How to create a balanced investment portfolio

Uncertainty about the future, especially in hard times like these, where COVID-19 has changed everything, can cause many worries. The best way to protect yourself and your money is to ensure that you have a balanced investment portfolio.

When you want to start building your investment portfolio, you must consider these three fundamental things:

  • Your financial goals
  • When you’ll need the money
  • Your risk tolerance.

Don’t put all your eggs in the same basket

Diversifying and spreading investments can reduce volatility and protect your wallet.

Your portfolio is a team. Your investments are teammates. It’s important to remember that the whole is greater than the sum of its parts.

Traditionally, a well-balanced portfolio contains three main asset classes: stocks, bonds and cash but investors should look to diversify their portfolios further through other means, such as through p2p lending, commodities, cryptocurrencies, precious metals, etc.

Diversifying protects you from collapse – the failure of one won’t affect the others.

P2P lending diversification

If you decided to diversify your investments by spreading them into P2P platforms, you should remember about further diversification. As P2P lending bring different risks, you should protect yourself by choosing different platforms, markets and borrowers.

Invest in different loan types/markets

P2P platforms tend to focus on just one loan market. This can be either personal, business or property loans. All of them bring different risks. Spreading your money across different loan types reduces your exposure to any risks of these markets.

Lend to different borrowers

To reduce the risk of a borrower defaulting, you should spread your money across different borrowers on a P2P platform. You must keep in mind that some borrowers may have multiple loans on a platform and consider this while diversifying. Remember that any financial issues could potentially impact all of the borrower’s loans.

At Sourced Capital, borrowers are a part of the Sourced Network, which now include over 140 property sector professionals. As the Network is a part of the same group, the borrowers are put through even more steps than your average P2P lender. Sourced’s dedicated support team assess projects rigorously before passed to Sourced Capital for funding, who then undertake their own due diligence steps.

Read more: Location, Location, Location – how Sourced Capital’s  borrowers choose their property investment strategy

If you want to learn more about spreading your investments on our platform, contact us

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