My P2P Lending Experience: Bondora 20.92% annual return after 10 months

After my first ever p2p lending investment on Mintos (as elaborated here) I started looking for other interesting platforms to try out. On the one hand for diversification reasons and on the other hand to see which of the many available p2p lending marketplaces delivered the best mix of high returns, ease-of-use, passive auto-investment features, transparency, regular reporting,…etc.
Basically the goal was to try to find – by investing in real life – the overall best p2p lending platform. And Bondora was my second pick. 

Bondora p2p lending marketplace

The second marketplace that caught my attention at the beginning of 2016 was Bondora. An Estonian platform that had been around since 2009 who was stirring up the world of p2p lending with its own novel approach delivering unbelievable results.

how-bondora-works

Bondora focuses on unsecured consumer loans with principal amounts of EUR 500 to EUR 10,000 and repayment terms ranging from three to 60 months serving borrowers from Estonia, Finland and Spain. It is open to private investors from Europe and accredited investors from other, non-European countries.
It is noteworthy to mention that Bondora does not provide any form of secured loans (loans backed by a collateral) in the way that Mintos does.

Ever since its emergence in 2009 Bondora claims to have made an impressive annual ROI for its investors of 16.2% !! In fact they claim to be the highest yielding p2p lending platform in the entire world.

On top of that Bondora claims to have the biggest secondary market, to be extremely transparent through their advanced analytics tools while charging no fees for investors.

general-statistics-bondora
Bondora’s impressive general lifetime statistics since its birth in 2009

Click the above picture to enlarge or find the info on Bondora’s website here

Add to these impressive statistics the fact that Bondora is the most licensed platform in Europe – having been authorized in the US by the SEC, in Estonia by the FSA, and in Finland by the RSAA – and it almost sounds too good to be true

Given these claims it was a logical pick for me to try out and see if Bondora could really live up to these stellar numbers in reality for a non-experienced p2p lender.
So I put down some money in a multitude of loans at the start of 2016 and now, after almost one year investing with them, I can say they have performed way beyond my expectations… with an amazing 20,92% annual return as a result.

Here is how it went…

My initial Bondora investment

I created an account on the https://www.bondora.com website on January 4, 2016.

The registration starts by filling in some personal details and an identity verification check is achieved by uploading a copy of your passport or ID. You also have to send a scan of a recent bill addressed to you on your home address to verify that address. All of it was quick and hassle-free.

On my account page I then easily found Bondora’s bank account number where to deposit funds into my Bondora account. For European bank accounts (including Swiss, UK and Norwegian accounts) money can be wired through a free SEPA transfer using Bondora’s IBAN bank account number. Recently Bondora has also added the low-cost option of Transferwise money transfers which work globally.

I wired €1000 to the Bondora account number and the money arrived the next day on my personal Bondora account (January 5, 2016 to be precise). I was notified by email when the money had arrived. 

To start investing I activated Bondora’s Portfolio Manager (PM) in my accounts Dashboard. The portfolio manager is Bondora’s auto-investment manager. At that time, in the beginning of 2016, Bondora’s Portfolio Manager let you choose between three different Risk-Return Strategies: Conservative, Balanced or Progressive. The strategies differ in their respective expected returns and risk (with risk referring to the amount of chance you have to deviate from the predicted returns).

bondora-old-dashboard-early-2016-screenshot-small
Bondora’s old Portfolio Manager and accompanying risk-return strategies

In its simplest form a Conservative strategy means lower risk with lower expected returns up to a Progressive strategy that implies higher risk with potential higher returns. You can see that in the screenshot taken from the portfolio manager at the time.

I activated the Balanced setting on the Portfolio manager and then…well just sat back and waited. Bondora started to invest in p2p loans for me with their investment algorithm. It does so by investing in €5 portions. After a couple of days my entire €1000 euros had been invested in 200 loans of €5 each. The low investment per loans is great as it means a easy way of diversification even with relatively small amounts invested on the platform.

After your first investment you have to wait three months before Bondora can provide you with a Return on Investment percentage as they need to gather enough data to come up with a sensible number. In the meantime they provide you with a daily email update about your incoming and outgoing payments. You can also login anytime in your account and see many detailed statistics about your account.

My net return on Bondora after my first five months using the ‘Balanced’ portfolio manager was hovering around 15%.

Wow…I was very happy.

As I was using their Balanced Risk-Return Strategy in the Portfolio manager with an expected return of 14.85% my portfolio was performing as Bondora had predicted.

I was well impressed. And not only by their returns rates…

Transparent reporting and communication

What I really got  to like about Bondora while using it for some months is its regular reporting and clear communication effort towards its investors.

They provide you with daily email updates regarding the state of your investment portfolio and also twice weekly emails with a diverse amount of highly informative info: from new dashboard features, investment options, platform updates to general p2p lending trends and industry updates. It really keeps you in close touch with your portfolio and the platform. Bondora really makes an effort and provides you with a steady stream of valuable information that made me have an ever growing trust and appreciation for Bondora. 

My Bondora portfolio changes

After some months I slowly started to invest more money and I went  from €5000 invested towards  €10.000 invested at the end of August 2016.

At the same time, as my trust in Bondora had grown, I also changed towards the Progressive Risk-Return Strategy of their Portfolio Manager.

Then mid-summer 2016 Bondora changed their Portfolio Manager (PM) slightly adding an ultra-conservative (lowest risk, lowest return in the PM) and opportunistic (highest risk, potential highest return) option. See the screenshot below.

bondora-new-portfolio-manager
Bondora’s new portfolio manager. Notice the new ultra-conservative and opportunistic investment options

Eventually, in September 2016 I went for the high risk, high potential return ‘Opportunistic strategy’ and that is what I have been using up to now in November 2016. 

Changing from an initial Balanced strategy towards the Progressive and subsequently Opportunistic strategy has served me well as my net return grew substantially….

20.92% return after 10 months investing in Bondora

With the aforementioned settings I managed to achieve a 20.92% net return after 10 months of investing on the Bondora platform. This almost unvelievably high number (especially compared to putting your money on a savings account with a bank) is actully completely in line with the expected return of 21.23% using Bondora’s opportunistic risk-return strategy. See the screen shot from my Bondora profile dashboard below for the details. 

Achieving a 20.92% annual return rate on p2p lending platform Bondora after 10 months

 

You can see from the screenshot above that I made a net profit of €793 euros over those 10 months.

Bondora beating the stock market

A recent comparison of the return rates of Bondora and the stock market in general revealed that Bondora, since its inception in 2009, has been outperforming the stock market. As crazy as it sounds, p2p lender Bondora’s annual return rate was on average 5% higher than the S&P 500 stock market index’s return rate.
It really is a sign that the relative new investment vehicle that is p2p lending is actually a very promising one that is there to stay.

For the entire in depth story check ‘How p2p lender Bondora is outperforming the S&P 500 stock index since 2009

My Bondora verdict after 10 months

Bondora is a great platform that has impressed me in every way. The platform is highly transparent, has a great user interface/dashboard that is very easy to use and full of features, communicates great with its investors and provides quick support if you contact them. Add to that the very high return rates and I feel they are indeed one of the better p2p lending marketplaces out there. At least the best one I have found so far.

I am very satisfied with my investment results after 10 months and hence will keep using the same progressive PM strategy in the near-future. I will regularly post updates of my portfolio performance here to keep you informed.

If you are interested in trying Bondora out for yourself click here and get a €5 free starting sum to kickstart your p2p-lending-life!

Bondora vs. Mintos

My Bondora return of 20.92% is much higher than the 11.28% which I achieved on the Mintos platform (described here). However taking into account that a big part of my Mintos portfolio consists of secured loans with a buyback guarantee (which have lower interest rates, and lower risk on default) this difference fully understandable.
Investing in both platforms is a great idea for diversification reasons and this is what I will keep doing as I think both are great p2p investment platforms each with its own strengths.

If you have any questions regarding my portfolio or investing on the Bondora p2p-lending marketplace post them in the comments and I will reply to them.

2 thoughts on “My P2P Lending Experience: Bondora 20.92% annual return after 10 months”

  1. Hi are you aware of the fact Bondora considers late/defaulted loan principal as current (only considers missing loan payment as really late) when calculating your return? So your return is purely fictional and your article misleading 😉

    1. Thanks for your comment. I am aware that their calculations are probably on the optimistic side. Like all p2p lending platforms seem to do. However I am trying to write my personal experiences as a p2p-lending novice and therefore write them up the way I am finding out about these kind of things. The calculation of return rates is definitely something I will write more about in the future as there is so many different ways of coming to this number. Would be glad to hear more about your personal experiences…
      What do you mean exactly with “only considers missing loan payment as really late”?

Leave a Reply

Your email address will not be published. Required fields are marked *