On Cashare, diversification means spreading your investments across multiple loan projects, risk categories, and borrowers. This strategy helps minimize the risk of individual defaults and ensures more stable returns.

How Does Diversification Work on Cashare?

1. Spread Across Multiple Loan Projects:
   Instead of investing your entire capital in a single loan project, you can distribute it across several projects. This reduces the impact of a single borrower's default on your overall portfolio.
2. Invest in Different Risk Categories:
   Cashare offers loan projects with various risk ratings (e.g., A, B+, B, C). By combining lower-risk loans (e.g., A) with higher-return opportunities (e.g., C), you can create a balanced portfolio.
3. Diversify by Loan Type:
   You can invest in personal, SME, and real estate loans to benefit from different repayment structures and return potential.

Advantages of Diversification on Cashare

• Risk Reduction:
  A default in one loan project has less impact on your overall portfolio as losses can be offset by gains in other successful projects.
• More Stable Returns:
  Different loan projects react differently to economic changes, leading to a more balanced portfolio.
• Flexibility:
  The Auto-Invest feature allows you to set criteria such as risk categories and amounts, enabling automatic investment across a variety of projects.

Example of Diversification on Cashare:

• Total Investment: CHF 10,000
• Allocation:
  • CHF 2,000 in 5 projects with A-rating (low risk, stable returns).
  • CHF 5,000 in 10 projects with B+ and B-rating (moderate risk, higher returns).
  • CHF 3,000 in 5 projects with C-rating (higher risk, maximum return potential).

Why Is Diversification Important on Cashare?

Crowdlending projects come with risks, such as borrower defaults. By wisely spreading your investments on the platform, you can significantly reduce risks while still earning attractive returns.

In summary:
“Don’t put all your eggs in one basket” applies to Cashare as well. Diversification helps you build a successful and sustainable investment portfolio.