In a brilliant move p2p lending platform Mintos has added the possibility to invest in foreign currency p2p loans across Europe. This means that from now on you can invest in high-netting loans in Czech Koruna, Polish Zloty, Danish Krones, Georgian Laris, Romanian Lei, British Pounds.
In practise this means that you can diversify your p2p investment portfolio not only across different loan types (personal loans, invoice financing, secured car loans, business loans, mortgage loans, …etc) but also across different currencies. And you can do this extremely easily as Mintos has added an instant currency exchange (forex) tool on its website. For very low fees (around 1%) you can instantly exchange your native currency (which is Euro for me) into any of the other currencies on the platform.
In the Mintos loan listing view as seen below you can easily filter the foreign currency p2p loans offered per currency.
My personal foreign currency p2p loans in Georgian Lari (GEL)
Ever since they started offering these foreign currency p2p loans I have started investing in Georgian, Lari denominated loans. As per the end of March 2017 my Lari p2p investment portfolio consists of 961.71ლ (Georgian Lari) with a Net Annualised Return expectation of 16.16% something I am really happy about as it is quite a bit higher than the 11.68% return rate my Euro denominated p2p loans investments are netting.
I really consider this option to invest in p2p loans across different currencies as a great addition to the great p2p investment platform that Mintos really is.
In the next few months I will keep you posted about the return rate developments with my Georgian lari p2p loan investments.
While researching the p2p lending market I stumbled upon the German based Crosslend platform. They offer p2p loans to borrowers in Spain, the UK, Netherlands and Germany and appear to be a highly ambitious platform with founders that have an extensive background in FinTech.
As they were a relatively new and small p2p lender in the beginning of 2016, that wanted to grow fast, they were offering a 10% bonus for every euro invested up to the 31st of March 2016. This sounded like a great deal to me and so I decided to try it out….
Europe cross-border lending
Like Mintos and Bondora, Crosslend is a pan-european p2p lending platform that uses market inefficiencies across european countries to create a win-win situation for both borrowers and lenders. As they state on their website:
“It’s our vision to reduce the gap between supply and demand within traditional lending in the European market by connecting borrowers from high-interest-rate countries with investors from low-interest-rate countries through our unique cross-border marketplace lending platform. We’re bridging Europe’s credit divide to create fresh opportunities for people on both sides of the coin.”
This form of interest inequality and arbitrage is one of the reasons p2p lending in Europe has such high potential as opposed to single country p2p lenders in for example the USA or the UK.
Opening an account with Crosslend (March 2016)
In March 2016 I opened an account by registering on the Crosslend website which was quick and easy.
Crosslend works a little bit different than for example Mintos or Bondora as they have a short video verification process to check your identity. After this is done Crosslend will open an investor account for you with their partner bank, the German biw Bank. This is a real bank account through which you will make all your investments and receive your payouts. It takes a couple of days to get it all set up as the bank needs to send you your account details and login credentials and codes by ordinary post. For me it took about a week to get it all up and running.
Once that was done I could start making my first investments in the loans offered on the Crosslend platform.
How Crosslend borrowing & lending works
On the Crosslend platform potential borrowers can apply for loans from 1,500 to 30,000 Euro for loan terms ranging from 6 to 60 months.
When a loan is granted to a borrower on the Crosslend platform it is purchased and acquired by Luxembourg based Crosslend Securities SA and securitized by a series of ‘notes’. Notes are debt securities which can be purchased by investors each with a denomination of €25 which is the minimum investment per note/loan. When a borrower makes their loan repayments, CrossLend Securities SA makes the corresponding payments of interest and principal pro rata to the holders of the notes and this money is deposited on your biw Bank account.
Crosslend’s loans are graded in risk classes A to G, HR.
A graded loans have the lowest risk and lowest interst rates (around 4%) while HR are on the complete opposite end of the spectrum with high risk and high potential interest payouts (around 17%) Crosslend checks submitted proofs of income for all borrowers.
Making my first Crosslend investments
After having finished the registration and verification checks of Crosslend I deposited my first sum of €900 on my account by wiring the money from my Dutch bank account to my Crosslend linked biw Bank acount with a free SEPA bank transfer. It took one day before my money arrived.
Subsequently I started hand-picking loans (or notes as Crosslend calls them) on the website as Crosslend does not have any auto-investment tools. I used the following criteria for my loan choices:
Loans from a variety of countries (Spain, UK, Germany, Netherlands) for diversification purposes
interest rate above 10%
Maximum loan duration of 36 months
I don’t want to tie up my money for too long hence my aversion for loans of 60 months.
Loans among all risk categories from A to HR rated but slanted towards more E, F and HR loan investments
With a €25 minimum investment per loan and a 1% fee charged by Crosslend on origination it means that the minimum cots per loan is €25.25.
My original deposit of €900 allowed me therefore to invest in 39 loans. It took me a couple of weeks to find 39 loans as the amount of loans available was with 48 pieces pretty low. However after logging in multiple times in March each time I found new loans had been added to the platform. After a couple of weeks I managed to find 35 loans that fulfilled my criteria.
Crosslend investment results after 8 months
Now after 8 months my Crosslend dashboard shows the following results:
As you can see the projected annual return rate of my loans is 15.59% and my initial €900 has grown to €1162.67. It has to be noted that part of my total revenue is the 10% bonus Crosslend awared on investments made in March.
All in all I am happy with the returns so far…let’s hope it keeps on going like this. Will keep you posted!
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.
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.
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.
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.
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).
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.
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.
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.
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.
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.