If you've heard about P2P lending/investing but aren't sure how it works, you've come to the right place. I will explain all the basic things you need to know in this post.
During the last months, I've continued to invest in business loans with high interest rates. I've got three platforms for this - Envestio, Kuetzal, and Crowdestor. Together they contain about half of all my P2P money.
Envestio seems somewhat stabilized recently. The rates are down to 16-17% and some projects even stay available for more than an hour, meaning you have time to log in and invest in them. All the payments so far have been on time, there hasn't been even a single delay (that I'm aware of). Some people find this suspect but I choose to believe that this is proof that the Envestio team is really good at choosing the projects. Besides, neither Kuetzal nor Crowdestor have had any late payments either so I guess that's the norm for this kind of platforms.
I love high interest rates. Who doesn't? And the highest rates (20% and more) are usually for business loans. There are quite a few platforms that offer these types of loans to investors but the problem is that the rates go down as soon as more investors discover the place. So I was very excited to find a new platform where this hasn't happened yet.
Kuetzal reminds me a lot of Envestio. The projects are of the same type and even the website layout is somewhat similar. I joined it about 10 days ago and transferred the money that I withdrew from doFinance, plus a little extra - 800 € total. Currently there are 6 active projects with interest rates up to 21%.
A few months ago I was very excited about Envestio - a relatively new platform that offers loans to businesses and very high returns to investors, up to 22%. Two of the projects I had invested in have finished and everything's been paid back; I have no complaints at all in this direction. Rather, the same thing that happened to many other platforms has also happened to Envestio - it has become a victim of its own success.
What does that mean exactly? Well, basically it means that there are not enough loans available on the platform, there are too many investors. It's a good problem for a platform to have because it means they can fund any loans quickly, but from the investors' point of view it is bad news. Usually it means that the interest rates will go down and/or more loan applicants will be accepted to satisfy the growing demand, potentially leading to more defaults and losses for the investors.
doFinance was the very first P2P platform I registered at and wired my money to. I chose it because it was the simplest one, not requiring any maintenance at all. At the time (January 2018) they offered a 12% return if the investment was 6 months long so I put 800 € there and watched my money grow. It was almost like a savings account at a bank.
The first bit of bad news appeared in April. The three different rates that had previously been 6%, 8%, and 12% were changed to 5%, 7%, and 9%. My 800 € were still earning 12% but once the 6 months were up in July, I would have to reinvest them at 9% because they didn't offer 12% anymore.
Since my goal is to become financially independent, I try to save some money every month and put it into P2P loans or stocks (or both). For a long time my default platform for new money was Mintos, then Envestio. This month I didn't want to add to Envestio because it already has too big a share of my money. Dofinance was out of the question (I'll be leaving the platform in January) so I had to decide from my remaining platforms.
At the moment, it's only possible to get 11% loans on Peerberry and Viainvest, unless you are really lucky. On the other hand, Robocash still offers 14% loans, but there are not enough loans for everyone so some money usually sits in the account doing nothing. So which one to choose? In the end, I chose Robocash because I hoped that the loan volume might pick up.
My strategy on Mintos lately has been either to withdraw funds or to invest them in short-term loans that offer at least a 10% interest rate. There were a few weeks when almost no such loans were available (hence the withdrawals), but now the rates for some short-term loans have increased even to 11%.
There are some ExpressCredit loans available with a 12% rate but I don't invest in those because they are 5-6 years long. ExpressCredit was offering 15% for the same kind of loans in spring so I'm hoping the rates will increase further in the coming weeks, maybe to 13-14%. Then I'll consider buying them again. ...continue reading "Mintos interest rates have slowly begun to recover"
Recently Mogo, the biggest loan originator on Mintos, issued a bond worth EUR 50 million, with an annual interest rate of 9.5%. They also announced that they would buy back many loans from Mintos's investors using this new money since the loans had a 12-14% rate, which is much higher than 9.5%. I was not overly worried about it because only about 15-16% of my Mintos money was invested in Mogo loans and I thought I'd simply reinvest it in other loans.
Well, it didn't turn out that simple. All the free money the investors suddenly had from the Mogo buy-backs meant other loan originators started lowering their interest rates as well. On top of that, Mintos started a refer-a-friend campaign in July which attracted even more investors and more money to Mintos. The result was that interest rates dropped to 7-9% (when they had been 13-15% in May). ...continue reading "How Mogo messed up Mintos and I discovered Envestio"
When I decided to start investing in P2P, I needed to choose a platform to start with. I knew Mintos was the biggest one but I didn't want to start with it because I'm always wary of market leaders, be it a bank or a phone manufacturer or anything else. My thinking is that they may grow complacent and their service or product might not be the best.
After doing some research, I picked doFinance to start with. Their offer looked almost like a bank deposit - "you give us money for 6 months, we'll give you a fixed 12% return". I was a little worried about the legitimacy of the company because it was quite new and I hadn't heard about it before, but then I read an interview with the CEO and decided to trust them. I deposited 800 € on January 8th with them and haven't touched them since. The 6 months will be up soon so I will have to reinvest the money.
When we are little we learn how the world works. Some things we experience for ourselves, some things we only see or hear about, but in either case they form our world view, our core beliefs, and we rarely reexamine them once we grow up - unless an external factor forces us to.
One of these unquestionable truths for me was the fact that I'd have to work until I reached retirement age. Growing up here in Riga, the only wealthy people I saw were dirty politicians and some businessmen. I knew I didn't want to be one of them so that was that. Once Latvia joined the EU in 2004, many people left for the UK and other countries to seek wealth, but I never heard anyone say they wanted to save up money and retire before reaching the age of 50. I don't think I was even aware of the concept.