only achievable through a healthy mix of categories in one’s profile.

Other

Some other parameters that the investor has to choose are based on the following: –

  • Loan applicant’s housing type: For example, would you prefer an applicant living in parental house, own house, company provided residence or rented apartment.
  • Loan applicant’s employment status: A loan applicant can be self-employed, employed, retired, or a pensioner.
  • Gender: To make financial inclusion all inclusive RupeeCircle has listed the trifecta of genders. It’s now up to the investor to select a gender to fund. (However, it is best if the investors stays gender neutral and select all genders).

Investment Amount and Ticket Size

Investment amount is the total amount that the investor needs to credit to their P2P wallet for the purpose of funding to the chosen borrowers. And ticket size is the minimum amount that one borrower will be funded. For instance, if an investor chooses only category ‘A’ borrowers then the ticket size of the loan can exceed Rs10000 or Rs15000, but if the categories chosen are ‘E’ and ‘F’ then to mitigate risks the ticket size should be kept around Rs5000.

Once these parameters are set, it’s the prerogative of the investor to choose the start date and end date of the auto invest feature. It’s now time to sit back, relax, and watch your money work for you.

Vaibhav handles performance marketing at RupeeCircle.com. In his free time, chances are that he's planning his next vacation or playing poker online.

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