Diversification

Diversification is a risk management strategy commonly associated with the phrase “Don’t put all your eggs in one basket.” The idea is to spread your capital across many different assets to limit your exposure to any single asset. In P2P lending, you can diversify your investments by channelling your money into various platforms, investment types (e.g., business, personal, real estate), risk profiles (low-risk, low-return vs high-risk, high-return), loan originators, markets, and currencies, and by investing small amounts in many loans rather than more considerable sums in a limited number of loans.