Some weeks ago I already announced Bondster and now it is time to take a closer look. Czech private equity company CEP Invest owns Bondster. Further there is a strategic partnership with the loan originator ACEMA, which I know from Mintos. ACEMA is a heavywheight in the Czech nonbanking loan market with only a little short of 20 years of experience in this market. I guess these are solid preconditions.
Sign up, Cashback and Fees
On Bondster retail and company lenders can invest money, if they have got a banking account withing the European Union (plus Norway and Switzerland). You can sign up with this link. If you add these four digits 4985 to the Promocode field on the bottom of the form you get 1 percent cashback for the first three months (same for me). The cashback is calculated on your average investment during the first three months. The funds will be credited on your investor account after 30,60, and 90 days. Further there are no fees for the first three months. Afterwards the marketplace charges 1 percent annualy on your invested funds. The fees are directly subtracted from your received interests. So basically you can test the platform for three months free of charge and get an extra cashback.
Currencies and types of loans
CZK (Czech Krona) and Euro are available for investments at the moment. With CZK there is sort of an instant access savings account (like Bondora Go und Grow), which yields 3.9 percent annualy. I doubt this is very interesting for Euro investors, but I wanted to mention it anyway.. Additionally there are loans which are secured with property, but only seldom they are on the marketplace. The biggest part of the loans are Guaranteed Liquidity (GL) and Buyback (BB). Both of these types come with a buyback guarantee on principal and accrued interest, after 60 days. The GL loans provide a possibility to exit before maturity, but this comes with a cost of 1 percent of the principal amount. As most loans are annuities with monthly installements, the effect of the fee reduces with increasing duration of the loan. The buyback loans do not provide this early termination option, but yield much better ( currently 12%) and come with a duration of a few months. I can forgo the liquidity feature because of the buyback and the relatively short duration. Minimal investment per loan is 10 Euro.
Bondster offers an autoinvest feature, which seems to be a little complicated on first sight. This has to do with the many options you can set. Therefor I made my first investments manually, which took some time as I had to confirm every investment . In my next Bondster post I will explain the mechanism in detail.
I find Bondster interesting as it presents a regional alternative to the Baltics. Another positive point is that ACEMAis on board, which I already know from MIntos. As always with these types of loans the quality of the loan originater is key. There are some unknown originators on the marketplace. I will try to gather more information on them and share my thoughts in the coming weeks. By the way, the website is also available in English.
Reinvest24 is a relatively new marketplace from Estonia which I will introduce to you now in some depth. I found the platform during their softlaunch last summer. At that time there was not too much going on there what should change now. The platform is open to investors from all around the world.
Reinvest24 was founded in 2018 through experts in the field of real estate, It and finance and is located in Talinn. According to them they have more then 10 years of experience with property development. Firstly the team developed and managed the projects as a kind of private fund. As the number of realisable projects increased they decided to offer access to this asset class to private investors (minimal investment 100 Euro per project). Not only the monthly paid yields are exciting, the type of investments is as well. You can be shareholder of a property and benefit from monthly rent payments plus participate in the value increase of the property. The properties will be revalued periodically or after a milestone in the development is reached. In future there will be a secondary market in place where you can sell your shares over or under actual value. However the main focus of Reinvest24 is to hold the properties longterm and generate passive income from renting.
Current and past projects
Momentarily there are two projects open for funding (details you can see in the project description), one with a fixed interest rate (14% annualy with a duration of 9 months). This project was published on the platform to give new investors more options to invest at the beginning. The second project is a partially renewable rental property which already generates rental income (I am in this project as well). Projects like this are preferred by the marketplace. If the team sees good opportunities, they will add different types of projects in the future (like the 14% fix rate project).
If you take a look at the properties page, you will see there are already two projects labeled with “exited”. This means the properties were already sold. These projects were never open to public, the team just processed these two for testing purposes through the platform. Hereafter there will only be limited exits on good offers, and only if the shareholders are ok with that.
Fees for investors
Per 100 Euro invested you get a number of shares of a property. Two percent of your investment is deducted as fees (applies as well for secondary market purchases, selling is free though). This means of every 100 Euro invested, you get 98 Euro worth of shares. Sounds expensive at first sight, but in comparison to other platforms this can be seen as moderat. Furthermore, the yields should compensate for the fees really quickly. The marketplace as well needs to make some money to operate. As already said the platform takes the 2 percent on investments and charges one tentht of the rental income for manageing the properties. In my opinion this is okay.
The whole development project is processed through a SPV (Special Purpose Vehicle), which represents the interests of the investors. This SPV is just a legal person, so basically a company (I am no lawyer, so please excuse the generalisation). By investing you do not get a share of the SPV, but directly from the property, which will be managed by the company. Basically this is the same structure used byProperty Partner, one of the bigger property marketplaces in the United Kingdom. The other possibility would have been to found a new SPV for each new project and give shares of the SPV to the investors. This is costly and not profitable to do for every 100 Euro invested, so not really an option. As it seems we will just have to trust the marketplace that this structure will be used in our best interest. I do not want to overdramatize this issue. Remember that with most p2p investments we do not get more then a contract in pdf and a promise to get paid. An advantage of this structur is that every project is independent, so if some problems occur with one project, it has zero impact on the others.
I like the concept of Reinvest24, as I exactly missed the possiblity to generate rental income in the Baltics. It is something different and the team seems to be very motivated. I was in contact with the CEO Tanel Orro over the last weeks and he answered all my questions in detail. You can contact him through the emailadress on the platform. Maybe this is necessary as there is not that much information available on the website as I’d liked, but they are working on it. Follow me to Reinvest24.
Today I decided to shortly introduce three new platforms to you. Of course, you should have in mind that one blogpost is way too little to describe all three platforms in a detailed way (particularly because I only registered on two of those three during the last days). This is the reason why you will only get a short introduction. A more detailed report will follow during the next days and weeks. So, let’s start:
Reinvest24 – Real Estate among the Baltic States with rental income
I always asked myself why there are no marketplaces in the Baltic States which allow investors to buy real estates and rent them. In Great Britain this kind of model is very common. That is why Reinvest24 is in its basic structures very similar to Property Partner. It is a very young platform and therefore open to investors only for a couple of months. I am already part of a project and received my first rental income previously. Concerning the second project I already placed a bid, but it will take a moment until it is financed completely. I will write a more detailed info blog for this platform during the following days. Before that you should take the chance and look a bit around. Via this link you can directly get to Reinvest24.
Bondster – P2P from Czech Republic with Buyback and Cashback
Like I mentioned before: this is a platform from the Czech Republic where you can invest Czech Crowns and Euros (here is a report concerning the development of both currencies). There are different kinds of loans you can find. The platform provides buyback in an exclusive category, as well. Self-explanatory, the buyback grasps after 60 days. But there is also an option to get out of the loan (like Envestio). Of course, you will have to pay a fee in this case. I am not sure yet who is the owner of this platform, but I saw that there is one partner of it which has a famous branding Name: ACEMA! This is a loan originator which already financed loans via Mintos. As well, this platform is under supervision by the Czech National Bank. The interest rates are with 10 per cent moderate (edit: they just added 12% loans). After three months new investors must pay an annual extra fee of 1 per cent which will be directly deducted from the interests. Like mentioned, in the first three months this extra fee will not be charged. Also, you will receive a 1% Cashback on your average investment during the first three months which you will be paid monthly – if you use for your registration the promo code 4985! This code you have to place in the field “referral code” on the bottom of the registration form. Furthermore, there is no retention. Here you can reach the platform of Bondster.
Debitum Network – P2P and Crypto made in Lithuania
This is the third platform I for today – even though I still do not have the complete view how it works. You can pay in Euros and Pounds but also crypto currencies. The crypto part will only be available after an identity proof. But you can also work in a normal way with Euro or Pound. Right now, I only see loans from Debifo (also this one we know from Mintos, Invoice Financeing). Like mentioned, I do not have the clue yet concerning this platform, but I try to work with it by investing a small amount. Via this link you can directly get to the Debitum Network.
This is it for today! Like always please write me if you have any questions. Like mentioned, as well, there will be more detailed experience reports in the following days and weeks.
Since my last post about envestio some weeks have passed und last week the first repayment of a project was up. As with all interest repayments everything went as planned and I got my principal back on time. End of this week, the next capital repayment is on schedule. Let’s see if this will be on time as well. Frankly speaking I thought there would be some delays. with at least one project. To me it seems weird that there is not the slightest delay anywhere (pretty bizar that I would like to see delays..). Envestio replied my question why there is no single day delay with the argument that the borrowers pay slightly before the schedule we see in our dashboards… I was less then impressed with this answer as in my opinion it does not adress the source of my question. I draw the following conclusions: 1) The marketplace makes an outstanding job and has everything under control (although we should differentiate here as most problems will occur normaly between 6 and 18 months, and the loans are not live that long so far), or 2) I did not fully grasp the risks involved in these types of loans or I do not understand the business, or 3) The multiple tiers are used to generate liquidity. I will describe this point further below.
To be clear: I do not accuse the platform to be a fraud or something, for this I have no evidence (if you have, bring them to me) and it is too early to tell.. For me, it is just weird that everything seems to go very smoothly. For this reason I am thinking through some scenarios. I still believe in the old formula: Very high interest = very high risks.
It is obvious that the same companies frequently take more loans. These loans are marked with the different tier. Tier 6 means that the same borrower has 6 loans open. At the moment there is one borrower (container) with 9 live loans in the amount of EUR 650’000 hat. Possible that every loan is secured by some sort of security coming with the loan, but I find this a bit special. One could suspect here that the new loans are just extensions for older tiers. As long as the loan volume stays the same, there is no big issue. If the volume raises over time, then I have questions. Seldom there are new borrowers, mostly I see new tiers from existing borrowers.
To reduce my exposere I try to invest only in one tier by each borrower and I try to catch an early one. If I am confident, I take a second tier. Further I only invest in secured debt which gives me the instant selling option with 5 percent discount. There might be other loans (subordinated) which do not offer this feature in the future, but as of now I only saw secured debt loans. Moreover I only buy loan parts with a duration higher then 3 months. This for the reason that I can sell without a loss after 3 months (assuming 20%, makes roughly 5% after 3 months). At loan expiration I can only count on 90 percent minimal payback (if the platform can pay that). If I really redeem early is a different story, but I like to have options available. Another question is if the platform has enough liquidity to provide the 95% of capital needed for early sellers, if lots of investors choose to sell. Basically this is the same as if savers call their funds from the banks. Let’s hope that we do not come to this point. As said before, it is possible that my assessment is just wrong.
Withdrawals from the marketplace are free of charge, as long as they are higher then 5 Euro. For amounts below there is a handling charge of 2 Euro. Envestio needs to do that as lots of investors required small amounts daily and their bank is charging them for that.
For the end
Maybe I am too hard on Envestio, but I remain sceptical. I believe the marketplace earned a chance, I stay with the platform and hope for new loans. Interest rates of up to 22 percent support me with that 😉 If you decide to give it a try, use this link for registration and you will get 0.5% cashback on your investments for the first 9 months.
During February I reported about Crowdestor and its Tesla project (seems I was lazy back then as I did not translate it from German ;)) the first time. Then I had my doubts about the marketplace and the Teslas as well. In the meantime someone enlightened me and told me the story behind Teslas in the Baltics. As it seems the Baltics really like Teslas and their uber counterpart, taxify, especially has a button in their app to order a Tesla as taxi 😉 I really like to learn new things (even unessentials), but more important is that the loans obey their loan schedule and pay. This is the case with the Tesla project. According to the marketplace all other projects are on schedule or already repaid.
Until now Crowdestor stood to their word and delivered the projects which they announced. Sadly there have only been a handful projects on the platform so far during the last months. Good news for us, these days seem to be over. There are two open loans at the moment. One is a start up in the fashion business, the second which was launched today is a property financeing in Riga. Currently the loans need weeks to fill, but this is not a problem for investors as interest accrues as soon as your bid is placed. Even if the project will not be withdrawn, you will be compensated by the marketplace. Really nice, but to honest, it is what a platform in this early stage needs to do to get projects funded. Good for us investors, even better that the interest rates are really good;)
A Start up, a property and a Berlin Restaurant (and more)
Crowdestor now has a good pipeline for new projects. Currently there are two loans live, the start up which yields at least 17 percent annually (and might go up to 22%, subject for that to happen are the turnover figures achieved by the start up in 2019). The second is a newly added property loan, paying 12% on an annual basis and runs for 9 months. In a week there will be a project live on the platform for a restaurant in Berlin, Germany. Somewhat special to see a German project here. I do not know if I like that really, as most German p2p marketplaces have difficulties with arrears and defaults.
It looks like that the marketplace gained momentum as there should be two more projects coming in the next weeks. So there will be plenty to invest in. Sadly I haven’t got more information on these coming loans. Follow me to Crowdestor.
On October 31st Lendix announced that they now are calling themselves october. First I thought it was a joke, but it is real ;). Their CEO explained the reasons in an email shortly after the announcement. In France legislation that allowed p2p was set up in October 2014. Lendix was founded in October. They want to differentiate themselves from their peers) and wanted to open their name and not limit it to “LEND”ix. Last but not least the CEO said that the name does not need to have a connection with the business and gave Apple as an example. Oh and October is understandable in many European languages. Actually I liked the name Lendix, but hey, I lend my money now on october.
Peerberry does no longer belong to Aventus Group
Maybe an older story but I wanted to mention it. Ausra, CEO of Peerberry, confirmed that the platform was sold to two European citiens. You can see it inthis video (at about 3m15s). This move is a little weird at first, but it does not mean to be negative at all. I really would like to know why this happened and what the reasons are. Maybe I will find out. At the moment my funds stay where they are.
Estateguru changed its appearence
Estateguru made themselves a fifth Birthday present and has now a new web and brand appearence. The new page is not free of errors and I am not easy navigating through it at the moment. I really hope this will be improved in the coming days. Nice is the new overview of the loans and more information is visualized. This does not change the fact that some loans are overdue or under administration. But this is just natural. If there is a problem with real estate loans, it takes time to solve.
Grupeer announces new loans for November
Grupeer is a victim of their own success. Really good growth numbers in volume and investors led to a situation where lots of loans where sold out. Good for the platform, not so good for us investors. The marketplace announced that they are working on new deals and we should see lots of them in November. Hopefully they come quick…
Last month I mentionned Bondora go and grow within my Bondora update, and as it seems I had not explained it as detailed as possible. I draw this conclusion from the numerous questions I received since. This led me to create a walk through which I will share subsequently.
Basic stuff concerning Bondora Go & Grow
The Bondora Go and Grow “account” yields 6.75% annually, you get interest credited daily. The daily credits are a little shy of what 6.75%/365 would result in. The reason is that compounding interest is included in the 6.75 percent. After one year you really have earned 6.75 percent. I contacted the support to verify and they confirmed it. At some point I read that the yield was set up to 6.75 percent, and this would have left room for speculation. So I reconfirmed that as well with the support. They confirmed that this is written because the daily interest payments are little less then 6.75 percent, but annually you get 6.75 percent. Your money with Go&Grow is liquid and available any time, including interest. You can do a withdrawal request in the morning (and take the daily interest from yesterday with you 😉 ) and should have your funds on your bank account in the afternoon, or the next working day latest. If you funded your account by credit card, you can credit the funds there as well. Bondora says that the interest will only be taxable after you withdrew them from the go and grow facility. I am not sure if this is really the case, and if, it won’t be true for every country.
Registry and settings
If you are new to Bondora sign up through this link and get 5 Euro starting bonus (valid as well for Go and Grow). If you are already a Bondorian (or after registry), click on go and grow in your dashboard to create the account (you can use more then one service simultaneously, will explain later). First you will be asked about the purpose of the account (check image below). You can choose what you like, it does not have any impact. I only could think the info will be analyzed by Bondora.
Afterwards you can create a fictive scenario, with a starting amount, monthly contributions and set the duration. These settings are more or less just for fun and do not impact the fact that you get 6.75 percent annually, on 100 euro or 100k, no difference. Only thing is that if you are behind your goal, you will be notified. But you can always change your settings. Actually in my opinion here is made more then necessary, but hey, it looks good 😉 And you can see what you can achieve.
Deposit and Withdrawal
Your go and grow account is now ready to be topped up. Click on deposit (see screenshot below). Now you have different options for depositing money: Directly from your Bondora account (if you already have one), SEPA, SOFORT, Transferwise and credit card. Depending where you are from the SEPA option is the fastest and cheapest. You need to put the following info in as payment reference that the money direclty appears in go and grow: first name second name, Bondora reference, go and grow reference. In my case this would look something like this: p2p hero 1234567 gg12345. This information you get for example if you click on SEPA method. A withdrawal can be requested by clicking on the wheel on the top right corner, they will charge 1 Euro per withdrawal. If you already are using a Bondora service, than you can sell all your loans direclty to Bondora. You can request the offer where you request the withdrawal. Be cautious, if you accept, there is no going back. Further it is possible to automatically send all your proceeds directly to go and grow (go and grow interest is already added by default on go and grow)
How secure is Go and Grow?
At the end of the day, it all comes down to Bondora. The marketplace is about 10 years old now and went through a recession. It is a maturing startup in my opinion. How much liqudity is available if lots of people request liquidity simultaneously is beyond my knowledge. Bondora is not a Bank and 6.75 percent on call money is about 20 times more then banks like DKB or so pay in EUR. So DKB pays about 0.2 annually, this means Bondora pays more in one month then the bank the whole year. I guess this puts it in the right relation. Therefor go and grow is an addition to park my liquidity, not an alternative. Perhaps the yield gets lower once go and grow is more known. If you are not already an investor, use this link to register and get 5 Euro starting Bonus.
Frequent readers of this blog might know that Bondora and I not were friends, we still aren’t but the relationship got better. One year ago I advised newcomers not to join Bondora, but started my second try back then.
In September I launched a portfolio manager (autoinvest) with a balanced approach. Sporadically I checked out what was going on, but never intervened (no deposits or withdrawals as well). After one year (blue bar) my yield is above the expected yield still, but decreased over time drastically. This was and still is one main critisism from my side. At the beginning everything looked fantastic with the high yields, which relatived over time. Still, I am positively surprised by them (although my calculated xirr is lower). I hope that my actual yield will stay in the expected bandwith for the coming years. Bondora is no marketplace for short term investments, until now. With the recent Go & Grow addition they filled this gap. More about that at a later stage in this post.
Short overview of Bondora’s multiple services
Before I get into details about Go & Grow, I’d like to give an overview of all available services:
Portfolio Manager The portfolio manager is just a simple autoinvest feature with very limited input factors. Nice for investors who do not wish to deal too much with the marketplace, and think the expected returns are reliable.
Portfolio Manager pro… … is actually an enhanced version of the portfolio manager with some more features to control. You can exclude specific countries and ratings and set the investment duration and the size invested in each loan.
API API is the programmable interface with which you can set your individual settings for loans. You need some coding experience for that or for example use a firefox plugin. You need to deal with the loanbook first and identify your settings from there.
And now the famous Go and Grow (replacement for call money?) with 6.75 yield p.a
By introducing Go & Grow Bondora now offers a short term lending service which resembles a call money account.Go and Grow pays 6.75% annual interest on a daily basis. You can withdraw the money when you need it, but keep in mind the withdrawal is charged with 1 Euro. If you invest 1k for example, after 6 days you already earned the fee plus some cents more. I park some of my liquidity with Go and Grow. I see this service not as alternative to an overnight account, but as a supplement.
Bondora pushes Go and Grow at the moment (by using this linke for registration you get 5 Euro free as a bonus on your account), as this is a cheap and easy funding source for them. On the left side of your dashboard you ses Go & Grow and this is where you can create the Go and Grow account. You can use more then one service simoultanously. In my case the portfolio manager is running, which I have to pause if I want to add funds from my account to go and grow. Or you can directly deposit into your go and grow account, by referincing your wire transfer correctly. This looks like this: first name last name 123456 (like your normal deposit) & add your GG reference for example GG12345. But this is shown in the go and grow section. There is the possiblility to set that all your future cash flows move directly in to go and grow, plus Bondora buys your entire portfolio, if you already have one. If you chose to do this, please be reminded that this is irreverible.
I am still of the opinion that Bondora with all their possibilities and data, needs serious time to get handled. Go and Grow is an exception to that of course. My experience from the past year eased my anger about Bondora, but I still suggest for new investors to start elsewhere. Of course Go and Grow is an exception to that, if you only use that. In my opinion it is not a good idea if you decide now to put all your liquidity on that account. For diversification and risk management purposes it is better to spread the funds on different accounts, even if they yield lower or 0 in extreme cases. As previously stated, new inverstors get 5 Euro by registering through this link.
First of all I want to offer my appologies to my english reading visitors. Normally I try to translate my posts from German into English within two days after the German post has been released. Lately, I really had a lot of things to attend, so my time was very limited. I hope the situation will get better in the next weeks and you get my posts translated shortly after the German ones are published. Here we go:
At the beginning of this year Envestio got my attention when a Latvian digital marketing agency introduced it to me. Their goal was for me to publish a post about the marketplace. I highlighted my concerns over the platform as I found the loan supply confusing (Real Estate in Spain, Cryptomining etc). Further I could not imagine that there really were projects paying 18% of interest to investors (including buyback). The cryptoloan paid far more then 20% if I remember correctly. In the end I had not enough trust to try the platform and review it at that time, even though all my questions were answered and they tried to be as transparent as possible. So I declined, but still watched Envestio, until in July I was confident enough to give it a try with some pocket money. Now I am able to give you an overview of my so far experiences.
Registration/Deposit/Withdrawal – Cashback included
If you are registering thorugh this link, you’ll get 0.5 percentcashback on your investments during the first 9 months. Cashback will be credited around the fifth every month, directly on your investment account.
Sign up is straight forward, confirm your email and you are in. Copy of your ID plus utility bill (or bank statement) is needed only before withdrawing. I suggest you do the verification in advance, so a withdrawal can be made any time. Somewhat special to me is that if you request a withdrawal you can fill out a blank form with your bank data, the data can be overwritten and is saved after each request. The first thing that came to mind was: What happens if I get hacked and all my money will be sent to another person. Envestio implemented a security mechanism for that, they double check withdrawals before processing. Only withdrawals will be processed if the beneficiare is the same person as the registered investor.
Minimal deposit amount is set to EUR 100, but you can invest from 1 Euro into each project. A little strange handling, huh? 😉 But that did not stop me 😉
Buyback guarantee/secondary market
Envestio does not (yet) provide a secondary market in the traditional sense, but they will rebuy your loan parts at a 5 percent discount rate. This means you’ll get EUR 9.50 back immediately for a EUR 10 loan part. This option is available until the maturity date is reached. If you do not sell your tranche and the loan defaults, you will get automatically 80 percent of your capital back. For the remaining 20% your got two options: 1) immediately take 10% and get 90 percent total. Or 2) you wait for the recovery process to happen and could get in the best case the rest back. I think this is just hypothetical, but it is your decision. Worst case you do not get anything out of recovery and have got back 80 percent. I asked if a loan can be prolonged if the maturity is reached and interest is paid monthly. Envestio would ask the investors if they would like that to happen, but generally they would like to send the loan into default and begin recovery proceedings. My impression is that the marketplace would not wait very long to get active with the recovery. They wrote that on their blog. But this is only my gut feeling. If this happens like that in reality is another, not yet tested, case. So far, no loan was in default according to Envestio.
Envestio offers a 100 percent buyback guarantee on certain projects, if you invest a defined amount, like 10k for example. In such a case, please keep in mind that this guarantee comes from Envestio, so if Envestio defaults, to guarantee is not worth that much.
Each loan is secured as laid out in the project description. There are commercial pledges and owner personal guarantees. An owner guarantee is not much worth to me as mostly the owners money is already inside the company. Furthermore as the loans are mostly to small enterprises with low capitalization.
One can ask if these companies are really that desperate as they pay 20 percent (I just take this number for the ease of the example, although the loan would cost more like 25 percent when platform fees are included) interest. I think we have to differentiate here a bit, as most loans are maturing within 3 to 9 months. If a company pays 20 percent annual for 6 months, this makes 10 percent effectively. If a company needs that liquidity to purchase material or for working capital purposes, I guess 10 percent are feasible. If they can operate with a good margin, my guess is this is an alright situation. To be clear: I still think the loans are high risk, but I can understand the need for bridge finance in a business.
Envestio is online since 2017…
… as marketplace, but already operation since 2014 as a private fund, according to their website. I asked the management why they came public and deal with retail investors, and why did they not stick to sophisticated/whealthy people. Background of my question: to get 100k in funding, one sophisticated investor is sufficent, but to get the same amount from retail investors, you would need like several hundreds. What is the easier path? I guessed the first one, but Envestio thinks otherwise. They see a huge potential in crowdlending, plus it is scalable. Furthermore crowdlending is only one part of their services the will offer. Last but not least, the Envestio people think that offering nice interest rates to the crowd for bridge financing business is a win win situation for everyone and it supports the economy. I agree on that one. Oh, if a big hitter is reading this: The platform has always some special projects available for people wanting to invest 100k plus. Just register and get in contact with them.
My closing thoughts
To date all my interest payments came punctual, no delays (which makes me sceptical). As no loan has reached maturity yet, I cannot talk about defaults or recovery proceedings.
You may have read between the lines, I am torn between that this is a great investment but very very risky. On one hand I like the idea to provide liquidity to companies for growing their business, on the other hand I think this is as risky as it gets. Such high interest rates do not come without high risks. One should remind himself of that before investing. I often consult the magical investment triangle (liquidity, return, risk) to assess investments. We here have good liquidity (monthly interest plus partial buybackback option), stellar returns so this means risks must be high (appologies if I repeat myself, but my mind is swirling around the risk part). What can I say more, just remind yourself of the risks involved and do not invest more then you are able to lose.
Ok, this is it from for now, if you are interested in Envestio, use this link to register and get your cashback. Maybe read this article before you invest, to make sure you got the risks in check.
Do we have the p2p or crowdlending risks under control? This question keeps me busy from time to time. These high yields, buyback guarantees, the super easy autoinvests and all the fintech blah blah get me into maybe false security. Because of that I have compiled some problematic cases from the past months. I do not want to take the fun out of p2p, but we should consider not only the return part but the risk part as well. I just want to see this post as a reminder, that there is no free lunch, and double digit yields do not come without risks. The next default of a loan originator or a market place will happen. Maybe not tomorrow, but in the future.
Collateral – an ugly case
Let’s begin where p2p in Europe started, the United Kingdom. Zopa as the first platform in Europe has been operational since 2005, so for more then 13 years now. I figure that after all these years the p2p market has already matured a bit, furthermore as the FCA seemed be willing to help with regulation, rather then ban the whole thing. And exactly there it happens, Collateral defaults and the FCA does not look that good in handling this case. Here you can find a lot of discussions about this case.
It comes a litte surprisingly that until now no Baltic market place has defaulted. Firstly, this because there are lots of young platforms and secondly, they operate in a not quite regulated environment. I can envision that the money laundering scandal of Danske Bank in Estonia could lead to a crack down of p2p lending, or at least will be observed. I am sure that the Baltics will be closely monitored by the EU now. Although this Dankse case is not related to p2p, it will have an impact on regulation.
As I said earlier, it is not my intention to present p2p in a bad light, but for me these cases clearly show that there are not to underestimating risks. I have no problem, ok I can deal better with, when a loan originator defaults because they were bad in business. This happens, it sucks, but it is something we have to deal with while investing. So the golden rule for investing is: never invest anything, which you cannot afford to lose. With fraud cases I have my problems, there was a crime commited and in most cases there where too few controls, if any. I am still a believer in the p2p story, but we have to be cautious as lenders.