A very quick overview of Bondora’s Go & Grow and Mintos Strategies
There’s no need to spend time picking up loans manually or to configure the auto-invest feature. Indeed, all that’s required is the amount to invest in the portfolio.
This simplicity makes these two products extremely appealing, especially for beginner investors. Unfortunately, there’s large risk of capital loss when using either of them.
Here are the reasons why I recommend peer-to-peer investors to stay away from them.
Bondora Go & Grow
Bondora Go & Grow is a very simple product, which offers an expected annual return of 6.75%.
My first reservation about Bondora Go & Grow is that it’s a blackbox. Investors don’t know which loans they invest in.
In addition, although the platform seems to be profitable at first glance, many hinted at the fact that it’s mostly due to Bondora’s “creative” accounting. Indeed, overdue loans aren’t actually taken into account. This casts serious doubts about the long-term platform’s profitability.
My last critics towards Bondora Go & Grow is that the expected return is actually really low compared to the actual performance provided by loans from reliable originators :
- Robocash offers 11% or 12%, and is probably the most reliable originator available
- Interest rates from Afranga’s StikCredit currently stand at 16%
- Even Moncera‘s rather low 8% interest rate is higher than Bondora Go & Grow’s returns, although the reliability of the loan originator Placet Group is much better than Bondora’s !
When it comes to actual returns, the performance for these portfolios is close to these theoretical values, thanks to the buyback guarantee A buyback guarantee is a guarantee provided by the platform or a loan originator. If repayment of a loan is delayed by more than a given delay (usually 30 or 60 days), the platform or loan originator will buy back the loan. The guarantee may cover only part of the capital, or in a much more interesting case, both the capital and accrued interests. As the conditions vary from one platform to another, it’s very important to check this point.. Reliable originators on Mintos such as Iute Credit, Delfin Group or Wowwo – to mention my own experience – also offer double-digit returns.
All these loan originators are greatly profitable entities, with high-quality loans portfolios. If you’re tempted to give Bondora’s Go & Grow a try thanks to its ease of use, please ask yourself if the lower returns and much decreased safety are really worth it.
Compared to Bondora Go & Grow, Mintos Strategies are a more transparent product. They’re actually ready-made auto-invest configurations, which means that the investor will see the individual loans in her/his portfolio.
In consequence, unlike Bondora’s Go & Grow, Mintos strategies don’t have a fixed expected performance. Indeed, it will fluctuate depending on the current loans supply.
In August 2021, the average interest rates for loans matching the criteria for Conservative and Diversified strategies stood slightly below 9%, and slightly above 9% for the High-Yield strategy.
These figures seem much more promising than the expected returns for Go & Grow. However, it’s essential to realize the actual performance may be different – and, to be clear, much lower -.
Indeed, because of the low quality of many loan originators and the lack of reliability of Mintos risk score, these strategies will often invest in loans coming from lending companies which are likely to default.
Take the Conservative strategy : it invests in lending companies with ratings from 7 to 10, which are supposedly the most reliable. However, checking their ratings on ExploreP2P reveals that many of them are actually rated less than 50 out of 100. Should one originator default, it’s likely that the invested capital will be stuck for a long time, and part of it will surely be lost, resulting in a much decreased portfolio’s performance.
I wrote a lengthy article on Mintos’ loan originators (which actually also covers other platforms). It’s a more than recommended read if you even consider investing through Mintos – and especially in Mintos Strategies -.
A large number of former Mintos investors left the platform after a large part of their invested capital ended up in recovery. Do you really want to end up like them, just because Mintos strategies are easy to use ?
Alternatives to Bondora Go & Grow and Mintos strategies
Depending on how much effort you want to put into investing, there are several worthy alternatives to these two products.
First, there are Mintos custom strategies – which are simply another name for auto-invests -. Mintos auto-invest sure is intimidating, but it’s actually not so hard to set up.
Another option is platforms created by loan originators. Moncera stands out thanks to its ease of use, but Robocash and ViaInvest are also excellent choices if you don’t mind their dated interfaces. Robocash’s website is actually expected to be revamped soon, which if done properly would probably make it my
Finally, PeerBerry now offers Investment plans; they’re roughly equivalent to Mintos strategies, but are likely to be safer thanks to PeerBerry’s great choice of loan originators.
As a side note, I used to recommend DoFinance in the past. They suffered a lot in 2020, and although I keep on investing there, I’m waiting to see how things turn out before mentioning this platform again.
All these options will require more efforts than Go & Grow or Mintos strategies, but the reduced risk and generally increased returns are well worth it ! Let’s look at them in detail.
Custom Mintos strategies
Although I don’t recommend Mintos “ready-made” strategies, it doesn’t mean I’m crossing out Mintos as a loans marketplace. On the contrary, there are still excellent loan originators on this platform. They will allow investors to get great returns with a reduced risk.
I won’t deny that Mintos auto-invest (ie custom strategies) screen is intimidating at first glance. However, most of this apparent complexity is caused by the large number of loan originators. Take away the upper part of the screen and what’s left is not much different from most other auto-invest forms.
Here’s how to painlessly create a custom auto-invest that won’t give you headaches later.
Select the loan originators you want to invest in
This is the crucial step. Fortunately, picking up the safest loan originators is now an easy task, thanks to the excellent work provided by ExploreP2P. They provide independent ratings for all Mintos originators.
I decided to invest only in loan originators which match the following criteria.
- a Mintos risk score above seven
- more importantly, a rating of 65 or more on ExploreP2P
- double-digits interest rates
Only a handful of loan originators are left after applying these filters. Among them, I stopped investing through DelfinGroup after they repeatedly bought back my loans with high-interest when they lowered interest rates. In addition, for loans from Moncera and CreditStar, I invest directly through Moncera and CreditStar respectively.
This leaves me with just four lending companies : Iute Credit, Wowwo, ESTO and Eleving group (formerly Mogo). After a few months using this strategy, my portfolio is well-balanced and has only a few residual loans left from other originators – mostly defaulted ones which I didn’t manage to sell -.
You may very well choose different criteria, but remember that a large diversification doesn’t always work !
Create one auto-invest configuration for each originator
I used to create only one auto-invest, which included all selected loan originators. However, this turned out to be hard to maintain. Indeed, I frequently lost my diversification parameters – for example, when I removed an originator after their downgrade by ExploreP2P -. In addition, I was unable to select different loan parameters for each originator – I usually want to invest for short durations, but some of them only offer loans for several years -.
Creating one auto-invest per originator allows me to fine-tune my settings. I first use the primary market screen to filter out loans for each originator, and check the interest rates and duration for currently available loans.
I always double-check that the “buyback” criteria is activated, as well as the Euro currency. Then, I assign each portfolio an equal size. Diversification settings obviously don’t matter as there’s a single originator for each auto-invest !
Keep in touch with rating changes
If carefully choosing the loan originators is vital, keeping informed of changes is equally crucial. Once a month, I check whether ExploreP2P’s ratings for my originators have changed. In addition, I screen the primary market again to check the trends of interest rates, and adjust my settings accordingly.
Overall, picking up the loan originators and creating the auto-invest is likely to take around half an hour. Maintaining the auto-invest roughly takes five minutes per month. I consider it time well spent !
Loan originators platforms
Investing in P2P loans doesn’t have to be complicated. A well-designed auto-invest screen is actually trivial to configure.
Here’s what Moncera’s auto-invest looks like. This platform provides only loans from Placet Group, which is among the most reliable loan originators.
Configuring it is as easy as :
- Typing a name for your strategy – for example Auto-invest –
- Inputting the portfolio’s size. This will usually be your account size, with some added leeway in order to account for the upcoming interests
- The maximum amount in each loan should be as small as possible, in order to diversify your portfolio among many loans. Unless your portfolio is very large, using the minimal sum of € 10 is the best choice
- The selected interest rate will depend on the current loans supply. Upper bound can be anything; I set it to 14%. For the lower bound, I’m currently using 10%, which is enough to have my whole portfolio invested. If the number of loans displayed at the top of the screen is too low to invest all your funds, just lower the minimal interest… or have patience until they get invested !
- Thanks to the buyback guarantee, the borrower’s ratings don’t really matter. This criterion can thus be safely set to “All”.
- The same goes for the loan origin; there’s no point in setting a geographical restriction.
- Just like the interest rates, the remaining term of available loans will fluctuate. In most cases, an interval such as 1 month to 12 months will do the trick. Depending on your preferences and portfolio size, you may choose a longer timeframe.
- Finally, check the reinvestment option and validate the assignment agreement.
The whole process should take at most five minutes, even if you never configured an auto-invest before.
Other reliable alternatives (or complements) to Moncera such as Afranga, Robocash or ViaInvest offer higher returns. However, their ergonomics vary greatly, with Afranga being well ahead of the two other :
- Recently reviews Afranga offers very high interest rates (16%) from a reliable loan originator. The platform’s website is very user-friendly, so even beginners will be able to use it effortlessly.
- It’s a pity that Robocash’s website is so poorly designed and translated. Indeed, in spite of the reliability of the platform’s parent group, the ergonomics is likely to put off many prospective investors. However, considering that Robocash Group is rated #1 by ExploreP2P, I consider it’s work putting some small effort to invest there !
- In addition to having a slow and very dated website, ViaInvest used to be somehow a victim of its success, as for a long time the loans supply wasn’t enough to meet the demand for loans. The situation has improved, though, as of summer 2021 cash drags are a thing of the past.
In February 2021, PeerBerry quietly launched their investment plans.
They’re roughly equivalent to Mintos strategies. However, as the loan originators on PeerBerry are much more homogeneous than on Mintos, it can actually make sense to invest through these plans.
Once caveat though is that the long-term plan invests in loans with durations up to five years, and there’s no secondary market. So, it’s crucial to make sure that you won’t need your money back before the loans’ term !