The last 3 months were really full for me, with increased work on my day to day job (talking about escaping the rat race…), a road trip around Greece and lots of learning in preparation for my first physical real estate investment (more on that in future posts).
And of course, building the tool I am going to show you in a few.
This is why you haven’t heard from me in a while.
But not to worry, I am here for the long run 🙂
And from the very beginning my goal has always been and will be to bring real value to my readers. Therefore I am writing whenever I feel I have something good that’s worth sharing and potentially can make a difference for you.
Alright, let’s get to the subject of this post.
Table of contents
- Expanding my P2P portfolio
- Selecting new platforms
- Introducing the P2P Platforms Helper
- How exactly the tool will help you?
- How my investments are protected?
- Do I have ability for an early exit?
- How much time do I need to allocate? Is there an Auto Invest function?
- What’s the level of interest rates?
- Default rate
- The social component. What others think?
- Allowing people to vote and rate
- Loans volume
- How young the platform is?
- Is the platform profitable?
- Do they offer 2 factor authentication?
- Where I can find the Helper? Is it free?
- My choices and initial impressions
- As a conclusion
- Share your opinion
Expanding my P2P portfolio
In late August I made the decision to expand my exposure on P2P, as part of a rebalancing process for my entire investment portfolio.
My goal is to keep P2P lending asset class at around 10% mark. It was a little bit lower than that, and I figured it was a good time to allocate more money.
But I faced a dilemma.
Should I allocate more money into existing platforms or look for new ones?
To answer that, first I had to take a look at my current investments.
Mintos has been through a rather difficult period, with decreasing interest rates, rating downgrades and financial distress for Aforti and more recently Rapido Finance.
Fortunately, I don’t have any losses as I haven’t invested in none of these with problems. So far my rules for selecting loans originators kept me out of troubles.
Also, as is the platform that I have invested the most money, over time I want to decrease my exposure for diversification reasons. So definitely not pouring more money into it for a while.
As for Crowdestor, I decided to add a little bit more money. Out of all these platforms with really high interest rates, they seem the most active, with lots of new projects.
Don’t be fooled though. This is really high risk platform, so unless you feel comfortable losing money, don’t invest. High reward comes with high risk.
For now I will keep Envestio as it is. After some cash drag problems earlier in the year, things started to slowly improve. All payments were made on time so nothing to complain here.
Update January 23, 2020: Unless you were hiding under a rock, you should know that Envestio is now gone. Most probably all the money are gone as well. I had a rather small stake of around 5% as I never felt fully comfortable with them. Read more on the P2P Lending Monitor.
Nothing new here, business as usual, but not very satisfied with my returns so far. I need to see what I am doing wrong.
So that’s it the short review of all the platforms I am invested so far.
Other than sending new funds to Crowdestor, in the end it was clear that I should expand my portfolio by investing in new platforms.
And now the hard work begins.
Selecting new platforms
After some quick research I figured there are over 30 platforms that are worth taking into consideration. In reality there are more, but we will rule out the really young and unknown ones.
You can find all the information you need about them online, but is scattered and you need to compile that in an easy to understand format. Goal is to be able to compare apples with apples.
And yes, there are a few sites where you can see some rankings and you can get a rough idea, but for me that wasn’t good enough.
Here are the main reasons why:
- Most of existing comparators don’t have the majority of platforms, so you may be missing some good ones.
- The lack the social component. I rely a lot on the experience of other people. If I see someone complaining of a platform, and the general feeling is to stay away, then I will stay away. So you still had to do a lot of your research to gather that information.
The P2P Platforms Helper is changing this and makes it easy to discover others opinion.
- Missing information about platforms. None of them painted the full picture.
As you can imagine, trying to come to a conclusion was really challenging. I was overwhelmed with the abundance of information, mixing things up. My head was spinning. I definitely didn’t feel comfortable enough that I was making the right decisions.
So I needed a better way to do this.
Introducing the P2P Platforms Helper
I started from the idea of building something that will aggregate all the critical information about platforms and present that in a way that will make it extremely easy to make decisions.
It took me weeks to do all the research, look up the information, process it, and come up with an easy way to keep this updated in the future.
But I’ve made it and I think the outcome is really awesome!
Proud to present to you the P2P Platforms Helper!
What it is?
It’s a tool, a helper, as the name implies, with the sole purpose of empowering you to make your own informed decisions when picking up the next P2P platform to invest in, or why not, to exit.
What it is not?
I think this is equally important.
The P2P Platforms Helper is not a ranking system!
The P2P Platforms Helper won’t rank platforms based on some rather subjective scores calculated using hard to understand rules.
If you’re looking for that, then you’re in the wrong place.
You see, we all are very different.
Take the Fur processing company project from Crowdestor. I did not invested, and there were many reasons behind that decision. But somehow it still got fully funded.
Any ideas why?
Well as we are all different the risk appetite of people varies a lot. We all have our own opinions and strategies. What works for me will not work for you.
That’s why I always encourage people to make their own decisions. You need to understand in what you’re getting into. It’s your own hard worked money after all.
Please do not believe all I write here, or what anyone else says for that matter. Trust your own feelings and do your own diligence.
The P2P Platforms Helper will help you do just that. Present all the information, and make it extremely easy to decide what will be the next platform you can try out.
How exactly the tool will help you?
There are many things to take into consideration when deciding where to invest your money. Many questions to ask and of course many answers to find.
Here is below a list of items, questions or problems to take into consideration when deciding to invest in a new P2P platform. And how the tool will help you to easily find all the answers you need.
How my investments are protected?
Understanding the risks and managing them is really important to ensure your money are safe. That’s why we need to understand how your investments are being protected.
For each platform you will easily understand if loans are protected by a Buyback Guarantee policy, a Buyback Fund, or any other form of protection.
The Helper has you covered, clearly providing this information to you.
However, do be aware, that all of these protections are working fine only during normal conditions. I can’t stress this enough.
Do I have ability for an early exit?
Here we want to understand how we can early exit from our investment, no matter of the reason. Maybe you need the money for better opportunities, an emergency, or simply the loan is late or defaulted.
Generally we are looking for a secondary market, preferable with no fees.
If no secondary market available, the next best thing is for ability to sell back the loan to the platform (usually for a fee).
Update January 23, 2020: As it turns out, after all the drama with Envestio and Kuetzal, being able to sell back the loan to the platform, even if is for a fee, is really a weak point. Mostly because is vulnerable to a bank run (that is if the platform is not a scam all together).
Using the P2P Platforms Helper will get you answers to this question.
How much time do I need to allocate? Is there an Auto Invest function?
Depending on the loan types the platform offers, most of the time an Auto Invest function is very welcomed.
However, there are situations where you don’t need the Auto Invest, even if the platform has it. For business and real estate projects I prefer to do my investments manually, to be able to better asses the loan.
In any case, the P2P Platforms Helper will make it very clear if the platform has this function or not. It’s up to you to decide if you find it useful and required.
What’s the level of interest rates?
This is important, as I want to make sure the risk/reward is balanced, and that I am not exposing myself for too much risk and a small reward.
I also take a look at the types of loans the platform offer, and as well the location, and asses that all together. Find this information in the Helper.
This is a very important indicator. It matters the most on platforms that don’t offer any sort of protection, and most of the time is specific to those focused on business and real estate projects.
A rather high default rate means that the platform is not doing a great job screening the projects before opening them for investments.
If the platform shares this information publicly you will find it in the P2P Platforms Helper.
The social component. What others think?
This is really important for me.
One of the things I am looking at is the TrustPilot score.
In the P2P Platforms Helper you can find this score for each platform, as well as the total number of reviews with ability to read them with 1 click.
Allowing people to vote and rate
This is not going to be useful right away due to lack of data. But I am hoping in few months time we can have enough votes to be able to have a better feeling of what the P2P community thinks about a platform.
I am really excited about this feature, and spent quite some time to get it up and running.
Somehow overlooked, but in my opinion I think it’s important to also take a look at the volume of loans issues so far by a platform.
The bigger the volume the better, as that means there are higher chances for a platform to do better and make money.
How young the platform is?
I am more cautious regarding young platforms (1-2 years old or even younger) so I am always looking to see when they started their business.
If I am to decide to try out a new business, then I will do it only with small amounts at first. They need to gain my trust to pour more money.
Is the platform profitable?
A platform that reached profitability is a good sign and is always preferable for this to have happened.
However, we should take a look at other factors. Maybe some of them are making the decision to reinvest all the profits and grow the business even more. So is not like a white or black sort of thing.
Whenever available, you can find this information in the P2P Platforms Helper along with links to financial reports.
Do they offer 2 factor authentication?
Not a deal breaker if a platform doesn’t have it, but if they do, that’s a sign of the professionalism of the team behind it.
At least they should have it on their roadmap.
Read Ido’s post on the matter. It’s quite good!
There are other indicators but I will let you discover those…
Where I can find the Helper? Is it free?
I am glad you asked. Yes, is FREE and will always be like that. Click on the button bellow to access it. I recommend bookmarking it for easier access in the future.
My choices and initial impressions
I guess is time to talk about my choices as well. After all, the whole point of the Helper is to help me take decisions on which platforms to invest next.
The interest started to accumulated, however I am not very happy with the almost 50% late loans. I need to figure out how I lower that for a safer portfolio and higher returns as the Buyback Guarantee doesn’t cover interest.
Another drawback is the 1% fee on selling on secondary market.
A young platform with an interesting proposition. They analyse and list projects from others and also invest their own money in some of them.
I like EvoEstate so far and invested in 3 projects. Planning to transfer additional money to invest in more.
I saw a few people talking about them and after taking a look I’ve decided to give it a try.
I got disappointed right away by the cash drag, which is something that others are complaining about as well. After lots of tweaks and a week later I finally had all my funds invested.
Not a very good start with Swaper, so will see how it goes in the next few months.
This is a platform with classic real estate projects mainly from Austria and Germany. I chose it for geographical diversification reasons, in my attempt to limit exposure on the baltics area.
A few not so good points of Rendity are that all their loans are subordinated, the average returns are not very high and minimum investment is 500 EUR.
Otherwise, they seem more professional, but only time will tell if I made a good decision or not. So far I feel good about it.
I invested in one project. I don’t plan to invest in others in the near future.
As I become more and more conscious about the environment we all live in, I decided to look for platforms with a strong social and environmental focus.
One of these platforms is Trine.
So far I invested in one project that will install solar panels in West Africa for commercial and industrial customers. This will drastically reduce the need to use diesel generators and other polluting sources to produce energy.
I am also considering adding some money in Agrikaab, but having a few logistical problems in terms exchanging money in USD.
Although a young platform, Wisefund looks really promising. I have sent funds and will need to figure out in what projects I will invest.
Update 11 December, 2019: I am still not invested in Wisefund as they have problems with wiring the money – they are updating their systems, as they say. The way they handled the whole process wasn’t very professional, which raised some red flags for me, so not putting any money into the platform.
As a conclusion
There are a few other platforms that look interesting but I will keep those for future investments.
And as I now have the P2P Platforms Helper, it will be a lot easier for me to keep an eye on things.
Otherwise, I will wrap things up. It’s Friday night and I need to take some good rest.
Tomorrow I will be publishing this after I take a final look on it and also work on a presentation I will be having in a week time.
It’s a presentation on P2P lending as part of a 2-days course on passive investing. Quite excited about it, but also terrified at the same time. I don’t feel that comfortable speaking in front of 100 people. Oh well, will see how it goes 🙂
Share your opinion
That’s it folks!
I invite you to take the time and check out the P2P Platforms Helper and let me know your opinion in the comments below.
Do you find it useful? How can I make it better?
Also, how do you feel about my decision with picking these new platforms?
What ever you think, feel free to leave a comment in the section below.
Until next time,
Disclaimer: This is a personal blog, containing our opinions and views, and nothing you read here can be used as investment advice or recommendation. You should also know that some of the links in this post may be affiliate links, meaning, at no cost to you, I may earn a commission. Read the full disclaimer here.