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Peer to Peer Trader [P2P] P2P invest

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Development of a concept for a P2P portfolio

Everyone is welcome to participate in the development of a portfolio concept by bringing in new ideas or suggestions for improvement.

Foreword: the concept that I have presented is merely a first draft that will evolve and change over time through new insights. neither the listed companies nor the current weighting of investments are final.
In addition, the concept I designed is just what I want it to be and should not be copied because everyone has different goals and interests. consider my concept as a mind game.

Diversification is the term used to refer to '' optimal '' diversification in order to increase opportunities and reduce risks. This is superordinate to the diversification of money into various asset classes such as cash, stocks, commodities, bonds, real estate, human capital ... .

This example deals with the diversification within a capital investment, in this case the P2P investment.

Diversification possibilities within the entire P2P portfolio

Country risk - invest in different countries.
It makes sense not only to be subject to one regulation and legislation, the laws can change to our disadvantage.
In addition, one should also pay attention to the country ratings, so Spain is in the criticism many bankruptcies to have loans.

Currency risk - because currencies can depreciate and a creeping inflation can eat up the yield without us noticing.
(The euro has an annual inflation of about 2% p.a.)
However currency exchange causes additional costs and in my P2P portfolio I will refrain from a currency diversification.

Companie risk - not having all the money in one account, it makes sense to divide your planned investment among several companies.
In the event of insolvency, the entire portfolio is not affected at the same time and may possibly be offset by interest gains elsewhere.
At this point I would like to draw attention to an analysis that I read some time ago: http://mintos-independent-review.blogspot.de/2016/10/peer-to-peer-lending-platform-mintos.html? m = 1.
Here the connection of many Baltic p2p platforms to each other is shown.
Accordingly, I will consider the various Baltic platforms, within my P2P portfolio, as one investment and not as already diversified.

Credit risk - There are many different types of credit, such as consumer credit, business loans, start-up loans, short and long-term loans, real estate financing and more.

I distinguish 3 areas:
1. Consumer credit
2. Corporate Finance (here we learn a new term: P2B = peer to business)
3. Real estate loans

The different P2P providers mostly specialize in certain consumer groups. I plan to invest in all 3 areas,
to diversify more optimally.

Diversification options within a P2P platform

Invest in different types of loans

Investment in loans with different maturities

Invest in loans from different regions

Investing in loans across different currencies

Investing in loans with different returns

Investing in loans with and without a surrender guarantee

Investment in loans from various lenders

These diversification options will vary from p2p platform to p2p platform, depending on the business model.
Some platforms have less and others more diversification possibilities, which also explains why I differentiate between the whole portfolio and what you have in a platform for possibilities.

Ultimately, you can achieve optimal diversification and higher stability and security if you use all the different methods and do not just pick one or the other.

Portfolio weighting methods:

by market capitalization,
also called stock market value or stock market capitalization; related to a single company.
by gross domestic product (GDP),
based on countries and regions
by equal weighting,
every country / region / companie gets the same weight

Since P2P is a riskier investment for me compared to a diversified ETF portfolio, I would like to take advantage of the opportunities and prefer the 'better performers' by using the market capitalization method for this portfolio

Portfolio rebalancing methods:

Portfolio Rebalancing: why it makes sence

by calendar rebalancing
by investment limit rebalancing
by cash flow rebalancing

I will use a cash flow rebalancing. Whether I design the cash flow rebalancing using the calendar method or the investment limit method, I will decide during the course of the year.

Portfolio weighting details

Consumer Credit - 70%:

Mintos - Latvia, € 612 064 793 M rounded to 612 M => 45% =>............ 30%
Twino - Latvia, € 500 M rounded to 500 M => 37% =>........................... 20%
Bondora - Estonia, € 122,4 M rounded to 122 M => 9% =>.................... 20%
Viainvest - Latvia, € 97 047 000 M rounded to 97 M => 7% =>.............. 10%
Robocash - Latvia, € 46 000 000 M rounded to 46 M => ...% =>.............10%
Swaper - Latvia, € 30 M rounded to 30 M => 2% =>.............................. 5%
Finbee - Lithuania, € 13 531 995 M rounded to 14 M => ...% =>.............5%

Real Estate Loans / Corporate Finance - 30%:

Estateguru - Estonia, € 51 774 833 M rounded to 51 M => 98% =>....... 50%
Bulkestate - ............................................................................................. 30%
Flender - Ireland, € 1 293 763 M rounded to 1 M => 2% =>................... 20%

<===============================>
10% of the total investment in other currencies and non-European providers?
I will review and develop this option over time. I can not make a final decision because I still lack a lot of information that I will start collecting now.

Ratesetter/australia ?
Swiss ?
USA ?
China ?
GB ?
Japan ?
others ?

<===============================>

To make it a little easier for the portfolio weighting in terms of market capitalization, I will very roughly round up and down.
Even though my weighting is now quite different from the actual market capitalization, I think that this weighting makes sense.

Because the consumer credit platforms are doing very well so far for me, and also have very good interest rates, I would like to give these platforms a preference by a high weighting. (A 70% weighting is an aggressive approach.)

Initial invest exit strategy

The idea behind this'exit-strategy''is the initial investment, in the next 4 years, in 4 steps, to pull out of the P2P-portfolio, and to let the P2P-portfolio continue only with the win.

Implementation idea:

- after one year: -1.000,00 Euro
- after two years: -2.000,00 Euro
- after three years: -3.000,00 Euro
- after four years: -4.000,00 Euro
(after 4 years: -10.000,00 Euro)

Since P2P lending belongs to the highest risk class (but still under CFDs, Bitcoin and co). It makes sense to think about how best to protect your money and get it back.

With this payment plan, the initially invested money is released and can be reinvested without having to dissolve the P2P portfolio. The risk is only limited to the profits from this investment.

Provided that nothing serious happens within the next 4 years.
(see 2008)

Although this concept is still very sketchy, I would like to publish it now.
I will continue to develop this idea in public, the aim is to improve and implement the concept by the end of 2018.

Disclaimer

What clearly differentiates this page from other financial pages on steam

I also read a lot of books on finance and investments to mention that

Since today I mainly deal with the risks, I would like to explain something to my side.

The P2P page you are currently on, otherwise you would not read this article, is not a business model in the sense that I intend to earn money with it.
First and foremost, I want to share my interest with others, how others share their hobbies and interests on the internet with others to talk about, because you just enjoy it yourself.

But why then the Paypal link and the '' bonus '' advice of the Broker platform?

If brokers bonuses are offered why not call attention?
If someone decides to invest in P2P loans, he can of course use my links, but he does not have to.
I have on a professional P2P page inquired on this subject, on the bonus links were also offered, but I did not use this from distrust.
In retrospect, I now know that it would not hurt me and I would have had a little more money, if not very much.
However, it did not hurt me and I'm still very satisfied.
(I would never make a investment decision because I am offered a bonus)

As someone who 'claims' to be intensively involved in finance, it is almost natural that you incorporate such possibilities on your side.

I can safely say that so far no payments have been received and I have not yet ordered a Ferrari, also I have in this regard, no special expectations.
There is no advantage for anyone on this site because he used the Paypal link.

Advantages on this site you have when participating and inviting friends but not when you make transfers to me.

My business model is the investment I make and nothing else.

Without wanting to maul someone, it is very noticeable that on other financial pages on steam the admins are often not reachable, there are also no warnings and no updates.

just a lot of links that lead directly to speculation.
These pages are clearly business models and are designed to tempt speculation.

Disclaimer

The Modern Portfolio Theory (MPT): Science Proposes Practice

In the meantime I have addressed the Modern Portfolio Theory a couple of times and thought that I should also write something to give a little insight.
What matters to me in particular is sensitizing for the risks.

I've often talked to '' credulous '' Bitcoin fans, and it's been proven, and so far without exception, that the ones I talked to basically do not even have a basic understanding of money and investments.

My comments on high-volatility speculation (bitcoin deals are speculation and no investment) have often been emotionally responsive as if I had offended someone.

I can only give advice to those who are really interested in finance and investments, especially if you do not know much about investments to keep your hands off cryptocurrencies.

Source: Sovereign investing with index funds and ETF´s
by Gerd Kommer (German book)

In 1990, three American financial economists - Harry Markowitz, William Sharpe, and Merton Miller - received the Nobel Prize for Economics for their contributions to a theory building that has undoubtedly revolutionized knowledge of financial investment since the mid-1970s. This theory building has become known as '' Modern Portfolio Theory '' (MPT). The MPT provides a number of amazing insights and is also the basis of a smart investment strategy that even ordinary retail investors can implement. Investors who do not know the basic principles of MPT, which are complex in mathematical terms but are difficult to understand in their conclusions, can be compared to joggers who want to win a triathlon without training - a futile and dangerous (financial) health undertaking.

Here are the most important statements of the MPT:

Risk and return are inextricably linked. Returns are first and foremost premiums for expected risk: Without risk, there can be no return. High-risk assets must compensate for this higher risk through higher expected returns. However, these higher returns are not guaranteed for every period (otherwise they are risk-free). Among the major asset classes (equities, real estate, commodities, fixed-interest securities, short-term money market investments), equities offer the highest long-term returns, but also the strongest fluctuations in returns (risk).
The value of an investment (expressed in its security price) is determined primarily by the expectation of future cash flows to the investor (ie, dividends and interest) and their volatility. Past payments, such as past dividends or statements in the company's financial statements, ultimately do not matter. Strictly speaking, irrelevant snow from yesterday.
The majority of private and institutional investors fail to beat the market (represented by a corresponding securities index, such as the DAX or RexP, a German bond index) on a permanent and long-term basis, taking into account risk and transaction costs. Although there is a small group of outperformers for a given time interval, this excess return - as the prevailing majority opinion in science - only happens by chance.
The smaller group of outperformers in a given unit of time, for example one year, changes in composition from period to period and is unpredictable.
Trying to beat the market is not free. Investors who make this attempt will necessarily have to face higher risks of loss to buy out the chance of outperforming. Due to the also mostly higher transaction costs of these investors, most of them end up below the market average net yield.
The financial markets are highly information-efficient social systems. In the current market prices (security prices), all available (public) information including expectations and assumptions are already priced in. No investor can hope to know more in the long term than the market as a whole.
When an investor discovers a '' market anomaly '', that is, a competitive advantage that allows him to successfully track under or overvalued securities, the market (the other investors) copies that strategy and destroys its effectiveness.
Securities markets have no memory, that is, historical returns have no relevance or predictive power for future returns, at least for periods of one to five years. In the short term, prices on the capital market (stock prices, bond prices, foreign exchange rates) are followed by a reliably predictable "random walk". For periods well beyond five years, on the other hand, '' regression to the mean '' is observable, which means that for very high annual returns, with a slightly greater probability than 50%, tend to be below average returns and vice versa.
By using a particular form of diversification across individual securities and across multiple asset classes, it is possible to eliminate around two-thirds of the risk (volatility) of individual securities without a simultaneous loss of return opportunities - or, conversely, to maximize return for a given risk. Portfolios constructed in this way are called "efficient" portfolios.
By far the most important single influencing factor on the performance of an overall portfolio (meaning the net return taking into account the risk) is its asset allocation, ie its specific allocation to entire asset classes. By contrast, for example, the portfolio's distribution to certain individual securities (stock-picking) or the timing of purchases and sales (market-timing) for the portfolio's long-term success have only a minor effect - both positive and negative. Taking into account trading costs, stock picking and market timing have a negative impact on investment performance on average.
Although active portfolio management is a loser game for the investor, three other institutions are well aware of this:
(a) the financial industry, the banks, investment advisers, fund companies and securities traders, which collect significant commissions and expenses;
(b) the numerous financial publications that earn week after week on the investment recommendations of their'Expert 'people;
(c) Father State, who is looking forward to more capital gains tax or income tax.