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I built a settlement, saw it getting constantly raided without any mechanism to support it so i decided to put money into a stronger defense. I took on the "merc" faction trait" build a training ground and upgraded the colony to level 2...
And the game decided to throw a level3 raid at it. The battle was lost, the colony level reduced to 1, the training ground destroyed. 2500 silver did absolutely nothing for me and for the next raid (usually around level 4-6) my chances of winning got reduced to 0 again.
What is the benefit of having colonies?
They are not profitable in terms of production and a drain on ressources in military terms.
They do N O T H I N G for the player except to frustrate on a regular basis.
From there, focus three settlements on making silver to pay for upgrades, and one on military to defend the settlements. They'll still get raided and damaged, but since the raids are randomly picking one of the four, none of them are likely to take too much damage before you can recover from it. With two or three military buildings and level upgrades, your military settlement should be able to fend off most raids.