4thWay’s 10 P2P Investing Principles

Principle One. If you have any doubt at all about lending through a specific P2P lending account, the answer's “No”. Only lend when you're supremely confident you understand all the risks.
Principle Two. Only lend when you're getting a decent premium over savings accounts and cash ISAs.
Principle Three. Treat buried information as if there's a reason, missing or ambiguous information as if it contains bad news, and decreased information as if it contains worse news. Demand more verifiable information the less that is provided freely.
Principle Four. Spread your money across lots of loans and P2P lending sites, and across other investments too – not just P2P.
Principle Five. If something smells fishy it just well might be. Trust your warning instincts, those little alarms and feelings in your belly. Don't let beguiling interest rates confuse your nose; sniff around for more pleasant smells.
Principle Six. Try your hardest not to prove you're right to invest but to prove yourself wrong. Look hard and deliberately for the weaknesses in the case. Only that way can you truly get wise and make confident decisions.
Principle Seven. Set your own simple lines in the sand in terms of the level of risk you're willing to take. (For example, not lending in property loans where the loan amount is more than 70% of the property valuation.) Only change these when there's an extraordinarily good case backed by all the facts and indicators. Don't move the lines in the sand just because the crowd (including journalists, pundits and experts) say that you should, or because nothing has gone wrong for a very long time. With investments, it's always when the last cynic thinks it's safe – and moves their lines in the sand – that it goes all wrong for them!
Principle Eight. Return of capital (the money you lend) is more important than return on capital (the interest and profits you earn when lending). The most important thing you should look for is high confidence that you'll get all your money back.
Principle Nine. Don't borrow to lend. The risks are too high. There might be exceptions to this principle, but they will be truly rare and unusual.
Principle Ten. Past profits do not mean that future profits are inevitable. Seemingly profitable investments can swiftly turn into bad ones for the unwary, the non-sceptical, the ill-informed and the greedy. Keep re-assessing the risks. Think independently.