What does diversification at Funding Circle mean?

Our aim at Funding Circle is to help you have the most enjoyable experience possible, by earning attractive returns in a sustainable way.

In this short video we run through the basics of diversification, why we believe it’s so important and how you can diversify at Funding Circle.


 

 

How many businesses are you lending to?

If you’re lending to less than 100 businesses you may be missing out on a more stable return.

Log back into your account today to see how many loans you hold. Could you increase this number over the coming months? Remember, by lending to businesses your capital is at risk.

Want to know more?

You can visit our statistics page for further details on the benefits of lending to at least 100 businesses.

As of 1st October 2017, approximately 91% of investors who have lent to 100 businesses equally are earning more than 5% per year (after fees and bad debt, but before tax). This is based on investors who have been lending for at least 1 year and have been at the stated level of diversification for at least 75% of the days they have been lending for. Remember, past returns are not necessarily a guide to future returns.

We update these numbers regularly so you can compare your account against others and find out how much other investors are earning by level of diversification.

We’re on-hand to help if you have any questions about your account or how you can diversify. Simply call us, or send us an email.

The Funding Circle team

 

Transcript

Our aim at Funding Circle is to help you have the most enjoyable experience possible, by earning attractive returns in a sustainable way.

In this video we’re going to talk about diversification, which simply means lending small amounts of money to lots of different businesses.

It’s really easy to become diversified at Funding Circle. Lending £2,000 or more will help you build a portfolio of at least 100 businesses. Choose one of our lending options and you’ll automatically spread your funds across businesses like David’s manufacturing company in Durham and Celia’s farm in Somerset.

Investors who lend small amounts to many different businesses, help a lot more small businesses access the finance they need to grow, and also earn a return which is much more stable.

Here’s an example of how diversification at Funding Circle works. You have £2,000 and lend £20 to 100 businesses. If some businesses are unable to pay back their loan, it won’t affect your overall return too much.

Statistically, every investor who has lent to at least 100 businesses equally has earned a positive return. In fact, 90% of investors who have followed these 2 simple guidelines are earning more than 5% per year.

-Lend to 100+ businesses

-Lend 1% of your total to each one

However, if you take the same £2,000 and lend £500 to 4 businesses, if one of those businesses is unable to repay then your overall return will drop significantly.

By spreading your money and helping hundreds of British businesses, you can see your money, and the UK economy grow.

Remember, by lending to businesses your capital is at risk.

 

Becky Armitage

Content Manager

Becky is part of the marketing team and looks after the content and online communities.