My social lending portfolio (2014, 2nd Q)

Time flies quickly and another quarter has passed. Overall there have been a lot of changes at Bondora and they’ve influenced my portfolio quite a bit. Firstly, the queue system has been changed which means that it’s a lot harder to get into A1000 Estonian loans (best credit grade). There has also been increased market pushes for Spain and Finland, which means that to get all your money out, you must either forcefully diversify or accept bigger risk through bigger loan parts.

Q2 pieOverall I’ve finally climbed to almost 3000€ in active principal which is pretty cool. Also, as of this morning I’ve put 2500€ into the site – I’m doing pretty good for my 2014 financial goal. The problem currently being the lack of loans – and I don’t want to just push all money into B+ (unverified) loans since I think it’s a bit too risky at this point.

I’ve added some B+ loans though – only Estonian ones that are verified through other documents. I’ve also made a small bidder for Spanish loans to slowly enter that market. I’m willing to invest about 25% of my monthly money to B+ loans and about 10% into Spanish A1000 loans. I’ll have to see how that works out.

Q2 returnsAs you can see the returns graph is still looking like a lovely flat line and unless something drastically changes I don’t really see this graph becoming any more useful in the future. I suppose I should be worried once it starts dropping for some reason.

Q2 total investmentsI tried to aggressively push money into loans but due to the slow queue it really isn’t moving much. I constantly have at least 100€ just sitting on my account waiting to be invested. This even with increasing some loan pieces to 25€ and adding in a small bidder for Spanish loans.

New loans issued:

During the 2nd Q I added 66 new loans –

7 of those are Spanish, others are Estonian

25 loans are A1000 EST

5 loans are B1000 EST

4 loans are C1000 EST

12 loans are 800-900 credit group EST

13 loans are 600-700 credit group EST

As you can see it’s quite easy to get into 600-900 loans, I constantly have to limit the bidder since I don’t want to overexpose myself to low credit groups while not getting into high credit group loans, but it’s proving to be quite difficult. Taking into account that some of those are B+ loans the risk level might be even higher than the numbers predict.

60+ loans

In the three past months 10 new 60+ loans have been added (to a total of 22 loans in the red). Luckily some have made repayments as well (as small as those are), and two have fully paid back the principal owed. I’m expecting a pretty big bump in overdue loans because if you look at the graph right now I’m feeling the effects of the winter months where I didn’t invest that much money.

New auto bidder system

I remade all my bidders when the queue system was revamped to have bigger control over diversification and really, it’s hard to push the money out. You can take a look below to see what I’ve managed to give out – the low credit ones fill up with a day if I increase the limits. I’m still playing around with it to see how to balance my portfolio the best.

I hope summer will bring bigger loan volumes since I’m likely to have more available money. But as it stands I’m likely to make another stock purchase soon instead.


9 thoughts on “My social lending portfolio (2014, 2nd Q)

    1. Well, Slovakia was instantly out since there just aren’t that many loans going there yet, so it will be a while before any useful data emerges. That left the choice between Finland and Spain.
      The problem with Finland is that if a person is delayed in their payments then NO extra penalties are applied, which means that people there have very little motivation to actually pay their debts. This also means that when Finnish loans default then you won’t really get any “extra” back once they’re recovered. In Spain, however, penalties (viivis) are applied, so you’re more likely to profit. (Also, from what I read then in Finland the laws are very much in favor of the person who took out the loan and it’s easy to argue against repayments.)

  1. It looks like you’re doing great with the P2P lending, congrats!

    When I looked into P2P lending last year, I don’t think it’s available in Michigan where I live as it’s not been licensed yet, unless you buy loans indirectly through a third party. But it’s certainly an interesting idea.

    Have you considered adding any advertisements to your blog for additional income?

    Enjoy your day!

    1. P2P is definitely a fun way to invest, but as I understand each state in the US has their own rules about it. If it does become available to you then I definitely recommend it.

      I have thought a bit about advertising but I’m just building up readership and I haven’t really come up with a great idea on how to run ads. (Most easy ad networks require a bit of traffic, even WordPress’s own in built adwords.)

  2. I have been investing in Bondora for some months now and the biggest problem is that there are no great loans to invest into. If you were to choose between Estonian B+ loans (not verified income, responsibilities) vs verified Finnish/Spanish (other documents) loans, which one would you go for? And what would be the reasons? And would any of these choices be worth the risk in your opinion?

    1. After you’ve run out of verified Estonian loans your next step should be Estonian B+ loans that are verified though other documents. There are two reasons for this – we have years of history on how recovery works in Estonia and B+ loans are limited to a smaller amount of money so it’s likely to be slightly less risky. You can also pick and choose from criteria such as home ownership and age. The 600-800 credit group loans will likely have a higher default rate but the increased % will likely even it out.

      I haven’t yet chosen too many completely unverified self-assessment Estonian loans but I’m slowly taking those in as well. Especially those that are 500-1000€. If a person wanted to defraud money then they would be unlikely to go for such a small amount – too much trouble for too little gain.

      If you get into Finnish/Spanish loans then there are two things to keep in mind. Firstly, for Finns it’s quite easy to get good loans from banks so the clients who come to Bondora might not be that reliable. Also, if payments are delayed then no extra penalties are allowed on Finnish loans and the overall legal system seems to be very much on the side of the person who takes out the loan – there might be issues collecting it.

      I started a small Spanish portfolio, personally. Mostly because I think that the economy there will start to recover at some point + penalties can be applied to Spanish loans if they’re late. Also, the rate Bondora offers is closer to the market rate for loans there so the clients are likely to be closer to market average clients as well.

      1. Thanks for the reply. At the moment there are even no ‘verified with other documents’ B+ Estonian loans available. So I’m choosing whether unverified Estonian loans with smaller loan amounts or Spanish (after you pointed out negative sides of Finnish loans) loans that are verified with other documents. The thing is, I do have Isepakkuja portfolio’s for decent Estonian loans set up but there is like 2-5 loans per week that match. Right now I invest monthly with smaller amounts, so I need about 25-30 loans to invest in a month. This is why I either need to search for alternatives (loan filter wise) or start investing smaller amounts in Bondora and invest the rest in stocks (in this case need to wait for few months so the % of fees would be smaller).

        When I started in Bondora few months ago, I made this mistake by investing in almost every loan that had A1000 (ended up with a portfolio with 60-75% of Finnish/Spanish loans) and now quite a big % of loans are overdue.

        1. It depends on how much money you’re investing per month. Currently it’s possible to invest about 300€-500€ per month into a relatively “safe” portfolio if you invest 10-25€ per loan. Also, there is a certain imbalance in terms of the amount of loans you get. I’ve had weeks where I’ve gotten basically no verified loans and then days when I’ve gotten 5 because all my autobidders have reached the front of the queue.

          While you’re right that you need a certain level of diversification (not too much money in any single loan) then if you’re building a portfolio that’s still growing somewhat bigger amounts per loan might be justified, you will just reach good diversification levels a bit slower. It’s a delicate balance between increasing risk and just letting the money sit there making no profits.

          1. Yes, one possible action I’m thinking of is increasing my amount per loan. At the moment I have like 190 loans, I wanted to increase that to 300 so the percentage of a single loan in my portfolio would be under 0.4%. That would ruin this plan, but I think its still better than waiting 3 weeks to invest the money.

            I reviewed your portfolios and seems that I might also need to widen my Isepakkuja range, at the moment I’m going only for AB900-1000 (automatically at least).

            I think if I waited the whole month, I could get all the money invested but its so tempting with all those Spanish loans waiting there to be invested :)

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