Mintos cashback vol 3

Well, 2018 has started well – by mid-march I will have achieved the cashflow returns that took me all of 2017 to reach. Goes to show that sometimes having a bit of luck and cash at the correct time happens completely accidentally.

My biggest portfolio move this year was selling the small 12m2 rental apartment I had in Tallinn. While it was offering good rental returns, then in the long run it wasn’t in a very good house and 16m2 apartments have slowly started to gain popularity. Also, the prices of 12m2 apartments have reached ridiculous heights and since I needed to cash out something from my portfolio since I bought a new home which is being built, and I have to have cash available for various expenses in late autumn.

This deal however ended up being surprisingly well timed because I was able to drop most of the money from the sale into Mintos’s cashback program, which over the course of the last month has created some nice returns

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Of course the campaign has been very popular – there are days when there are no 60+mo loans and days when even the supply for 48mo+ loans has run out, but checking every now and then allows you to pick between countries and loan lengths to boost your portfolio. Since I’ve been investing mostly into Mogo loans anyway then I didn’t really feel much increased risk from temporarily increasing my exposure to them.

While this is a short term boost to investments (since when the cashback ends I will slowly have to start withdrawing money from the repayments), then it’s safe to say that Mintos has helped me boost my returns for the year significantly. Those who still have some cash laying around, then the campaign lasts for another 10 days (until March 16).

Mintos cashback program

It seems like Mintos is growing at such a rate that they need more investors’ money and therefore they are offering for the month of December a cashback program for investors willing to invest into long term loans via the primary market.

As someone whose portfolio in Mintos mostly consisted of long term loans (mostly mogo) anyways, then this is not a particular hardship to take part in – the cashback offers 2-5% cashback depending on the length of loans you are willing to put your money into.

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You can already see the effect this promotion is having by the fact that a) the primary market is pretty empty if you go looking for 60+month loans and looking at the stats for the whole month then half way through the month, Mintos seems to be on track of 45-50 million euros worth of loans being funded. Essentially they are reaching a point where through Mintos as much money is invested as through most other Baltic P2P portals, so super impressive for them!

Looking at the amount of money invested, and assuming maybe half of it would be invested into loans which qualify for the program (since there’s plenty of people who still wish to have only short term loans) the expense for the cashback I would assume, would run somewhere into the range of a couple of hundred thousand to half a million euros to be paid out to the investors.

I’ve also added a bit of extra money to Mintos this month, and will probably add another top-off to benefit from the cashback offer. There are a lot of interesting aspects to this offer, I assume at least some investors will be selling the loans they invested into on the secondary market once the program is over, so I’d expect it would be reasonable to stock up some cash to pick up bbg loans which are on sale on the secondary market at the start of January.

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For my portfolio it’s a nice boost to have, probably in the range of 50-100 euros max depending how much I deposit extra, but a nice Christmas present overall. The cashback gets paid out within a week as well, so if you invest now, then you’ll have time to reinvest the cashback amount as well after it’s deposited.

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If you start investing in Mintos now with a referral link, you’ll gain an additional 1% off your first 90 days of investments.

Mintos returns at 1,5 years

Mintos is running another campaign to catch new investors, since it seems like they’re getting a lot of new originators, so I thought I’d take a look at how my portfolio has been doing.

I started building my company portfolio in Mintos a year and a half ago, with the plan of having a very passive part of my portfolio there. There is a lot of originators to choose from, there isn’t really a lack of loans, and the current 12%+ returns with close to zero effort is a bit too good to be true long term, so might as well enjoy it.

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Pretty much all the money you transfer in gets pretty much instantly invested unless you have a very specific criteria (very short loan terms, very limiter originator selection). For me, my portfolio is very heavily mogo loans focused, but overall I haven’t really put a lot of effort into managing or perfecting my Mintos strategy.

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Interest wise, I was steadily adding money month-by-month. The small drop thisy year in interest growth is because I stopped adding money in February. This isn’t due to anything Mintos did, it’s because I just needed to stack up some cash since I’m in the process of applying for a mortgage.

Overall, at about 4K invested into the portfolio, it’s about 40-45 euros interest per month, so at this rate, it’s a nice 500+ euro investment per year that is about as low maintenance as it can be. Definitely going to keep boosting it once I’m able to direct more money back into investments, especially since Twino seems to be struggling to offer short term loan volumes, so Mintos has pulled ahead in terms of money invested, for my portfolio at least.

 

 

Twino and Mintos are both making me 1 euro/day

I’m a fan of silly investment goals. Just aiming for the big goals 10K – 100K – 1M or anything of the sort is great in theory, but a bit demotivating at start, because the first big goals take the longest, and the big goals often seem so far off, that they seem impossible to achieve. So, take joy in the little things!

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Since the end of the year is nearing, then I’m starting to write in some final numbers to look over goals and returns for the year and I noticed that both Twino and Mintos portfolios are both earning just over 30 euros per month, which means an euro every day. It might seem small, but I mean – if you found an euro or two on the ground every day to work you’d be pretty happy, no? Also, that’s just enough to  buy a latte every day forever 😉

On a more serious note, both Twino and Mintos have clearly done well this year, finishing at 10M/month, which is finally starting to make the totals for P2P lending in the Baltics look nice. The ease of use, and lack of overall attention you need to pay on the investments is nice for any passive investor, but there are of course changes happening constantly that you should keep an eye out on.

Twino

Twino is by far the most hands off part of my P2P portfolio. Due to overall lack of any detailed info about clients, it’s as much of a set-and-forget as possible in P2P. It does seem like there is an increasingly large amount of investors’ money available because you’re unlikely to see any higher interest loans available listed on the market. I assume without an autobidder it’s near impossible to invest into them.

Overall, I’ve kept to my strategy of mainly 13% interest rate longer-length loans. Largely because I don’t see myself needing the money any time soon, and secondly because a large part of those loans gets bought back due to the buyback guarantee, meaning if I did need to get the money out it would be reasonably easy.

Mintos

Mintos however has been a bit more hands on. Since the interest rates that different loan originators offer change rather often, you must keep an eye out on what’s happening. This means tinkering a bit here and there with the interest rates in the autobidder and due to high demand for loans it’s rather difficult to get into them even with the autobidder set, it seems.

My recent strategy has been picking up loans on the secondary market. There are always people leaving the site and selling their investments, some people even sell things at a discount when they’re delayed (yes, even buyback loans), so there is potential there. It does however take some time, because you have to do the purchases manually.


Overall I can’t say that I have any big complaints about either of the sites. Current plan is to slowly keep increasing both portfolios until they are both bigger than my position in Bondora (which will happen rather soon), making them the 3rd and 4th biggest P2P positions in my portfolio (currently led by Omaraha and Crowdestate). Definitely nice to see good diversification options on the market!

 

Average returns in Twino and Mintos

If there is one topic that investors get passionate about, then it’s returns. Looking at the current economic climate, then P2P returns are clearly quite good, but the somewhat downwards trend you can see happening is clearly causing dismay among investors.

Way back when, when I started investing in Bondora, it was completely possible to get 20% returns yearly due to the fact that the market was both new (therefor high risk), and pricing was vague at best (due to lack of precise credit models). However, in the recent few years the industry has clearly evolved to be more mature and less inefficient, bringing to investors loans with buy-back guarantees, which at times might have left beginners the impression that there isn’t much inherent risk left anymore when it comes to investing into P2P (which is clearly not the case).

The two favourites of the recent year or so have clearly been the two Latvian portals – Mintos and Twino, which offered large loan volumes with buy-back guarantees. For a while the interest rates were high enough that many people were a bit confused as to why the rates were that high, and were sure that the rates would be dropping in the near future.

It seems that we are somewhat starting to reach the point where returns will not be as high as they were anymore, and this is of course both good and bad – for investors who enjoy higher risks, the reduced returns are of course bothersome, for more conservative investors the lowered level of risk will of course be more appealing.

Twino

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Twino has already gone through one attempt to reduce the interest rates, which caused significant uproar among investors. They attempted to drop the interest rates to 10%, which caused investors to reduce their investments, which made them increase the rates once more, but they are still not back to the point where they started at (they used to be 12,9% & 14,9%; however now are 10-12% & 13% respectively.)

This means that while it’s still possible to generate >10% returns, then looking at the loan volumes they process the question arises – for how long? Since Twino is closing in on 10 million loans funded per month, then clearly there is enough investor money to go around, meaning when the higher interest loans run out, then the lower interest loans will get funded as well. Once enough get funded regularly, it would be reasonable to expect a drop in the rates.

Interestingly enough, a lot of investors in Twino seems to be super cautious about the longer term loans (24 months), which in my opinion seems a bit unfounded – largely because 1) they are resellable 2) a large amount of them get bought back early, meaning it’s not such a big commitment.

Mintos

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Now, with Mintos, the dynamic for the rates is a bit more complicated since different loan originators balance the interest rates between what they themselves believe to be fair and what the other originators are offering. This so far has caused a sort of a hierarchy to form between the different originators, meaning some loans disappear from the market very quickly (or get marked full by autobidders) while some remain “waiting” on the primary market.

While there have been fluctuations here and there between the interest rates offered, then it’s clear to see that the amount of loans with a buyback guarantee has been slowly but surely decreasing, meaning that investors are forced to do some more in depth analysis to figure out whether or not they should include lower rate buy-back loans or higher rate ordinary loans, which is rather complicated to do due to the lack of public information about the loan books of the originators.

Future of returns

Twino and Mintos do not exist in a vacuum – the amount of investor money available is dependent on the amount of projects listed on alternative sites and the returns offered there. However, if you look at the average returns offered by other portals, then >12% returns will be more and more unlikely as time goes on.

Just looking at the Estonian portals available, then Estateguru historical returns are <11%, for Bondora they have said they wish to hit 10% returns, for Investly the returns are <9%. Higher returns are offered by P2P portals which include more risk or a more complex model (Crowdestate for example inherently has much more risk, Omaraha’s premium for returns makes sense if you consider the fact that they have no proper exit mechanism available and the learning curve is rather steep).

It’s of course difficult to make predictions about the future, and how the markets behave, but I do believe that we are likely to be hitting the downwards slope of returns, which will in the long run bring us closer together to US/UK/Central European returns for P2P portals.

On the one hand this means a bigger faith by investors (investing their money at a lower rate), and a reduced risk rate (due to growth of the whole sector), on the other hand this will signify lower returns, and higher efficiency on the markets, meaning the >20% returns several investors have achieved are likely to be in the past. As someone who does believe that the effort/risk vs returns have been off balance so far, the returns lowering a bit is not an unexpected development.