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 one 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 includes over 150 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

Project Complete: Wellhouse Lane, Sheffield

The Wellhouse Lane project launched in February 2020. The borrowers of the project were looking for a raise of £297,500. The plan was to sell the property within a 12-month period, generating an estimated profit margin of 21%.

Situated just a short walk from the local town centre on a quiet road in Penistone, the plot of land was purchased with a view to build a 4-bed detached house. Penistone had seen strong growth over the previous 5 years in housing prices, boasting a 21% increase in house prices during this period.

Once Sourced Capital put this project through its rigorous due diligence process, it was accepted to raise the funds on the platform. Listed in February for investment, with a return for investors of 9% with a 2% bonus on investments of £20,000, the project was funded in just 5 minutes.

After months of hard work, Sourced Capital is pleased to announce that all investments into the McCrorie Place project have now been repaid in full, along with an average interest of 11% per annum.

Sourced Capital has repaid £317,581.25 to investors*, after a total of £297,500 was raised, a healthy return for investors in such a short period of time.

Peter Firth, an investor of the Wellhouse Lane project, spoke with Sourced Capital to talk about his experience investing with our platform. You can watch the video interview below.

Stephen Moss, Managing Director of Sourced Capital said: “It’s great to match our investors with great projects. The borrowers are a part of the Sourced Network, meaning that they have gone through rigorous training and have ongoing support from the Sourced HQ team who are property experts, providing an extra layer of security for investors. Despite COVID-19, there is a high demand for projects like Jamie’s as they are of good quality.”

Future Projects

Sourced Capital currently has a number of exciting projects in the pipeline currently and these will soon be available for funding through our platform. All you need to do is follow the link and register your account. You can get set up in less than 5 minutes and you will then automatically be added to our mailing list so you can keep up to date with upcoming projects.

Alternatively, if you’d like to read more success stories from investors, you can take a look at the Sourced Capital blog for updates.

*Capital at risk. No FSCS protection. investment is only suitable for sophisticated and high net worth investors. Past returns are not a guide to future returns.