Top 3 Peer-to-Peer Lending Tips Prime Meridian’s Don Davis Shared with The Lending Mag
The Lending Mag recently interviewed 30 experts in the peer-to-peer lending space to give their top three investing tips. Prime Meridian’s Don Davis, one of the experts interviewed, shared his thoughts to the question:
“If you could only give a novice peer-to-peer lender 3 tips for successful investing, what 3 tips would you give?”
- Do your homework. Not all platforms are alike, and not all credit grades are alike. An A rated loan is not necessarily better than a B or C rated loan, and an A rated loan on one platform is not necessarily the same as an A rated loan on another platform. Thoroughly research the data and understand what you are investing in.
- Diversify and Reinvest. Invest in hundreds or more loans of various grades, and reinvest the cash flow. In the 70s, watching your bank account grow with compound interest was amazing. Today watching you bank account grow with compound interest is like walking the streets looking for pennies. It just doesn’t add up. With P2P lending, however, it does.
- Consider a fund. If you are accredited, consider a professionally managed fund with an established track record managed by a team that has experience managing money through multiple cycles. A fund has many advantages including instant diversification in a large pool of loans, possibly with older higher interest rate vintages. A fund may also provide greater access and liquidity, and save you a ton of time vs managing the entire process on your own. After all, time is money.
To read the full article and other’s tips, visit thelendingmag.com
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