I invest 10k in P2P platforms

Follow my winning investment strategy and do not miss out above 10% interest rates
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Mintos – Learn from my mistake and create a safe profit making portfolio

Mintos is first platform I use to start my journey to invest €10k in P2P lending. Learn from my mistake and create a profit making portfolio at Mintos.

Based on my Golden Rules and my overview of existing platforms I decided to start at Mintos to invest.

  1. Diversification
    • Mintos ticks my diversification box. Be aware I will make a selection on loan originators and countries I would like to invest at.

       

      On Mintos, we already have 64 loan originators from 32 countries across 5 continents – Europe, North America, South America, Africa and Asia

  2. Interest rates
    • I use auto invest to obtain my 11% interest targets. Although offered loans with higher interest rates can be harder to find by the increased popularity of Mintos
  3. Liquidity
    • I have checked several sites where a liquidity tests for Mintos have been done. A interesting one is from a guy who test liquidity of his €1.0M investment at P2P millionaire.
    • A secondary market with no rates being charged is very active and highly liquid at Mintos.
  4. Risk appetite
    • Due to my auto invest selection I am able to manage all my risks (e.g. buyback guarantee, duration of a loan.

My first deposit and my first mistake

It is easy to register at Mintos and transferring money to the platform went smoothly as well. Thereafter, I made my first deposit of €500 and actually made my first mistake at investing my €10k in P2P lending.

For some reason my money was immediately invested by using Mintos’ ‘Invest and Access’  offering. As a result my money was within seconds automatically invested without setting up a good working auto investment strategy. Thus, by checking my portfolio that Invest and Access had selected I even had a 7% interest loan originated in Kenia. This is definetely not a good deal…

However, after this lesson I transferred an additional amount to my portfolio in order to set-up my auto invest portfolio. As you can see in the below image my portfolio still needs to recover from Invest and Access, since my Net Annual Return is just below 10%.

Mintos - learn from my mistake and create a safe and profitable portfolio

Tips & Tricks – My investment strategy

Next step was setting up an investment strategy which actually is working towards my goal of 11% and ticks all my Golden Rules boxes as well. I did this by using auto invest.

Auto invest works easily and you are able to set-up multiple strategies.

Mintos - learn from my mistake and create a profitable auto invest strategy

My key settings of my investment strategy are:

  • Invest in euro loans;
  • Interest rate minimum 11% and at the secondary market I do not pay a premium on loans;
  • Loan duration from 3-24 months;
    • Minimum of 3 months, since when loans become past due they hit a grace period where not always interest is being paid;
    • Maximum of 24, since I prefer liquidity in my portfolio. Even besides the selling opportunity at the secondary market;
  • For diversification reason I invest €1 – €3 per loan. With a larger portfolio I would increase this amount. Be aware, at Mintos investments below €10 are only possible at the secondary market. Furthermore I do not tick the box “include loans already invested in” to improve my diversification;
  • Reinvest my money is ticked on. By ticking this option every incoming amount above €1 will immediately be invested again by auto invest.

How to decide which loan originator to include in my investment strategy

  • Review ratings from ExploreP2P of loan originators;
  • Include Loan Originators up to B+ based on Mintos’ own rating;
  • Always select buyback guarantee;
  • Select loan originators who pays interest on late loans;
  • Keep in mind the grace period for loans. Some loan originators have longer grace periods than other ones. Keep in mind a longer grace period minimizes our return;
  • Exclude loans from certain countries in my selection.

Really helpful – and hard to find directly at Mintos – is the loan originators overview page. This page is a great overview to see the terms and conditions of all loan originators.  An advice in reviewing loan originators is to click also at the ‘Details’ header. For instance, here you will find if a loan originators pays interest income on delayed payments and how long the grace period is for a loan.

My shortlist of loan originators to invest at is based on the above mentioned criteria.

My journey to invest 10k in crowdlending

My journey to invest 10k in crowdlending starts with reading reading reading…and perform more research.

As stated above I read for a week lot of content to start my journey to invest 10k in crowdlending. By reading I noticed the following things:

  • Most platforms are located in the Baltic states;
  • Most loans are originated in Eastern Europe;
  • Mintos is the largest and most well known platform;
  • Interest rates are in general above >10%
  • Some platforms offer a secondary market;
  • Almost every platform offers a buyback guarantee – although the conditions differ;
  • Some platforms focus on consumer loans, other on real estate backed loans
  • And last but not least…if a platform goes bankrupt it will be hard or a huge hassle to get my money back.

Step 1 – Define my golden rules

After reading and creating my first views about the interesting landscape of P2P lending I decided to set some basic guidelines to structure my approach.

My Golden Rules

  1. Diversification
    • Invest a maximum of 25% in a single platform
    • Diversify in usage of loan orginators
    • Spread countries where the loan is being issued
    • Use multiple type of loans (real estate, business loans, consumer loans)
    • Do not invest in countries with a weak cash collection infrastructure
  2. Interest rates
    • My target return is 11% per annum
  3. Liquidity – If for whatever reason I need my money I want to get within a reasonable timeframe
    • Invest in platforms with a secondary market or select loans with a maxium duration of one year
  4. Risk apetite
    • Only invest in loans with a buyback coverage and take lower interest rates for granted
    • Invest in euro dominated loans to avoid a currency risk
    • To play around a bit I invest a maximum 20% of my portfolio for risky playing around (e.g. investing in foreign currency to achieve high interest rates

After defining these Golden Rules I continue my journey to invest 10k in crowdlending to do a platform selection.

Come back to follow my decisions. I really appreciate it when you think with me and leave a comment to improve my Golden Rules!

My journey to invest 10k in crowdlending start with research