Robocash has outlined three strategies that lenders can use to increase their profitability when investing in the platform.
The European peer-to-peer lending platform highlighted the reinvestment strategy and interest capitalization which means continuous investment.
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Robocash said that if a lender invests in short-term loans on the platform for seven days, reinvesting their interest every week, their year-end profitability can reach 10.95 percent, 0.45 percentage points (pp) higher than if they just had that Nominal amount while maintaining a high level of liquidity.
The platform said lenders could keep investing in long-term loans to earn more, such as investing in one loan for a year and then investing in similar loans. This would generate a return of up to 12.68 percent for one year, 0.68 pp above the annual interest rate.
Robocash called the loyalty strategy another way investors can get more returns.
The platform has a loyalty program that can increase annual returns by up to one percent, depending on the money invested.
The lender receives 0.3, 0.5, 0.7 and one percent of the base rate when the total balance of the investor portfolio reaches € 5,000 (4,277), € 10,000, € 15,000 and € 25,000, respectively.
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In combination with the interest capitalization method, the annual return could increase from 12.3 percent to 14.1 percent.
The other tactic highlighted by Robocash was the incremental investment strategy, that is, replenishing the investment portfolio, for example by adding more funds every month.
Not only does this give lenders more investing, but it also gives them the opportunity to gradually move up to a new tier in the loyalty program, which increases the interest rate.
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“If you want to focus on increasing profitability, you can reinvest funds and capitalize on income, qualify to join the loyalty program, or top up your balance on a monthly basis, increasing the total amount you invest,” Robocash said on a blog on his website.
“It should be noted that recommendations on strategies that Robocash gives are informative in nature. They are prepared without taking into account the investment objectives, risk tolerance or financial circumstances of each individual investor and may not be suitable for all investors. “