What is Auto-Invest?
liwwa's Auto-Invest tool allows investors to automate their investment strategy by specifying their risk appetite, investment horizon, and level of diversification. Auto-Invest then creates and maintains a diversified, balanced loan portfolio on the investor's behalf. The tool invests an investor's available funds across many loans on a daily basis according to their strategy. This removes the burden of logging in frequently to make new investments, and ensures that any newly added funds and loan repayments are efficiently reinvested into new loan opportunities.
Currently, over half of liwwa's active investors are taking advantage of this feature to increase diversification, reduce volatility, and earn higher returns. Learn more about these benefits and Auto-Invest's historical performance compared to manually choosing loans in this blog post.
We have provided a simple guide below for investors setting up Auto-Invest for the first time to understand more about how the tool works.
How do I choose the Settings for Auto-Invest?
There is more than one way an investor can go about setting up the Auto-Invest tool, keeping in mind that there is no single "best" combination. Each investor should determine their personal risk tolerance and investment goals and choose their Auto-Invest parameters on that basis. The guide below explains how each parameter works so that investors can make informed decisions when setting up the tool.
Portfolio Distribution by Risk allows an investor to choose their target allocation across risk classes based on their risk appetite. If an investor has a high appetite for risk and chooses 30% for Class D, Auto-Invest will make investments that are more concentrated in the relatively few Class D loans currently offered on the platform. You can learn more about liwwa's risk grading system here.
Investors can opt for liwwa’s default risk allocation (Class A - 45%, Class B - 35%, Class C - 17%, Class D - 3%), which matches liwwa's overall loan portfolio. This means Auto-Invest would spread the investor's funds relatively evenly across all loans offered on the platform.
For example, if a new investor added $1,000 to their liwwa account today and activated Auto-Invest with the default risk allocation, Auto-Invest would invest $450 across the 9 Class A loans currently open on the platform ($50 per loan), $350 in Class B loans, $170 in Class C loans and $30 in Class D loans. After a few days, once the first batch of loan repayments for $55 is paid, Auto-Invest would then re-invest the $55 in a similar fashion, $24.75 in new Class A loans, $19.25 in Class B, etc.
liwwa typically offers loans with repayment periods between 6 to 18 months (loan tenor). Most liwwa investors have a long investment horizon of five or more years, so it generally makes the most sense to invest across the full spectrum of loan tenors offered. When an investor is ready to exit their liwwa investment, they can disable Auto-Invest and begin regularly withdrawing their repayments until recovering their full investment plus profits within about one year.
Investors that diversify their portfolio across many loans on liwwa's platform have witnessed more stable returns and reduced risk. Therefore, liwwa recommends investing only a small portion of your overall portfolio in any one loan. Auto-Invest automatically attempts to divide your funds among the most possible loans based on your settings. An investor using the default settings would typically be invested in 200-300+ loans within one year, with less than 1% of their portfolio invested in each loan.
For investors that would like to test out the Auto-Invest tool when first using it, they can initially limit the total funds that the tool will invest on their behalf. For example, if an investor has $1,000 in their portfolio, they may choose to put a $100 limit on Auto-Invest initially. This means that $900 will go un-invested unless the investor logs in frequently to make manual investments. Therefore, liwwa recommends investors to choose "No Limit" to benefit from the full scope of Auto-Invest's ability to create and maintain a diversified, balanced loan portfolio on your behalf.