Klear launches Auto Invest

Blog / Investing with Klear

Klear launches Auto Invest

2 August 2017 / 3 min.

Investors at the Klear platform can now automate their investment strategy and invest in an easy and convenient way. Auto Invest reduces the time spent on reinvesting available funds, allows achieving a high level of diversification and reaching optimal return.

Available funds generate no return

With P2P investments, the investor buys parts of many loans. This entitles him/her to receive parts of the payments made by the respective borrowers. These payments occur throughout the whole month and the investor receives a flow of money on his/her account daily. This money stays in the account, and if these funds are not put to work again they become “idlers”. To achieve higher returns, it's good to re-invest your available funds.

So far, the investor had to spend a few minutes a day to use his/her available funds to buy new loans. While reinvesting "manually" is beneficial for people new to the P2P investing, for the more experienced ones it is a routine activity that is worth automating.

With Auto Invest, money remains busy

On the "Automatic Investing" page, the investor can apply all the currently available filters to select loans on the Primary Market. In addition, he/she has the option to choose whether to reinvest in loans he/she has already invested in, to define the maximum outstanding amount per loan, to set up an investment ending date, and to determine the amount he/she would like to remain available on the account. After defining the preferences, the investor can activate Auto Invest and it will start investing on his/her behalf.

The maximum outstanding per loan impacts the diversification level

The most interesting parameter the investor has to determine when activating the auto investing is the maximum outstanding amount per loan. It has a direct impact on the level of diversification, especially if one reinvests in loans that he/she has already invested in. How to define it?

When investing with Klear, the investor has limitations to invest in a single loan: minimum 2 leva, but not more than 2% of his/her balance. If he/she invests the maximum allowed per loan, then his/her portfolio will have only 50 loans, which is rather a sanitary minimum than a well-diversified investment. Let's take a look at the following example:

If an investor with BGN 15,000 invests the maximum allowed per loan of 2%, i.e. 300 leva (15,000 x 2%), he/she will invest in no more than 50 loans (50 * 300 = 15,000), which is too risky.

The investor in our example should invest in at least 150 loans to diversify his/her investment well. This can be done by setting the maximum outstanding amount per loan below the limit. This is how:

To determine the maximum outstanding per loan, the investor has to divide the amount he/she has (15,000) into the number of loans (150) he/she wants to have in his/her portfolio. This, according to our example, would mean a maximum outstanding per loan of 100 leva (15 000/150 = 100).

What else?

If the investor does not have a clear goal in mind for the investment end date, he/she’d better leave empty the field “Investment ending date”.

Auto invest can be activated, edited or deactivated by the investor at any time. Upon activation, it starts investing every hour and only in loans available on the Primary Market.