Investing in loans: a new generation of asset class

At Mintos, we’re making loans an accessible asset class for regular investors on a truly global scale. In this article, let’s take a look at how loans can complement ‘traditional’ investment asset classes like stocks and bonds in any investors’ portfolio.

Investing VS saving


To begin, it’s worth noting the difference between traditional savings and actual investment, since savings are sometimes regarded as an asset class in their own right. Saving and investing are quite different concepts with different aims within a financial strategy:

  • Saving means putting cash aside somewhere safe and highly liquid, such as a checking or savings account. The purpose is to preserve capital and have it available when needed, with minimal delay. Most financial strategies recommend having some degree of savings on hand for a rainy day.
  • Investing means using your money (“capital”) to buy an asset that you think has a good probability of generating returns over time. ‘Traditional’ investments tend to be stocks, bonds, and real estate (…more on that later).


Since the focus of this article is investing, let’s delve a bit deeper into the topic. One important thing to know about investing is that it always carries a risk. Investors can lose money if they buy the wrong investment or if their investment underperforms. To better understand how investments behave and help us make informed decisions, the financial world has historically looked for commonalities and categorized investments into a few accepted groups, known as asset classes.

Asset classes help understand investments


In finance, an ‘asset class’ is the name given to a group of investments (assets) that have comparable characteristics and which react in similar ways to market events. As the economy shifts, different factors will nudge different asset classes in different directions. But within a class, the assets will move in a similar direction, keeping in mind that individual assets can still move against the market.

Investments can be grouped into 2 main types: debt-based and equity-based.

  • Debt-based investment means that the investor is loaning money to a person, business, or government. The income from this investment is typically fixed. Unlike equity, debt must at some point be repaid. Common examples are certificates of deposit, bonds, and annuities.
  • Equity-based investment means that the investor buys all or part of an asset. The profit from this investment is related to the asset’s performance. Common examples of this are stocks, mutual funds, real estate, REITs (Real Estate Investment Trusts), or business equity.


Of the 2 investment types, equity is usually seen as having higher risk and volatility and therefore offers more returns over the long term. Debt-based investments have more limited upside but are way less volatile.

Investment types can be further broken down into the asset classes. Let’s take a look at the more traditional asset classes and some of their key characteristics. Note that cash – although strictly speaking a form of saving which therefore differs from investing – is also often considered an asset class.

Alternative investments push the boundaries


In recent years, alternative forms of investing have become more and more popular, as investors scramble to find higher returns. Examples include hedge funds, private equity, cryptocurrencies, or even collectibles such as art or vintage cars. While they have some similarities with traditional asset classes (e.g. a hedge fund investing in the stock market), they are different and unique enough to stand in their own right.

Another alternative type of investing is collectively called “crowdinvesting”. Investment types within the crowdinvesting category can be equity-based, or debt-based. (Strictly speaking, they can also be reward-based, for example when you back a project on a platform like Kickstarter. But this article is about investing to earn a financial return on your money).

Loans are one such alternative debt-based investment that has been around since the late 2000s, with early pioneers offering access to P2P investment opportunities online. While Mintos is not the first company to offer investing in loans, we are the first to do it at scale and make it mainstream across the globe thanks to our unique marketplace model.

What it means to invest in loans


Out of all the traditional asset classes, bonds are probably the closest in nature to investing in loans. This is because both investments are debt-based and pay interest over time. In the table below are some typical similarities and differences between the two. Keep in mind that loans and bonds are available in many different forms, and may be subject to different parameters.

Why should investors be interested in investing in loans?


Investing in loans offers a modern alternative to traditional investments. On the surface, it has some similarities with bonds, a traditional asset class. But when you look deeper, it offers a unique combination of characteristics and benefits that allows it to stand on its own as a separate asset class.

So why should investors be interested? Since the financial crisis of 2008, the interest rates banks offer for savings are at a historic low. Adjusted for inflation, they can even be negative in many areas, such as the Eurozone, meaning deposits will silently lose value every day.

To make your money work, you need profitable investment opportunities. At the same time, stocks and bonds have become significantly more correlated over the last 10 years, challenging classic theories that previously guided portfolio building. Diversification is more important than ever, and fortunately investors today have more choice than the old “equity vs bonds” paradigm with a host of newer and alternative asset classes.

These new asset classes have expanded the spectrum, and provide a powerful alternative that is historically less correlated to traditional asset classes such as stocks. Among these new classes, loans represent a great, highly accessible opportunity. Investors looking to diversify their investments while receiving attractive and regular returns may find loans to be a worthy addition to their portfolio.


Looking to get started? Here are some tips on how to choose a platform and on investing and risk.


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  • is provided for informative purposes only and does not constitute an offer, a recommendation, or an invitation to buy, sell or discharge any financial instrument, or to enter into and/or exercise obligations in respect of any other transactions;
  • does not consist and shall not be treated as an investment research and/or financial analysis and/or general recommendation relating to transactions in financial instruments.

AS Mintos Marketplace (hereinafter – Mintos) draws attention to the fact that the transactions on the securities market and financial market involve risk and require appropriate knowledge and experience. Every investor has to conduct an analysis and thoroughly weigh such risks before making his/her investment decision. Any investment decision should be based entirely on the assessment of the personal financial circumstances and investment objectives.

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