January 3rd

After short deliberation and looking for “missing income” on #Mintos I have come to conclusion that my decision to test Mintos FX and exchange a few EUR into GEL (Georgian lari) a few months back turned out to be a bad one. GEL kept losing its value (by 9% compared to the moment I made the initial exchange)

GEL:EUR Aug 6th 2017: 0.35551 vs. Jan 3rd 2018: 0.32282

(should have paid more attention to FX rates from the outset):

GEL:EUR

so even with 17%+ returns p.a. Mintos offers for loans in GEL I’m going to be in the minus. I’m currently contemplating whether to withdraw now or wait another month or two in hope that the FX rate improves. But I’m definitely out from GEL loan market.

On another note – I decided to (almost) double my investments that I made in 2017 across the platforms, invest in one go (apart from DoFinance) and spread them more or less evenly across the five platforms I’m currently using. The most went to Mintos, Viainvest and DoFinance (I’ll increase investment gradually here) as I have the most confidence in these at this point in time. A bit less went to Twino and the least to Robocash (they have the same amount now). I still have some unexplained and subjective reservations towards both these platforms, more towards the latter.

Thus I expect the returns to be more even and, of course, higher than last year. Graphs to follow from time to time.

I’m going to make a separate post with final results of 2017 across all platforms.

November 6th

Skipped September review as there wasn’t really much to share. The return was exactly the same as in August – no growth there although I invested the same amount as previously.

Last post mentioned that I didn’t know why there was such a drop of return – I figured it was because I restructured Mintos portfolio from payday loans (up to a month) to short-term loans (up to 6 months) which in turn made returns fluctuate and seem to underperform.

Mintos produced another spike in returns in October. Viainvest showed a more steady growth of returns over the past months. Robocash produced more returns due to the fact that October was the first month in a while when I added to my Robocash investment portfolio. Robocash still offers the highest returns although I noticed that there’s been a shortage of loans on this platform. It all produced a +49% growth of returns compared to previous month.

Dofinance repayed first 6-month loans with 12% rate in October too. Now I have only 6-month loans on the platform left. I invested in a way to receive the same amount of returns every month. I think the first “full month” is going to be November.

Overall returns were fluctuating across the board. Go figure 🙂

September 21

Took me a while to post something here. I’ll keep it rather short. This month was surprising because instead of overall income growth over the last months (+54% profit in August compared to July), this month the profit growth was negative (-1% compared to August). Mintos and Viainvest both underperformed. I didn’t do thorough examination of the reasons but my guess is that more loans didn’t get repayed on time (therefore theoretically September should see a spike). Although, to be fair, from the chart it looks like July was the actual anomaly with the big spike, and not August.

This month I did a complete revamp of my Mintos portfolio. If up until August my portfolio consisted of mostly (~90%) “short-term loans” (up to 30 days), in August due to a total drop of these loans on the platform I had to purchase “personal loans” with term up to 6 months. So now >60% are loans with term from 3 to 6 months. I also realized that having these longer term loans actually brings in even better returns because of the way they are getting repaid, i.e., using Full Amortization Method which means that each month I get back a small part of each of the loans the sum of which I again use to purchase new loans. More loans = more returns. So although it may seem that the money is tied for a longer term, actually I can invest the sum of repaid parts to gain more profits.

I also decided to test Mintos FX, converting EUR to GEL. Loans in GEL are offered at ~17% p.a. My guesstimate was that to cover FX fee I have to keep investing in GEL for three months. Even with the fee investing in GEL brings better returns. Of course, there is more risk – FX fluctuations which are basically unpredictable.

Although income growth was negative, the overall performance was on par. Robocash as always is the top performer. It’s funny though that my IT department has blocked Robocash homepage as suspected phishing/fraud 🙂 However I haven’t acquired any information that would support this claim. So I suppose the block is due to the “.cash”.

October will be the first month for DoFinance to start repaying the 6 month loans. So far DoFinance works like a clock – buying back the loans the moment they mature. So although they call it “investing”, I’d say their insta-buyback setup looks more like a loan to the platform that they then invest in loans to consumers. Not that it matters much. At least at this point.

August 7th

Last month continued to show good returns across the board. All Robocash investments (5) were late and got bought back so I still haven’t invested anything more than my initial investment and most probably won’t invest more for the foreseeable future.

I still support my decision to withdraw from Twino. It has a short period of many loans listed and then we return to the usual emptiness. And their webpage is experiencing some loading issues recently.

Unfortunately Viainvest saw a complete drop in loans from Czech Republic and Spain, instead currently it only offers loans from Poland which come with a lower return of 10% (Spain and Czech loans were up to 12.2%). They haven’t announced anything as to why they are listing only Polish loans. At least I’m not aware of such an announcement.

At the very end of July Mintos announced that they are changing the way Lendo loans will be listed on the platform. Instead of Lendo listing the loans directly, Mintos OU will issue loans to Lendo instead and this loan from Mintos OU will therefore be listed on the platform. They announced that loans issued by Mintos OU will be “pegged” to loans issued to consumers by Lendo. However it is not clear at all how they are going to “peg” a loan to another loan. They failed to provide a clear answer in the comment section of their blog once an investor raised this concern. The fact that instead of buying from Lendo the loans issued to consumers and then selling them to investors on the platform (which, in my opinion, is the more straightforward approach), Mintos OU chose a dubious path of “pegging” loan to another loan. I don’t know how this setup is going to work if there are any problems on part of Lendo or Mintos OU. I have not had enough time to read through their agreements yet. Once I do, it may shed more light on this shady deal.

Nothing to say about DoFinance. Everything works as expected. By far the most consistent performance. They did send a welcome gift in July – a pen and a letter 🙂 presumably to every investor. A small but very neat gesture, a sort of a personal touch of the owners. Very neat indeed.

Now the stats part. I switched to google sheets so the editing is simpler from anywhere in the world.

Mintos showed a sudden spike in performance but I didn’t notice anything that could have triggered it. I suppose more loans matured in this period than before. Robocash seemingly skyrocketed but they do promise 14% return on their loans and that’s what they deliver. Viainvest keeps showing more or less consistent performance. And most loans of DoFinance have not matured yet. The first 12% loans are due to mature in October.

I also slightly changed the formula I use for calculating returns. Now it takes into account the fact that the returns are being reinvested:

total income for the month / total funds (including returns) on the platform x 12

The change though did not have a big impact on overall statistics.

A consistent growth. Most of it due to the fact that I keep adding funds to platforms 🙂 July saw me adding funds to Mintos, Viainvest and DoFinance.

In order to make this chart “cleaner”, I’m contemplating about removing the weird stats of March showing an increase of 473%. Which of course is a “technical” (maths rather) issue rather than actual returns.

As to my idea of ETFs – I did not quite get to the bottom of it. I found a cheap broker offer from Ireland, but unfortunately they do not accept bank accounts from my domicile. So I shall keep looking.

Sidenote – I recently came across a new abbreviation “FIRE” of already known notion of early retirement. Financially Independent and Retiring Early. Shall read more about it.

July 7th

Been a while since I last posted. Three weeks ago I changed my job and now I’m working in a bank – I had to adjust to a new routine so that took (and still takes) a toll on my time.

Anyhow I continued exiting from Twino in June. My trust toward them has not risen and while they had a surge of new loans for several days, now they are back to their usual state with 3 pages of delayed loans.

In one of the previous posts I mentioned that Twino has the Payment Guarantee which I considered to be a nice addition. It is if we don’t take into account the fact that once the loan which has the PG defaults, your investment in that particular loan is locked for the whole remaining term of the loan. Basically Twino just holds to your money for the whole initial term and keeps paying you out. It sounds good on paper but like I mentioned in a previous post the problem is that all loans that I invested in that had PG defaulted after two initial payments. Coincidence? Maybe. It is also possible that PG is an elaborate plan how to tie up your money invested in defaulted loans. What makes it worse it this:

Under the Payment Guarantee investor protection scheme, TWINO will compensate both the invested principal amount and earned interest as per original loan repayment schedule, even if the borrower is late with the repayment

That means that PG is an obligation of Twino and not the loan originator to keep paying the defaulted loans. That makes me wonder if Twino has strong enough financial background to keep up with this obligation. Time will tell I guess.

Now to the statistics.

As I continue exiting Twino, I excluded it from this month’s statistics. As can be seen Mintos continues to perform consistently with its previous performance bar February (I explained why in an earlier post). I expect the performance to continue being consistent. They have attracted more loan originators and although they too had loan shortages those were really minor. They continuously improve their platform so I keep faith in their future.

Nothing bad to be said about Vianinvest. The fluctuations observed in the chart are most likely due to the weird formula I’m using to calculate returns. Their better performance compared to Mintos is mostly due to the fact that Viainvest offers only a month-long loans while my investments in Mintos are up to 7 months which at this point obviously don’t show any returns yet. Viainvest too keeps having strong influx of new loans and I have yet to witness a single shortage. So far so good.

DoFinance returns keep growing but still as the 6-month term for most of the loans has not come yet, the numbers are not really indicative of the performance. Their BuyBack Guarantee differs a bit from the rest of the bunch because

the loan originator will repurchase the loan from the investor if the repayment of that particular loan is delayed.

So that means that contrary to other platforms, DoFinance does not make an investor wait for any amount of days before kicking in the BuyBack Guarantee. You can be sure you will be able to invest again at exactly the date the loan matures. And it’s how it’s worked so far.

Also in June I opened an account on Robocash. So far 3 out of 5 loans are delayed. Not the best score tbh. But gives me a chance to see if their BuyBack Guarantee works. Until I receive all delayed loans back I’m holding off from investing more. They do have the highest interest rates at the moment at 14%.

My aim for this month is to get my head around investing in Index Funds and/or ETFs. I guess the hardest part would be finding a cheap e-broker. I might as well try it out using bank as an intermediary. But I need to think about it some more.

At the end a summary chart.

 

June 10th

Today is the day I gave up on Omaraha. No funds have moved for 10 days. The loans that pop up on the site are either bad or for long terms up to 5 years. The auto-investment system is quite cumbersome while the secured loans offer too small returns. My guess is they profit well from the site considering the vast array of fees they have introduced. The outcome is that I lost 50 cents on “transaction fee” to get my investment back to my account. Oh well..

I’ve been looking at “Iuvo group” marketplace for a few days. The system looks very similar to the one Mintos has (I’d say they just copied it). However the investment conditions are quite unclear and even shady. For example, they offer a buyback guarantee which seems to cover only the principal amount, not the interest. At least that’s what I gather from the FAQ section. More alarming is the fact that the buyback guarantee is triggered at the loan originators discretion:

The buy-back guarantee is activated whenever the originator has decided that the loan has defaulted – usually this happens after 60 days of no payment from the borrower.

That’s as good as no guarantee – the loan originator might as well decide to not recognize a loan has defaulted no matter how delayed the payments are. And even if the loan originator decides the loan has defaulted, they will only repay the principal, not the interest. I also wonder what happens when the loan originator receives payments from the borrower after the buyback has been exercised – do the investors receive part of the interest recovered for the period the loan was invested in? My guess is no. Which is quite unfair. Another gem found in FAQ:

In case the borrower is unable to repay their loan the investors can lose some or all of their invested capital.

How is this possible with the buyback guarantee? That’s clearly contradicting.

The interest rates on the marketplace are also quite low unless the loan is labeled “E” (up to 12.34%) or “HR” (up to 15%) which, considering the aforementioned, is as good as loaning the money for an unknown term for free while taking the risk of “losing some or all of the invested capital”. Doesn’t sound inviting at all.

Therefore I’ll keep from investing with Iuvo-group for the time being. It’s a new marketplace and they definitely have room for improvement. I’ll keep an eye on them though and once they sort their stuff out, test it for real.

June 5th

I opened an account on Omaraha on June 1st. I set up several profiles – both using interest rates suggested by the site and my own. I did aim for the “highest quality” short term loans – credit score above 900 and loan term up to 3 months. Today is June 5th – no money has moved, no investments made. From the loan listings it looks like most loans are scored 700 or under and have ~60% interest rate. In my opinion those wouldn’t constitute a good or relatively safe investment. No wonder they are still being listed as open for investment.

Secured loans are also offered on Omaraha. I don’t quite understand what they mean by that because the only statement is “Monthly loan repayments are 100% guaranteed!” *shrug* Who guarantees repayments? Collateral? If so – what kind of collateral? Anyway the interest rate for secured loans is 8 – 9% which is lower than can be found on most p2p marketplaces even for loans with buyback guarantee.

Another downside is that Omaraha has quite steep fees. For example, 20% from the interest goes straight to the site. That just makes it all even less alluring.

Having tinkered with loan marketplaces so far I guess I’m leaning toward not financing the borrowers directly. A middleman – loan originator – who keeps some part of the loan adds another layer of “safety”. It should at least. The quality of such a layer however is disputable and depends on the middleman.

Current state

I’ve just hit the age of 30. I started thinking about long-term future and thus looking into investment opportunities sometime last year (2016). My first thought was – stocks. That’s how people do it, that’s how people get rich, right? After watching The Big Short a couple of times I bought the book and finished reading it in just 18 days (I’m a very slow reader, mind you!) which was a sort of a record for me. The book had several references to other books of the financial world and thus I ended up buying Benjamin Graham’s Intelligent Investor in December. Although I have not yet finished reading it (like I said – a very slow reader), the book feels like the holy grail. Maybe because I have no financial background whatsoever so almost everything in there is new to me. While reading I realized – stocks is not the way. Bummer, eh?

Around the same time I got into business of contemplating about investing, by coincidence I had to go over an assignment contract of a p2p platform (from the point of view of a loan originator). I knew nothing about p2p lending at the time but it sounded captivating. The loan originator decided to place their loans on the platform. Later I found out that their loans (worth about 1,5 million euros) were fully invested in in a mere week or so. That meant the market is huge. I decided to give it a try.

I’m not rich, I’m not very knowledgeable about finances or investing. I am basically experimenting to see whether it is possible (for myself) to reach financial freedom in the next two decades. And I have started with p2p platforms. My investments are small but they are regular and slowly growing. I’m very wary of where I’m putting my money and I’m not willing to take big risks. Graham says it’s a good thing. I sure hope so.

Since the beginning of this year (2017) I have tested four p2p platforms – Mintos, Twino, Viainvest and doFinance. Just yesterday I opened an account with Omaraha (Finzo).

The results thus far.

The numbers may not be quite accurate as I haven’t taken into account the fact that, for example, I keep adding funds to Mintos on a monthly basis (hence the % is lower – the newly invested funds make returns only next month) while Twino had a lump-sum sitting around for three months (hence it appears to be the most profitable in April). I also haven’t taken into account reinvested funds. That is, I only account for the funds that were actually transferred from my bank account (“real funds”). If I stumble upon an elaborate formula I can use to calculate my returns more precisely, I’ll use that. Until then – simple excel and simple formula it is:

total income for the month / total “real funds” on the platform x 12

Mintos saw a drop in February which was due to the fact that I was experimenting with secondary market and incurred some fees.

doFinance is not bringing in much (or anything) yet because I invested only a small portion of the funds in the short-term (1 & 2 month) loans. The bulk went into 6 month loans there as the interest on those is promised to be 12%.

Viainvest has worked like a charm thus far. What makes them different is that they withhold applicable taxes upon transferring interest into investor’s account. So (I hope) I will not have to pay a dime more.

After testing Twino for 3 months I decided to exit Twino altogether. This is why – a) they don’t have enough new loans coming in; b) my user-experience with their webpage was horrible. I couldn’t get used to it. Things that I was looking for were not where I expected them to be so that was just frustrating; c) their loans seem to be quite shady – this is the only platform where I have 3 loans marked as “defaulted”. All of those were issued for 24 months and all of those only made 2 repayments; d) too often I’ve seen “delayed” in red letters. Even today – I just witnessed a few dozen loans popping up on the platform and all of them are already showing up “delayed”. I don’t get their strategy.

Browsing through the web last night I also stumbled upon a few posts and comments here and there about either withdrawing from Twino or rumoring about some sort of business troubles on their end. Rumors or not, but that just added to my resolution. I wish them luck. Once they rework their webpage and make it more intuitive and thus more user-friendly as well as offer a continuous supply of “current” investment opportunities I may just as well return. Their “Payment Guarantee” feature was a nice addition in my view and presumably one that will get picked up by other platforms sooner or later. Unfortunately due to PG loans that I had invested in showing up as “defaulted” I’m also unable to sell them and withdraw funds immediately. I surely hope Twino keeps on going for at least a year so I can get all my investments back 🙂