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