I´m Kimmo, CEO and founder of Income marketplace and also an active P2P investor. I intend to write about my personal P2P portfolio in the Income blog periodically to allow others to see how I invest in loans. While you should not consider this as investment advice, I hope the information is beneficial, or at least interesting to you.
During my career in non-bank lending I´ve had the opportunity to follow how the different aspects of consumer and SME lending have evolved through the adoption of technology in many different markets. The principles of modern, scorecard based loan origination have not changed much during the last 10 years, although new data sources have made predicting bad payers easier, and technology has made financial products more accessible to the masses.
The principles of investing in loans has also not changed much when it comes to institutional investors. The loans are (or should be) nearly always backed by a real security, which most of the time means the loans being funded by the investment act as the security. What really has changed during my career is the emergence of marketplace lending/investing (P2P) and it becoming an established asset class also among retail investors. Equipped with my knowledge of alternative lending, I started investing in P2P marketplaces in early 2019.
My P2P investing journey started with a European market leader in 2019 after a friend’s recommendation. When the COVID pandemic hit in early 2020, I was concerned that a sizeable part of my portfolio was at risk as many loan originators could not honor their obligations and investor protection mechanisms did not work as I had expected. I was active in protecting my investments and it eventually turned out I had chosen mostly the right loan originators. I was lucky to escape with very minor losses and today I have only very small amounts “in recovery” from suspended loan originators.
The experience was not pleasant, so as a result I consider more carefully where I invest and I no longer invest into as many loan originators as I previously did. A carefree diversification is better than nothing, but it’s not an optimal strategy.
I also put more thought on how I diversify between marketplaces and how much exposure I should have on each one. I obviously know Income marketplace and its safety features very well, so I´ve started increasing my investments on it. As I´m active in the P2P investment space I think its fair that I´m sharing below my portfolio and account views for transparency and information purposes.
Portfolio split by marketplace
I´m currently invested in two main marketplaces. The 54 229 € that is the current size of my portfolio is divided as 36% to Mintos and 64% to the Income marketplace.
Portfolio split by loan originator
I´ve been slowly withdrawing from Mintos, but still have about €17,000 invested into older Iute Credit loans and ESTO loans. To me, both companies have good risk profiles and professional management, so I´m confident the investments will be repaid, and I´m not in a hurry nor considering to sell on the secondary market. I may consider increasing my exposure to them in the near future. Finko and Akulaku are “in recovery”, but the amounts are very small.
Danabijak, Fin Yritysrahoitus and Click Cash are all loan originators on Income marketplace. I´ve been increasing my exposure to them lately.
Income Account overview
I started investing in Income at the end of January as we entered a closed testing phase, and have gradually increased the size of my investments. I´ve since earned 12% on my investments p.a., which equals €133.52. I have also accrued €212.23 of interest on my investments which will turn to cash when the loan originators make payments and then this will be shown also on “interest” and “total profit” line. Some of the loan companies I invest in on Income are relatively young, but as I know the underlying security structures well, I am confident in my investments.
Mintos Account overview
As explained before, I started investing in 2019 and quickly grew my portfolio to over €100,000. I´ve since earned 10.59% on my investments p.a., which equals €11 78.59. I did make some losses on the secondary market by selling off some long term and lower yielding loans. These had been in my portfolio for some time, but I noticed later these were not amortizing fast enough for my liking. In retrospect I could have kept them also and no harm would have come but I thought at the time it was better to sell. The takeaway is that always check what type of loans are available and use all available auto-invest filters.
Conclusion
Currently my overall strategy is to keep investing in loans, earn a minimum blended yield of 10% p.a., and gradually increase my portfolio size.
I´m thinking of investing on other marketplaces but I am not yet a fan of the ones that are only funding the operations of related companies, and this limits my options quite a bit. I´ve made test accounts to some of these, but I currently have no significant P2P investments outside Mintos and Income. I still consider loans to be a great asset class and I keep investing in them when I find the risk/reward to be at an acceptable level.
If you have any specific questions or comments about the post you can reach out to me on Linkedin or contact me through my email: firstname (at) getincome.com
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