Auto Invest is an investment tool that automatically invests available funds based on your selected parameters.
- There are no fees and no minimum account requirements to use Auto Invest.
- Individual investors can set a target allocation and other investment criteria. In turn, Auto Invest will places orders for matching Notes [link to: What is a Note?] on their behalf. Please know that Auto Invest does not sell your Notes to re-balance your portfolio; it only places orders for new listings according to your investment criteria.
- The cash in your account may be invested immediately or over a long period of time, depending on your investment criteria. The frequency of Note orders is based on the cash balance of your account, availability of listings matching your investment criteria, and demand from other investors.
- Auto Invest prioritizes accounts with a higher percentage of cash and places orders for these accounts first (in other words, Auto Invest will give priority to accounts that have not yet heavily invested in Notes). Account size and customization do not determine prioritization.
Getting Started with Auto Invest
To get started with Auto Invest, you only need to define your investment criteria and save these settings in your Prosper Account. The basic investment criteria for Auto Invest includes (1) a target loan allocation and (2) the amount invested per Note.
When defining your investment criteria, you can:
- Select one of the preset target allocations, any of which can be customized by changing the percentage allocated to each loan rating
- Create a custom target allocation across Prosper loan ratings based on their risk tolerance
You can further customize their investment criteria by adding loan filters.
Once funds become available in your Prosper Account, Auto Invest will start investing. As the Notes held in the investor’s account generate principal and interest payments from borrowers, the account may accumulate a cash balance, which Auto Invest will reinvest automatically based on the investment criteria.
You can also add a “cash reserve” to your account, setting aside a percentage of your portfolio to be available as cash. By doing so, Auto Invest not place orders until this cash reserve level is met and will only use funds in excess of your cash reserve to place new orders. You can change the amount of your cash reserve at any time by adjusting the percentage of cash in your target allocation.
Pausing / Canceling Auto Invest
From your Prosper Account Dashboard, you can review, adjust, pause or re-start Auto Invest at any time. Please know that pausing or canceling Auto Invest will not cancel any pending orders that have been placed for your account.
Once Auto Invest stops placing orders, it will no longer invest your cash balance for you. The cash generated from principal and interest payments from borrowers may accumulate into your cash balance. You can withdraw [link to: How do I transfer funds to and from my investment account?] or reinvest your cash balance at any time.
Customizing Your Investment Criteria
You can customize your investment criteria by (1) editing your target allocation across the individual Prosper loan ratings and/or (2) applying additional criteria to the loans you would like to invest in.
- Keep in mind that using a restrictive investment criteria can limit the amount of Notes Auto Invest can purchase on your behalf. If that’s your preference, that’s okay! As always, we recommend consulting an investment advisor if you have questions about how to set your investment criteria.
You can also set your target allocation to be less than the current allocation.
- Example: Let’s say your current allocation is 10% AAs, 5% A, 10% B and 75% Cash; and you set a target of 0%AA, 0%A, 0%B, 50%C, 50%D and 0% Cash. In this case, Auto Invest will place orders for C and D notes only but will be unable to reach your target allocation while you continue to hold AA, A and B notes.