P2P starting Manual

For someone who has never invested in P2P, starting from scratch is a hassle. I have written down the process and strategy for a beginner.

  • How to Open an account :

As of now I am actively investing in 4 Platforms

  1. I2I Funding
  2. LendenClub
  3. RupeeCircle
  4. CashKumar

Some of the platform I had evaluated and stopped investing due to various reasons are : Faircent, Monexo, Lendbox and Finzy

To open accounts in these 4 Platform you may use these Referrals  to avail discounts

I2I Funding:  https://www.i2ifunding.com/referral/ud8cwng83/invest

( add I2I50%DISCOUNT  code while registering to get 50% discount )

RupeeCircle:   https://www.rupeecircle.com/investor-register

( use Referral code PIND145 while registering )

LendenClub : https://app.lendenclub.com/signup

( use Referral code LDC11989 )

* You need to put referral code under Referral code heading on the first page. Many people skip the first page and then try to put it under promotional code which doesnt work)

Cashkumar: https://cashkumar.com/application/lender/signup

(Mail me to get referred  for Cashkumar)

  • How to Start Investing :

Before starting  make sure where P2P fit in your asset allocation ,you can  put it between 10-20%  of your total portfolio depending on your comfort

Unlike Equity Market where you can get some advantage by timing the market due to valuation , in P2P timing has no impact so it doesn’t matter you do a SIP or Lumpsum but I recommend  doing a Lumpsum and then SIP because it has three advantage:

  • Initially with Lumpsum you are able to diversify into multiple loans which is critical for P2P lending
  •  With SIP You dont run out of good borrowers as you don’t have excess cash and few borrowers at any given time
  •  By SIP You are able to gradually gauge platform performance. It takes around 3-4 months to understand portfolio performance, NPA issues etc

Now as we have decided to put monthly amount in P2P we will  break it down between the 4 platforms. Lets assume we have 100,000 to invest in the first month  and after that  we plan to do 25000 sip every month.

We will break 100,000 in such a way that we are able to able to diversify across decent number of loans in each platform.

Secondly we also do not want to put money more than the platform can disburse in 10-15 days.

I have created the table which can do justice to all the platforms  .

For month 2 first we need to check how much EMI we are going to receive in rupee circle as it has minimum ticket size of 5000.

For example if we are receiving 2500 in EMI we can invest 7500 or 2500 so that we can disburse that amount.

after Rupee Circle we can divide the rest of the amount in Cashkumar and I2I.

Whatever is pending can be put in Lenden as it has minimum ticket of 500 and even 1000 can be disbursed easily.

  • Maximum Amount per Loan:  I always suggest go for the minimum platform required ticket size for a loan. This ensures that we are not concentrated on any particular Loan. Only time you may break this rule if you are very confident of a borrower. I follow the policy of minimum ticket regardless of the quality of borrower.
  • Monitoring Platform performance:

I suggest after  you have used the platform for 3-4 months and have sufficient number of loans you should monitor portfolio performance every month.

I have already covered how to use XIRR method to calculate portfolio performance

Calculating Portfolio Return for I2I Funding


Calculating Portfolio Return for LendenClub


Conclusion: Initially NPA and delinquency seems discouraging but we need to understand its a part of P2P lending model. What we need to ensure is that our NPA adjusted ROI is better than alternate investment of similar time horizon . eg Bonds,  FD, Liquid Funds etc.  Platform which promise zero defaults  are probably a sham as its impossible to achieve underwriting with zero default.

I had written an article on using Kelly Criterian to invest in P2P. Excerpts  from the article are given below.

Peer to Peer Lending(P2P) Investing Strategy based on Kelly Criterian

Happy Investing !



Why Mutual Funds Are a bad Investment Option!

 It doesn’t make much sense in investing in Mutual Funds

Mutual Fund companies and Wealth Managers have all the reason to make you believe that you are going to be a crorepati in 5 years

Let’ s start from the beginning

PART 1: Why active investing sucks for most people

Why do People invest in Mutual Funds ? Because they think some people who are smart will buy stocks on their behalf and make money. They will charge some fees for that.

Let’ s See how many of these Fund Managers have made us rich.

In the Large Cap space itself we have 70–80 Mutual funds and in the past year only 3–4 are able to marginally beat the benchmark Index. Just imagine instead of choosing the best Mutual fund if you choose the worst,what losses you had to suffer and on top that you would have paid the fund manager a FEES!! yes these people are smart to make money for themselves.

Only people making money continuously through mutual funds are the fund managers.

PART 2 : Why theoretically Mutual funds make money but practically it is not a very feasible strategy

Now we know ETF are as good as mutual funds if not better. So should we buy ETF ? Answer is NO!!

Why ?

Theoretically Mutual Funds /Equity Asset allocation looks the best performing asset but what does High Equity Asset Allocation Entails?

Financial experts these days swear by equity mutual funds .

They will throw in some CAGR numbers based on empirical data. So far so good . then they tell you that as you are just 30 years old so put in 70 percent of wealth in equity and in 10 years you will be rich.

Sounds good but let’s examine it how the real world works.

Let’s say a 35 year old works in some company and over the last 10 years after saving his hard earned money and paying off all education debt saves around 50 lakh.

Now 70 percent of it is 35 lakh..he decides to put it in equity MF.

His horizon is 12 years and he knows based on the CAGR calculation he will make almost 4 x of his investment.

Nobody told him how real market works .He knows they are volatile but has no idea what’s riding the volatility looks like..

In first 2 year at 12 percent he makes good 8. 5 lakhs and he is very happy.third year economy goes into major depression.

Market tanks 40 percent .

His 43.5 lakh is now just 25 lakh..he is afraid he might lose his job anytime as he works for a MNC which is suffering loses.

It’s all over the news that market can slide another 20 percent and equity is a failed asset and talks about great recession are doing the round.

He can’t lose everything he build over so many years. With so much paranoia…what does he do??

He books the loses because he can’t start all over again..His networth today is actually 25 lakh in equity that’s a reality not some unrealised loss…He is as good as someone who has started with 25 Lakh

The hope for gain is just a speculation.

What happens next..5 year fast forward..market has 2 great years and .last 10 year CAGR is 12 %. Experts tell how right they were and equity is best.But did our guy make money..nopes. People will label him as naive but that will be fate of most . Losses can drain the strongest mind

Just Looking at how much stock market was in 2000 and comparing it with 2019 does not mean anything. Being fully invested in the trough and crest can make anyone lose their mind. Look at the some of the worst stock market periods in history.

Dow Jones lost almost 80% of its value in 4 years! Took 25 years to reach old level

Japanese market has not recovered since 1989! Almost 30 years.

The intentions is not to scare people but to make them understand what kind of volatility we are talking about .Its not your merry go round but a Roller coaster ride!!

Just imagine losing everything in 2 years. Can you still stick to your original Plan. Do some introspection and then answer.

PART 3 : Alternative Strategy

What if I tell you can have the cake and eat it too!!

Yes it is possible to lower the risk of equity investment and yet take advantage of the growing economy.

How ??

let’s take an example. A person invest 10 lakh in Large Cap Mutual Fund. The Market

gives 10% return first year ,-40% Return year 2 and 50% return year 3 . How will the wealth of the Person look like.

End of year 1 : 11 Lakh

End of Year 2 : 6.6 lakh

End of Year 3: 9.9 lakh

What all did he lose?

  1. 4.4 lakh loss of wealth in a year. How easy would be to digest that!!
  2. After 3 years his wealth is same as starting year which means he lost time value .He could have earned Interest on 10 lakh in 3 years.

So how to do equity investment in a smarter way:

  • We know equity are risky so we will eliminate the Equity volatility first.
  • We will Replace the Equity Risk with diversified high Yield low volatility asset classes
  • We will create equity upside synthetically

We have split the equity market risk into manageable and controllable risk in the form of long term real estate, corporate debt risk and individual debt risk which can be diversified unlike equity market risk which is highly correlated to broad equity market performance

Now to 10 lakh equity can be split in 3 asset classes:

  1. High Yield Debt: We will invest in diversified portfolio of bonds and Credit Risk funds .These

2. P2P lending: I have covered details of my P2P lending Portfolio in my blog  earlier posts. My portfolio is currently delivering almost 16% annual return

Peer to Peer lending, also known as P2P Lending, is a financial innovation which connects verified borrowers seeking unsecured personal loans with investors looking to earn higher returns on their investments.

3. REITS: Real Estate Investment Trust( REITs )invest the proceeds collected from the investors in real estate projects directly, while mutual funds buy shares or other financial products from the primary or secondary markets. According to Sebi rules, currently REITs can invest only in commercial projects in India. REITs can be a good investment option for the investors, as they invest in commercial realty projects, in which income flow is steady, thereby giving them good returns.

Now instead of 100 % equity our investor puts 50% in P2P lending,

30% in REIT and 20% in high Yield Bonds:

IF I put 9.3 lakhs out of 10 in these assets (assuming 15% return in P2P, 11% in REIT and 10% in bonds) . I will explain why only 9.3 lakh and not putting 10 Lakh

Net Return would be 5 Lakh * 15% + 3lakh * 11% + 1.3 lakh * 10%= 1.2 lakh

or in terms of return 13.3% return in my portfolio

Now comes the replication of equity upside. if nifty is at 11500 . I will buy a call option for Dec 19 with strike at 11500. What does it mean . I will explain!

A brief about options:

Call options give the holder the right to buy 100 shares of an underlying stock at a specific price, known as the strike price, up until a specified date, known as the expiration date.

For example, a single call option contract may give a holder the right to buy 75 units of Nifty Index at 740 Rs up until the expiry date in Dec,19 at 11500 strike . There are many expiration dates and strike prices for traders to choose from. As the value of Nifty goes up, the price of the option contract goes up, and vice versa. The call option buyer may hold the contract until the expiration date or sell the options contract at any point before the expiration date at the market price of the contract at that time.

The market price of the call option is called the premium (here 740). It is the price paid for the rights that the call option provides. If at expiry the underlying asset is below the strike price, the call buyer loses the premium paid. This is the maximum loss.

If the underlying’s price is above the strike price at expiry, the profit is the current stock price, minus the strike price and the premium. This is then multiplied by how many shares the option buyer controls. For example, if Nifty is trading at 13000 at expiry, the strike price is 11500, and the options cost the buyer 740, the profit is 13000 – (11500 +740) = 760 Rs per lot . If the buyer bought one contract that equates to 760 x 75 = 57000 Rs

If at expiry Nifty is below 11500, then the option buyer loses 740* 75 =55000 Rs bought.

Below is snapshot of 11500 Dec call option with price as of today

current price of 1 lot of 11500 Call option Dec 19 (75 Nifty shares) is 740*75 = 55000.

lets assume for 1 year(march 20) it is 70000 instead of 55000.

Now How will my Payoff look under 3 scenario tested earlier(for simplicity I have considered nifty base as 10000, and option price as 7% of Nifty)

We can clearly see :

  • Our portfolio returns have very less volatility. You dont lose sleep after year 2 fall
  • Out portfolio has higher total return than equity only portfolio.


  • Equity investment are very volatile ,people need to understand the volatility risk and need to avoid exposure unless returns are very high in long run ( eg: small cap MF)
  • Avoid large cap equity exposure. Replicate it as much as possible.
  • Only take small cap exposure to an extent you can digest 50% loss in short term
  • Use P2P lending ,REIT and High yield bonds to create a robust portfolio.
  • Our portfolio has high Liquidity because of P2P loans and bonds. We can always reallocate higher share to equity if market crashes
  • RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  • I2I (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest ,add I2I50%DISCOUNT code while registering to get 50% discount )
  • Cashkumar (Mail me for referral) !
  • Lendenclub ( referral code LDC11989)

Drop me a mail if you wish to construct your portfolio!


Index funds’ outperformance over large-cap peers boosts their appeal

REITs: An option to invest in commercial realty, now in India

Optimisation of Investment (Part 2)

In Part 1 I covered how important is to manage expense and track them religiously ( Managing Expense )

In Part 2  I am covering

  • Investment Allocation
  • Liquidity Management

Investment Allocation :  Somebody tells you about some great investment product. What do you do? You put some money into it .Does this change the outcome of your future corpus. The answer is no! Unless you allocate a substantial amount of money in a a particular product it would not have much   bearing on the result. If you put too much money in it you run a huge risk of losing the capital. After all Risk and Reward are Related.

It sounds like a cliche but for any investment we can only choose 2 out of 3

  • Quick
  • Easy
  • Sure

Either you can choose it to be sure and easy  but  it  wont be quick or  it can be Quick and Sure  but it wont be easy

So a balanced approach is important. This bring me to the point  why ” an average investor does not need a wealth manager who charges annual fees” because the loss in fees over a 10 year period is substantially higher than any valuable advise he can provide which is not already available in the public domain.

Now I will show how my excel tool helps in asset allocation:

In our example Mr X had 100,000 monthly cash inflow. His expense was 69000 and 31000 was the saving. Now as the individual is young he wants to go for slightly aggressive portfolio  with a 10 year horizon.


In the “Accumulated Investment” column I have  added all the existing investment of  Mr X. In the “Monthly Investment” column I have added the amount he would put monthly. In the last row we can see anything left would be put in the saving account ,which should be minimum unless its a strategy.

Points to note in the investment allocation are

  • I have not used any names of Mutual funds. The idea is that the individual will invest in 1-3 funds in each category as he does not want to take too much risk on one particular fund.
  • This tool can project corpus for any tenor,Also your ROI for that tenor and allocation percentage
  •  I have added expected return column where the investor can put  how much he can expect to gain per annum on that category. Always use a conservative figure to have cushion for unexpected times.
  • I have used p2P funding as an asset class which gives me good diversification and returns at par with equity. It is an add on  and not a replacement.
  • I do not have any Large Cap exposure .Why?

Here is the Trick.! Lets say I wanted to  have 7 Lakh exposure to Nifty 50 . What I did is I bought  5 lakh worth of Credit funds and 2 lakh nifty liquid bees ETF.

So lets say my investment in Large Cap would have fetched on an average 11%  annually.

Now My 5  lakh will fetch around 9% , 2 lakh  7 % .ie.  around 8.5 % on this portfolio.

I can use the Liquid bees to get margin. I will Sell 1 year tenor   2 Deep OTM  (10% OTM) put on Nifty . I will get around 5% for this. Now if Nifty is at 11000. I will sell 2 puts at 10000.

If market tanks 10 percent I am still safe  and get around 8.4% +5% = 13.4% return. Compared to this my large Cap would have been 10% down now. In most scenario this will be better except say a 25% drop or lower  in Nifty.If I am scared of that I can sell further OTM at 3% yield instead  which will be better off even at 30% Nifty Fall.

  • The portfolio IRR is around 11% . what will happen if I had bought a different fund which gave  more return  than my existing small cap and midcap  fund. So where I had  put conservative figure of 6 and 8% now I have put 12%.

Whats the impact ? only 0 .7% on the total portfolio . This is much lower than what my Wealth Manager would have charged me!!


Therefore it more important to do the asset allocation right, use low cost ETF  products and optimise investment than  try to find some  Dream mutual fund.

  • Liquidity Management  : My tool helps me to manage liquidity of my investment. This is very important because many times people have to liquidate assets just to meet immediate requirement.

what comes in instant Liquidity? Your Saving account  then  In 0-7 days Arbitrage Fund. From 1 month -1 year Lot of my P2P investment provide liquidity as I keep getting back EMI payment. P2P has been very helpful in providing balance between Liquidity,low volatility and high Returns.

I have considered debt funds in 1-3 year because they need atleast 3 year to become tax efficient.All equity and PF will fall in the last bucket.

After having a look at the Liquidity chart I can gauge  what needs to be done if I have to  allocate more in the nearby bucket if there is some cash outflow soon.

If you need help in structuring your portfolio and need this tool ,please drop me a mail .








Optimisation of Investment

People keep asking me which is the best mutual fund?

Which is the best stock in long term?

Will Crypto make it big?

Is Real Estate better than Stock ? Is P2P lending good?

I should be honest about it that I dont know the exact answers of these questions ! I can only predict based on the historical data I have .Maybe If we do a million simulation of the future in some simulation  you make a killing in crypto and in other its a dud.

The point is there are some controllable variable and some uncontrollable. We focus too much on the uncontrollable and too less on controllable.

For instance we want to buy the best MF! what is the best MF ? Its a function of the fund manager ,what if the Fund manager leaves. How good is our strategy now.!

The aim of investment should be to take exposure of the uncontrollable to the extent we can tolerate. Do not bite more than you can chew.While on other hand controllable variable should be exploited to it fullest potential .

So how should the strategy look like.

The 3 very important tenets of investment are

  • Saving
  • Asset Allocation
  • Liquidity

Each can make or break the investment goal. I have prepared a simple excel tool to optimise these three aspects.

Lets take an example of a 30 year old guy. He is able to make 100,000 per month ( which includes salary,PF, rent etc)

STEP 1: Before even starting to invest he needs to be cognisant of the assets and liabilities. Its paramount that you calculate all your monthly fixed and variable expense .You should be able to predict 95% of your  expenses.

How you save will have more impact than your choice of MF investment on the end corpus. I will demonstrate that shortly.

One thing which is very important is Insurance: health and Life . You do not want any health emergency to jeopardise your retirement corpus.

Lets see the sensitivity analysis of impact of small change in saving and small hike in assets on the end corpus considering  same investments.

Here my portfolio is giving 11% IRR approx for 10 years.I have calculated end Copus at various expense and salary levels

It is evident that by reducing 20% expenses and increasing earning by 15% I end up 50% higher corpus in a period of 10 years!!

This is very much in my control .How to do it .Very simple Have 2 different account

  1. Salary
  2. Investment

As soon as you get salary transfer everything  except your monthly expense to a different account. Use the other account for transferring SIPs etc.

If you think you are making some unnecessary expenses ,cut them, Instead of splurging money on fine dine every week do it alternate or monthly etc. Everybody has their vices and their priority and they can cut expense based on them.

I used to spend lot of money on gym supplements. I realised only after wasting lot of money and time that most were marketing gimmicks and I perform better even after not using 99% of them.Worst part was I used the same account for investment and expenditure and every month used to fall short of my goal to invest. A disciplined approach will go a long way

If you do not track your expenditure you will never realise that you overspend! Take ownership of both : your assets and your Liability.

In my next post I will demonstrate how I can optimise my investment and liquidity.






P2P portfolio Analytics( Feb 2019)

This month I have completed  1.5 years investing in P2P lending platforms. Overall the experience has been good. There were some hiccups though in the form of selecting good platforms,choosing category of loans but with experience you learn from your mistakes.  Today I will compare my  latest portfolio performance with the other asset classes for 1 year period

Portfolio Composition


January allocation


February Allocation

Portfolio Changes: I am still in the process of unwinding my Faircent exposure .

I  move my Faircent EMI to lenden .it is a good strategy as I am able to put staggered investment in Lenden  on various dates thus my cash inflows also become staggered across dates and makes it easy to reinvest

I2I portfolio is pretty much constant. Due to less number of loans in the platform I target 3-4 good loans every month.As loans are long dated the cashflow inflow is manageable

I am increasing my RupeeCircle and cashkumar  portfolio as I have not faced any defaults uptill now

The portfolio allocation of I2I and Lendenclub is not reducing much because of the compounding effect of the interest generated from the past investment.

Calculating Portfolio Performance: I consider loans delayed by more than 45 Days past due date as NPA. I use XIRR method to calculate returns as it is the most accurate. My post on calculation methodology  ( Lenden ROI calculation  )

I dont have any NPA Cashkumar and RupeeCircle in till now(new portfolio ).



Portfolio returns have  been stable .Had I not invested in Faircent and rather divided that money in other platforms my ROI would have been 18% plus.I have kept Rupeecircle and Cashkumar investment as 20% even though actual return is higher because I expect some delays as time passes thus I am provisioning for them.

Comparison with other asset classes


One year performance of my P2P portfolio has dwarfed  the  best performing equity and bond funds. Even the sharpe ratio has been excellent. It means my portfolio has delivered superior consistent return.

Axis Large cap delivered 9.3% .What are the chances of all the mutual fund you bought Axis .More than 30-40 Funds were not even able to deliver positive returns.

Gilt Fund delivered 10%. its a very good return for a bond fund but this is primarily because interest rates came down from the highs this year. Even the best bond traders could not have predicted it

This shows the unpredictability in a diversified P2P portfolio is far less than an equity or Gilt fund

It would be unfair to say that P2P is better than equity  or debt investment  because equity returns are always subjected to short term volatility  and people who have a short term horizon should refrain from such investments.

I would say it is good to have P2P investments as a part of your portfolio when you are looking for  high returns with manageable risk and decent liquidity.

Points to note

  • If somebody is just starting to invest I would not recommend calculating XIRR because your interest income is too low and slight delay of emi  etc can change the return drastically.Better gauge at starting will be to check the amount in delay and  subtract that much percentage from the portfolio published ROI.
  • In Lenden I use only Insta Loans using autodebit as I invest only 500 per loan and want to diversify as much as possible .I do not check individual loan as my rationale is if platform is underwriting properly with sufficient diversification my NPA will match with platform’s i.e if platform has 10% default my portfolio will also have 10% which is very good for 48% ROI loans
  • I prefer investing in a SIP fashion(Systematic Investment Plan). If I have a monthly budget of 10000 I will calculate how much I need to replenish in I2I and rupeecircle so that I can make my escrow balance a multiple of 5000 for further investment. Then what is left after that I put it in other 2 platforms depending on where I  want to increase allocation.

eg : if amount to invest 25000

Let’s say  I2I escrow balance :2000

I need 3000 minimum to  make it multiple of 5000

So I will invest 3000 or 8000

Same with Rupee circle.

Now the amount which is Left will be divided between cashkumar and Lenden depending on 2 factors a) where I want to increase exposure b) how much is available  in escrow of the platform( In lenden you may end  with up large cash inflow and do not want to increase it further which may cause delay in disbursement)

Strategy Going Forward: 

  • Move all Faircent EMI to Lendenclub(better risk adjusted Return)
  • Keep growing investment corpus in RupeeCircle (use code PIND145 while registering to get portfolio analysis reports)
  • Increase investment in I2I  (use referral https://www.i2ifunding.com/referral/ud8cwng83/invest    ,add I2I50%DISCOUNT  code while registering to get 50% discount )
  • Increase investment in cashkumar( positives are:short term loans(<6 months), overall good platform performance with low npa, high interest)  Mail me for referral !
  • Use Statistical analysis to determine if there is  a pattern in default

People who wish to construct a  P2P portfolio can email me.