Bondora is an Estonian company that started to offer peer to peer consumer loans in 2009. It offers loans from Estonia, Finland, Slovakia and Spain. So far it issued loans amounting more than 160 million EUR in loans and the investors received more than 20 million EUR in profit. The net return so far for investors is 10.7%. You can find more statistics about Bondora here.
- one of the oldest p2p lending platforms in Europe
- offers different types of investments based on your risk profile
- no buyback guarantee
- only auto invest options
My portfolio on Bondora
Started investing: November 2018
Deposits: 10 EUR
Current value: 10.1 EUR
I’ve only started a test account on Bondora and invested so far only 10 EUR. For some reason I don’t understand, Bondora split my deposits into 10 different investments. So now I’m expecting around 3.7 EUR return in the next 3 years. The average interest rate of the loans I’ve invested in is 21.8%.
I’m not sure I like the fact that you can’t individually choose the loans you want to invest in. I do like auto invest tools but only as long as I can stop them anytime I want and switch to manual.
Creating an account
You’ll need to offer an email address and a phone number to open an account on Bondora. The process takes less than 2 minutes. The platform is opened to users from around the world.
Adding funds to your account
You can start investing in Bondora loans with as little as 1 EUR. Although that amount won’t bring you too much profit, the point is that there are no minimum limits to loan investments.
You can fund your account using Trustly, credit cards, SEPA bank transfer or Transferwise. Transferwise comes in handy when your bank account is not using EUR and you want to save on transaction and currency conversion fees. If you don’t have a Transferwise account, you can click here to create one.
In order to withdraw your money, you’ll need to first provide proof of identity (a copy of your passport or ID card).
Bondora Investment options
Bondora platform gives you different options for auto-investing. The only manual investments offered are loans put on the secondary market by other investors. It offers 4 different products to choose from. Each one of them offers different levels of flexibility and risk.
This strategy lets you choose the level of risk you want. Based on the level of risk chosen it selects loans from borrowers with different risk levels, ranging from AA to H.
Go & Grow
This strategy is the simplest strategy to use. Based on your investment purpose, it lets you choose between retirement, big purchase (like a car), extra income, the children’s future, rainy day and travel.
The strategy names are intuitive and might give you a better indication of the level of risk taken. It might be best suitable for beginner investors. On the other hand, not knowing in what type of loans you’re capital is going to be invested in could trigger warnings for control freaks like me.
The strategy details offer you an indication of what kind of gain you should expect. One interesting option it offers is to auto-transfer monthly amounts from your bank account into the Bondora Go & Grow account. This frees you from entering the account every month to top-up your balance. It could be an interesting saving plan if peer to peer lending wouldn’t come with much greater risks than classical bank savings accounts.
Portfolio Pro strategy gives you the highest level of flexibility on the Bondora platform. It lets you start different auto-invest portfolios spread across different types of loan ratings. You can choose loan terms, loan ratings, maximum amounts to invest per loan, the total amount to invest in each portfolio.
You can also invest in loans sold on the secondary market. On the secondary market, you can either choose to sell your loans (for various reasons) or buy loans that other investors are selling. This is a good option when you need access to your money before the end of the loan term.
The custom strategy lets you combine the features of all the other strategies. This lets you enable/disable Secondary Market, Portfolio Pro, Go & Grow or Portfolio Manager option. You can then setup investment strategies for the products you like most.
Conclusions on Bondora
Proven track record
Bondora is one of the oldest platforms in the world of peer to peer lending so it has a proven track record.
It offers various auto-investment options that range from complete flexibility to complete intuitive investing based on your goals. You can choose investment strategies named Retirement, Rainy Days or Travel. Or you can customize the type of loans you want to invest at the most granular level.
You can drop your investments at any point in time and sell them on the secondary market. Or you can get good deals from other investment that need to free up their money.
How safe it is
This is one of the drawbacks of Bondora. It seems to have a high default rate and the recovery process takes a long time. You’ll eventually get your money back but meanwhile, your capital will be locked and won’t produce anything. You can choose to invest in loans with lower risk though, but this also comes with lower interest rates.
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