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
- 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
- Interest rates
- My target return is 11% per annum
- 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
- 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!