Fifth investment – Crowdlending Bondora

After the first investment with Companisto I was looking for more crowdlending investment opportunities. While screening the web I found the platform Bondora based in Estonia. The platform offers peer-to-peer loans to persons in Estonia, Finland and Spain with loan terms up to 5 years. The minimum investment into a loan is € 5.00. The platform also offers a secondary market, where investors can sell their investments to other investors. This is interesting if an investment is not performing – e.g. if a creditor is overdue – or the investor needs its investment back earlier. Although the seller in most cases charges a premium, it is possible to make a reasonable profit with the loan. The most interesting point for me is that the secondary market gives access to loans where most of the time has already passed. Therefor it is possible to buy loans with durations as little as a few days. Opening an account with Bondora is quit easy. After registering with the email address it is only necessary to deposit the wished amount to the bank account of Bondora with the own name and an identification number. In my case, the money was available two days later for investing after my bank account was verified.

The investment strategy I am following is to spread the available funds widely. The main idea is to invest in loans that have short running times and therefore low investment sums as the debtor already repaid for some months. From my point of view this strategy has two main advantages. First, the amount invested in each credit is quite low and therefore the funds can be invested in a broad loan portfolio. Second, as the borrower already pays the loan back, each loan has its own little credit history. With these it is possible to make assumptions about the default probability of the loan and find those, with a high repayment probability. Additionally, due to the short running time and the permanent repayments, it is possible to reinvest in new loans and diversify the portfolio even further.

For the beginning I deposited € 107.88 and invested it according to my investment strategy. Lets see, if it pays out.