Security and risks

It is important to remember that all investments entail some form of risk. How big of a risk an investment entails differs, and as an investor, you need to decide what risks you feel comfortable taking.

On this page, you can read more about risks related to investments in general, and investing with SaveLend specifically, as well as how the various risks can be managed or mitigated.

How to become a successful investor

Most investors have a goal with their investments; whether it’s to buy a boat, invest in an apartment, or just live a more comfortable life. Here are four tips to help you achieve your financial goals.
  • Balance your investments in different asset classes

    Managing risks related to your investments is important. An effective way to do this is through diversification.

    To diversify your investments, a good practice is to invest in different assets such as stocks, funds, or P2P loans. By spreading out your investments, a potential dip or crash in one of your asset classes will not affect your overall portfolio drastically.

  • Carefully choose your investment types

    Although it is important to diversify your portfolio, you should not spread out your investments into every conceivable investment type on the market.

    Instead, make sure you have a strategy for your investments that includes a plan for risk diversification. For example, a good strategy is to invest 50% of your capital in equities, 30% in mutual funds, and 20% in loans with SaveLend.

  • Focus on what you can control

    Successful investors know that they can’t influence global events and, therefore, do not panic during short-term fluctuations in the market. In most cases, the best action is to stay calm rather than trying to predict the dip - provided that you don’t need your invested capital in the near future.

  • Think long term

    Buying high and selling low is one of the most common mistakes that investors make. Successful investors do not strive to get rich quickly. Instead, they tend to follow a long-term plan to become financially independent in the long run.

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We like risk diversification

Remember that no investment is completely risk-free. This applies to shares and funds as well as P2P loans. Therefore, understanding different types of risks and knowing how to mitigate them is important as an investor. At SaveLend, we want to help you with that.

When you invest, diversification is a fundamental part of reducing risk - to put it in simpler terms: the aim is to not place all your eggs in one basket. At SaveLend, we offer several asset classes as well as automated investments that help you diversify your loan portfolio. When you invest with SaveLend, your capital is automatically invested into hundreds of different loans, which not only increases the risk diversification but also offers more options for you as an investor.

Risks and how we handle them

As mentioned previously, it is important to understand that all investments involve risks. Below, you will find common questions and answers about risks and risk management associated with investments in general and SaveLend in particular, as well as how we mitigate them.
  • Life happens. Whether it is a foreseen or an unforeseen event, sometimes, you may have to withdraw the money you at one point wanted to invest. Therefore, SaveLend offers a secondary market where you can sell your investments to other investors.

    How the risk is managed:

    • Using our secondary market, you can sell the loans you’ve invested in to other investors on the platform for a fee. This enables you to quickly liquidate money that you in turn can withdraw to your bank account.
  • If a borrower (company or person) whose loan you invested in is unable to repay their loan, there is a risk that a loan won’t be repaid.

    How the risk is managed:

    • One way to mitigate this risk is to invest in loans with a buyback agreement. This way, if a borrower does not repay a loan that you have invested in, your share is sold to a debt collection company. Note that the debt collection company pays a reduced price for your share, but in return a majority of your capital is freed up. This enables you to reinvest your capital directly, instead of locking the money up in debt collection processes which, in some cases, can take several years.
    • Invest in loans with some form of collateral, such as real estate loans through our originator SKF. Collateral on a loan is a guarantee that, if the loan turns bad, the borrower has underlying securities that in turn can be sold to repay their loan.
    • All loans that are available for investment on SaveLends plattform are all presented with a target interest rate. In addition to the loan’s actual return, the target interest rate takes into account, among other things, the asset classes’ estimated risk of credit losses. In general, loans with higher risk of credit loss are balanced by higher actual interest rates - which is the underlying principle of the target interest rate.
    • Adjust Smartinvest so your capital is automatically divided among several different asset classes and originators. This minimizes the total impact on your portfolio if a loan you have invested in turns bad.
  • There is a risk that a borrower is unable to repay a loan on the due date, but might be able to pay at a later date.

    How the risk is managed:

    • Invest in loans where penalty interest is added for late repayments. In the SmartInvest settings on SaveLend's platform, you can easily see which loans offer penalty interest.
  • In order for you to get a return on your capital, it must be invested in loans. If you have capital at SaveLend that is not invested in loans, that is a risk in itself. Our goal is that an investor that has all originators activated should have an investment ratio of 100%, meaning that all of the available capital is invested.

    How the risk is managed:

    • Activate SmartInvest and make sure that your settings are not too limited. SmartInvest automates your investments, meaning that our system will automatically place your capital into loans that match your set criteria.
  • The loans available for investment on SaveLend's platform are provided by external originators. If an originator goes bankrupt, it involves a risk.

    How the risk is managed:

    • Before SaveLend allows an originator to publish its loans on our platform, they are first vetted by our strict compliance team. Our compliance team ensures, among other things, that the loan intermediary follows good lending practices and has a good historical return in their loan portfolio. This is done in order to ensure an overall high quality of the loans available to invest in on SaveLends platform.
    • Based on the above-mentioned compliance checks, a target return is determined for each asset class provided by the originator. The target return provides an estimate of the return that the asset class can be expected to provide after credit losses and fees.
    • It is a good idea to balance your investments in different asset classes and originators to mitigate the risk of credit losses. This is easily done with the help of SaveLend's automated investment engine, SmartInvest.
  • Should SaveLend, against all odds, go bankrupt, there are several precautionary measures that will be taken in order to protect you as an investor. However, it is still a risk.

    How the risk is managed:

    • SaveLend has a permit from the Swedish Financial Supervisory Authority, which supervises that SaveLend complies with applicable regulations and ordinances. This is handled, among other things, through continuous reporting to the FSA.
    • SaveLend has an independent internal accountant who ensures that there are routines and processes in place to make sure that we comply with all applicable regulations.
    • SaveLend has a risk management framework, where different kinds of risks are monitored and managed continuously. If events or circumstances that could lead to bankruptcy occur, these risks would be cautioned in an early stage, and measures would be taken immediately to prevent this from happening.
    • SaveLend has an independent risk function that reviews and follows up the company's risk management framework.
    • SaveLend has an authorized accountant who reviews the financial reports and follow-ups in order to take action at an early stage if necessary.
    • As an investor, you own the claim of the loans you invest in, not SaveLend. This means that you have the opportunity to have your investments repaid directly from the originator.
  • SaveLend always acts according to the regulatory conditions. Therefore, if new laws or regulations are introduced that partially restrict or completely prevent SaveLend from operating, it entails risk.

    How the risk is managed:

    • SaveLend continuously monitors updates and changes in laws and regulations that could affect the company. This means that we can continuously take the necessary measures to comply with them, as well as update our operations to act according to the new conditions.
  • The market is in constant change and the value of investments can be negatively affected by this. It is important to remember that this is always a risk when you invest. This includes market changes such as, for example, pandemics, financial crises, or geopolitical crises. These events tend to affect entire markets, causing stress beyond the risk of losing assets.

    How the risk is managed:

    • Diversify your investments in different loan types and geographical areas.
    • If you are in need of money due to unexpected events, you have the opportunity to sell your investments on the secondary market.

Learn more about investing in loans with SaveLend

  • How investing in loans works
  • How to invest with SaveLend
  • How to deposit and withdraw money

 

  • Why you should invest in loans

    Get answers to frequently asked questions about investing in loans, such as:

    • What return can I get?
    • How much should I invest in loans?
    • Why should I invest with SaveLend?

     

    Read more
  • How SaveLend works

    Learn more about how P2P loans and SaveLend work, including:

    • How investing in loans works
    • How to invest with SaveLend
    • How to deposit and withdraw money
    Read more
  • Why you should invest with SaveLend

    Learn more about Savelend, for example:

    • How we work to balance risks
    • Which asset classes we offer
    • How we ensure that our loans are of high-quality
    Read more