Robocash has outlined three strategies that lenders can use to increase their profitability when investing on the platform.
The European peer-to-peer lending platform highlighted reinvestment strategy and interest capitalisation, which means investing continuously.
Robocash said that if a lender invests in short-term loans for seven days on the platform and reinvests their interest every week, their profitability at the end of year can reach 10.95 per cent, 0.45 percentage points (pp) higher than it would be if they had only invested the principal amount while keeping high liquidity.
The platform said lenders could keep reinvesting in long-term loans to earn more, such as investing in a loan for a year and then investing in similar loans. This would generate a returns up to 12.68 per cent for one year, 0.68 pp higher than the annual interest rate.
Robocash cited loyalty strategy as another way in which investors can generate more returns.
The platform has a loyalty program that can increase the annual return by up to one per cent, depending on the amount of money invested.
The lender receives 0.3, 0.5, 0.7 and one per cent to the base rate when the total balance of the investor’s portfolio reaches €5,000 (£4,277), €10,000, €15,000 and €25,000 respectively.
When this method is combined with the interest capitalisation method the annual return could increase from 12.3 per cent to 14.1 per cent.
The other tactic Robocash highlighted was gradual investment strategy, which means replenishing the investment portfolio, for example, by adding more funds each month.
As well as having more to invest, this gives lenders the opportunity to gradually reach a new level in the loyalty program, which increases the interest rate.
Read more: Robocash funded €8.8m in loans last month
“If you want to focus on increasing profitability, you can reinvest funds and capitalise income, qualify for participation in the loyalty program, or replenish your balance on a monthly basis, which will raise the total amount you invest,” Robocash said in a blog on its website.
“It should be noted that recommendations on strategies Robocash gives are informative in their nature. They are prepared without considering investment goals, risk tolerance or financial circumstances of each particular investor and may not be suitable for all investors.”