One-click investing : P2P loans the easy way !

The drawbacks of P2P loans marketplaces

Investing in loans may be confusing at first. As highlighted in our documentation, an essential part of the investment process is determining your investor’s profile. Which kind of loans do you want to invest in ? For how long ? And even more important, how much risk are you willing to take ? All these considerations can probably deter a potential investor.

Fortunately, several platforms now offer easier ways to invest, focusing on the expected returns.

Initially, DoFinance was the only company to offer such an opportunity. The target returns vary based on the investment duration, and this is the only choice one has to do. Returns were initially great for such an easy product; unfortunately, their new offering has lowered down the interest rates, making it slightly less interesting.

Now that Mintos offers predefined strategies, and with Bondora aggressively pushing their Go & Grow product, is it time to switch to DoFinance’s competitors ?

DoFinance

DoFinance offers a very simple way to invest in P2P loans. The platform has recently updated their offer; currently there are three options to choose from, depending on how long you want to invest for. The investment process itself is dead simple, and there’s no surprise regarding the final returns.

However, the fine print varies regarding early withdrawal depending on the selected interest rate. I encourage you to read my complete DoFinance review for details; overall, you’ll have to accept both a penalty and some delay if you want to withdraw your funds before the planned date.

 

DoFinance's updated terms

DoFinance's pros and cons

  • Investing is as trivial as it was before
  • The withdrawal conditions are hard to understand as they vary from one offer to another
  • Returns for short-term investors are low

Mintos predefined strategies

The classical way to invest at Mintos is through the use of the auto-invest feature. While its interface is particularly well-designed, it’s still a bit complex due to the richness of Mintos’ offer.

Mintos now offers three predefined strategies one can use. They’re actually custom settings for the auto-invest feature; as such, the returns may vary from the expected ones. Indeed, apart from the short-term strategy, none of these settings specify a minimal interest rate. Thus, if the interests rate offered on the platform suddenly drop, the strategy may actually invest in loans offering lower interest rates than expected.

It’s also important to understand that while this offer makes the auto-investment easier, it doesn’t restrain the investor’s freedom. For example, it’s still possible to sell loans on the secondary market.

The investment criteria for each strategy are visible by clicking on “View Auto Invest strategy criteria”; this will display which loans kinds and originators the strategy will invest in, as well as the duration and interest rates range. The target diversification is also visible from this screen, by clicking on the link labeled “Diversification settings”.

 

Mintos pre-defined strategies pros and cons

  • Ability to use other Mintos features, such as secondary market
  • Unlike DoFinance's offer, there are no complicated terms for early withdrawal
  • Actual returns may vary greatly from the expected ones

Bondora's Go & Grow

Bondora‘s Go & Grow is a very simple product, designed to yield 6.75%. It can be used in addition to the Portfolio manager and Portfolio Pro, or replace them altogether. It’s a very popular product among Bondora’s investors; in June 2018, 38% of the total amount invested through this company was allocated to Go & Grow.

Setting up the the portfolio is easy; first you have to select the purpose of your investment (retirement, big purchase, children, travel…). Then you have to name your portfolio, and input how much you’re planning to invest both initially and as monthly additions; this allows to simulate your final gain.

In my opinion, this step is rather useless, and may even discourage investors who would mistakenly think it’s mandatory to add money each month.

 

Bondora's Go & Grow's pros and cons

  • It's a very easy-to-use product
  • Funds can be withdrawn at any time
  • $1 fee for withdrawals
  • Low returns for long-term investors

Which offer is best for you ?

It depends on how easy you want things to be.

If you want an extra-easy experience, and don’t plan to withdraw your money early, choosing DoFinance is a no-brainer.

For short-term investments, Mintos’ Short-term strategy is an excellent choice. It offers great returns, while retaining the flexibility of using Mintos features such as secondary market. Their diversified strategy may also appeal to longer-term investors. In both cases, I’d recommend it only for portfolios above €500, as the loans need to be diversified enough !

Finally, Bondora’s Go & Grow will mostly appeal to those who want to be able to withdraw their money at any time without penalty or resorting to secondary market.

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