P2P lending as an investment idea. In times of low interest rates, a (monetary) policy that seems to aim more and more at expropriating the saver (keyword: negative interest rates…), the private saver has almost only the possibility to try out new ways and partly also to take new risks. Because as everyone knows: there is no such thing as a high return without risk!
For me it is particularly important that the risks taken must be calculable and that I am not threatened in the worst case scenario in my economic existence. After all, zero interest on something is still better than 30 percent on nothing.
Such a new way of investing could be the p2p lending platforms that are currently becoming more popular. So the investment form of P2P loans. I have therefore included them as one of my investment pillars. I have decided to use the platform MINTOS*. I will explain why below.
No return without risk
It is worth mentioning that I only started investing at the end of may with a rather small sum of 600 euros in order to gain experience and not to take too high a risk immediately. Just because with such new trends you can't know how they will develop in the future. The business field of P2P loans is still quite young and unfortunately we know: fin-techs come and go..
After almost a month, my statistics look like this:
So you see, currently I have a return of about 12.7% p with my loans given out.A. Generates. I invest only 10 euros per loan to get a particularly high spread, which in turn brings higher security with it. All in all, I have at least 60 loans running in parallel at the moment. On some platforms investments are possible only starting from 25 euro per credit.
Whether the return after exactly one year is also so much (or more), whether some loans fail or other things happen on the platform, I will then report to you. In purely mathematical terms, at 12.7 percent interest, I should have at least 676.20 euros in my account at the end of may 2017. As I said, if it comes like this, I will report to you.
What are the platforms for P2P loans?
Some may have already stopped reading at the word "loan". But in this case, you are not taking out a loan, you are lending to private individuals. There are several such platforms, I myself am currently only active on the platform mintos* and can therefore only make halfway reliable statements about this platform. Other platforms besides mintos* are:
This list is not exhaustive, there are now many platforms on the net. But in various reports the mentioned are always classified as reliable and serious (as of today!).
I am not advertising one or another platform either, as all have their advantages and disadvantages. Best have a look at all of them and find out about them before you invest.
The whole thing now works like this:
– banks lend to private individuals (so the loans on mintos are pre-funded)
– banks post loans on mintos* so investors can buy into them
– your share earns interest every day, in my case currently at 12.7 percent
– special highlight: when loans are repurchased, you earn interest or deposit more money, you can have the money automatically reinvested at parameters you set using auto-invest. In this way you exploit quasi directly and automatically the compound interest effect, the anti-aircraft gun of wealth accumulation. Theoretically, you make your settings once and then no longer have to look into the account, while your money increases almost risk-free.
Just in relation to mintos, here is a detailed explanation of the provider.
Who gets my money?
In the case of mintos*, we are dealing with private individuals from eastern europe or the baltic states. The baltic states, to whom you lend your money.
"I am supposed to entrust my money to people from the baltic states in the hope that they will pay me back? And then still at such high interest rates?! Are you mad?!"
Well I have to say, that was exactly my thought process at first, which is why I quickly walked away from the idea…Initially. My money was more important to me.
But one small detail immediately made me change my mind again:
At mintos there is a repurchase guarantee (. ) for the loans
That means you can decide to invest only in loans with repurchase guarantee.
What does repurchase guarantee mean?
If the loans are not serviced by the creditors for more than 60 days, the bank (called "loan originator" on mintos) buys back the loan and pays back each investor his share plus. Daily interest.
You invest 100 euro in a loan. The creditor no longer repays it. The bank (loan originator) buys back the loan after 60 days and initiates collection action against the creditor. You get your 100 euro back plus the agreed interest until the day of repayment.
In fact, it means that currently on mintos* as an investor you have no risk whatsoever as far as loans are concerned.
That was it then nevertheless which convinced me to give the thing times a chance.
Where is the catch?
Well now, that's exactly what I'm honestly wondering right now too. Because 12,7 % p.A. Return or more without risk, that usually does not exist. So if I find out a downside or discover the "catch" here as well, I'll follow up with you guys. By the way: investing on mintos* is currently free of charge and without any fees (!). Mintos only earns when you resell your loans on the secondary market.
At the moment, however, it looks like there is actually no risk, except that of mintos going bust as a company itself. But even then your money should not be gone, because you never invested in mintos itself. After all, the platform only brokers. It will just be a long process to get your money back.
I am not familiar enough with bankruptcy of companies and the procedure to be able to make a reliable statement about it.