Guest blog: All things considered, this is why I will continue to invest with Mintos in 2020

I have been investing with Mintos for almost 4 years, so I feel like I can write “my two cents”. 

Me and Mintos

I remember it took me some time to trust Mintos. Months actually.

After some investigation, the first thing I thought was: “This is a bit too nice to be true”. Taking the UK P2P Lending market as a benchmark, everything was a bit too beautiful, but there were reasons for this. At that time the Mintos interface was quite simple. There were only eight Lenders, a few thousand loans on offer and of course, there was no Auto Invest feature yet. Secondary market sales were subject to a 1% transaction fee.

This is how Mintos website looked in 2015!

My favourite page was: “Statistics”.

I could spend hours checking for the volume and the lateness of the loans on offer. That data was magic for me and it was (and probably still is) updated daily. I found out later on that there wasn’t much need to study that data. Important numbers were also somewhere else… but this is another story. The business model was apparently brilliant and scalable. To create a marketplace for loans was not even a very new idea, but as always, an idea isn’t worth anything without execution. Connecting investors and credit agencies were nice, but something was missing. Mintos added that “something” by introducing its “buyback guarantee”.

It was not a provision fund, which is why it was much more appealing. As an investor, I was no longer exposed to borrowers’ delays. Whoever issued that debt would have to rebuy my late loans after a certain period of time. In exchange for this “service”, I would sacrifice a percentage on my returns. On the other hand, I could distribute my risk with good precision on the lenders I trusted more. A welcome simplification for me.

Even today I find it very appealing because this has greatly simplified my “business plan” as an investor, in a sense. I know for sure that Mintos’ buyback guarantee is the most discussed topic by its investors.

Is it possible that the Mintos Buyback Guarantee is Columbus’ egg?

Maybe not.

Blindly trusting buyback guarantees is not a good idea, even if it is the one that until now, for almost 5 years, has guaranteed us regular and constant returns from our loans.

The most refined investors argue that Mintos should be more careful to admit new lenders that are too aggressive or exotic. I partially agree. As a DIY investor, I have always been used to taking responsibility for what I do to multiply my money. I use various tools but I don’t expect them to solve my problems. What I demand is transparency. I think Mintos is trying to offer it, even though it is moving in a difficult and rapidly evolving market. For example, the fact that Mintos offers loans even in very unusual countries simply pushes me to modulate my lending appetite according to the risk/return ratio.

I am well aware that regulators in certain countries may offer a different level of continuity and perhaps change some rules and laws without warning. This might be the reason for what happened in Kosovo some time ago to two Mintos loan originators, also present on Mintos. In my opinion, perhaps taking that risk should be rewarded more so that – like so many advanced investors in Mintos– I adjust my exposure to those loans appropriately. I would also like to add that, for now, I do not invest in loans offered in currencies other than my own currency, the euro. This is questionable and I certainly lose the opportunity to multiply my profits, but I have made my choices based on my risk profile.

Are Mintos Ratings perfect?

Maybe not yet.

They have not been reacting fast to the changes we have seen this year in the lenders’ panorama. I guess Mintos is trying to provide clarity by helping those getting started by providing some guidance. In doing so, it also helps itself by matching the growth of the loans on offer to the number and appetite of the investors.

This move of applying “ratings” to the lenders has been emulated by other big players in the P2P world and it is good news for everyone. As an advanced investor, I am also free to look for more sophisticated and up-to-date sources to establish my own ratings.

Why I will continue to invest (a little) also with ”Invest & Access”

The “Invest & Access” automated feature has become a good way to allow  “ordinary investors” to dip their toe in the loans market.

Is it good or bad?

I think it’s a good thing because it basically allows anyone to diversify from the usual portfolio of funds, bonds, commodities and cash. Diversification is key and loans can lower portfolio volatility. (Yes, even if we are forgetting it, there was volatility in the markets once… and it will come back sooner or later.)

Lending money is one of the oldest ways to generate income. It’s something that banks have always done and it’s nothing “new”. I can easily imagine that not everyone has time to spare in selecting the “coolest lenders” and to keep up to date on everything, so the I&A feature is a great idea for many. Mintos, along with the other P2P lending marketplaces has the merit of having “democratized” access to this type of investment in a way that makes it easy, understandable and still quite profitable.

Would I invest 100% in “Invest & Access”? Not yet. I know how it works and I know that I prefer to place it alongside my custom portfolios, where I target the lenders and loans that I prefer from a longer-term perspective.

Long story short…

To sum up, I would say that it’s been a year of strong growth, but also “strong emotions” on the Mintos platform. Nothing bad in my opinion, because growing just means adapting to a new state. Becoming more aware of the risks and advantages, in this case, is just healthy.

I value platforms that are:

– Mature

– Established

– Growing

– Profitable

– Transparent

And you?

For me, the balance sheet is still absolutely positive and I will continue to invest with Mintos. 


About the author:

Sal from RevenueLand is “a boring serial investor, a travel addict and an unlucky sport fisherman”.

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