My Fast Invest portfolio after 4 months
I started to invest in Fast Invest around 4 months ago. I liked that it had 500+ loans with a 15% interest rate and the platform paid you any unpaid interest if it was more than 3 days late.
What’s not to like about it? The rates on Mintos, the main p2p lending platform I was using at that time, were around 11-12%. Also, if the payment was late, Mintos would wait 60 days before buying the loan back for you without the interest you were owed.
So, what is Fast Invest
Fast Invest is a UK p2p lending platform that offers loans from Spain, Denmark, Poland and the UK. All the loans are personal loans with loan terms from 1 to 12 months, and the interest rates range from 9% to 16%. (Those 16% loans are in PLN (Polish Zloty) currency, the highest interest rate for EUR loans is 15%).
The loans are originated from 8 different loan originators, which we know nothing about because they’re not displayed on the loan details.
I’ve written a more detailed review here on how Fast Invest works, but in short, besides the high-interest rates, the 3 following things convinced me to use the platform.
All the loans have a “default guarantee”, which means that if the instalment payments are late by 3 days, Fast Invest will pay you the interest owed, and you wouldn’t know anything about it. That’s really nice because you don’t have to worry that half the loans you invested in are late with their payments, and you’re losing potential interest because you could have invested those payments into new loans.
One problem with many crowdlending platforms is that it’s not easy to exit your investments. You’ll need to wait for the loan term to end before you can free up your money locked on that platform.
Some p2p lending platforms solve this by creating a “secondary market”, where investors can sell their loans to other investors. There’s no guarantee you’ll actually be able to sell the loans, but these secondary markets offer you some levers to make your sale more attractive. You can set a discount on your loan, at worst case scenario selling it at the same price/ less than the price you bought it.
Other platforms, like Fast Invest, don’t have a secondary market, but they offer to buy the loan from you. On Fast Invest, the buyback guarantee comes with strings attached. You can sell your loan at any time you want and free up your money, but you’ll lose any interest payments you received for that loan up until that point. If you don’t want to wait until the loan term ends, you’ll get your money back, but that’s it.
For example, if you invested 100 EUR in a 12 months loan with 16% interest, after 4 months you would have received 4 EUR in instalments. If you decide to sell the loan back to Fast Invest at that point, Fast Invest will only pay you back 96 EUR. Plus the 4 EUR you already received in instalments, it’s exactly the 100 EUR you started with. This is not ideal, but I can live with it. The default guarantee and the 15% interest rates make up for that.
No p2p lending platform would be complete with an auto-invest feature. One important thing to do when investing is to diversify your portfolio in order to reduce risk. You need to pick different loan types, from different countries, and to do that efficiently you need some tools to help you.
I’m currently invested in 120+ loans on Fast Invest and around 15 loans have already been repaid. This means on average, in the 4 months I’ve been on the platform I’ve invested in around 1 loan per day.
1 loan per day it’s not that hard to do, right? But if I’d do this manually, I’d had to do it for the rest of my foreseeable life. Every day. Add to this that I’m also invested in other platforms, so I’ll need to spend 5 to 10 minutes every day on each platform to check my balance, then browse loans, then pick some up and move on. Maybe I receive some payments in the evening, so I’ll either need to do this in the evening or check my account at least twice a day, mornings and evenings. I have better things to do with my life than spend 1-2 hours per day zombie clicking browse-invest-confirm.
So, auto-invest is a necessary tool. You set the parameters for the loans you’re interested in, like loan term, interest rates, loan country, minimum and maximum to invest per single loan, and that’s it. That’s what you’ll do anyway if you did it manually. It stands to reason to automate it.
How is my portfolio doing after 4 months
I’ve started late August with 2010 EUR. The value of my portfolio now is 2093 EUR, with some other 111 EUR planned to receive an interest in the following 9.75 months.
The average interest rate was 14.26%. That’s a bit weird, right? I mean, I’m only selecting loans with 15% interest, the average should be 15%.
The auto-invest tool doesn’t have your best interests
You live and learn. I invested part of my funds manually in the first days, in lumps of 50 EUR per loan. Then I realized this is not going to do it. I can’t do this every day, so I set up an auto-invest portfolio.
My first auto-invest portfolio looks similar to the one I have now, except the interest rates range was set from 9% to 15%. I was thinking Fast Invest would choose for me the loans with higher interest rates, but boy was I wrong. That was my first mistake. It started investing only in 9% loans, even though the loan list was full of hundreds of 15% loans. At some point, when it finished with the 9% ones, it added some 12% ones in my portfolio, so I don’t cry too much.
Armed with this new knowledge, I changed my auto-invest settings, so it doesn’t catch any 9% loans anymore. But of course, I didn’t set the minimum interest rate to 15%, I’ve set it to something like 13.5%. That was my second mistake. And of course, the auto-invest tool picked up only 13.5% loans.
I’m wiser now, and my minimum interest rate setup is 15%. If the number of loans with a 15% interest rate drops on the platform, I’ll create a new auto-invest profile to pick up lower interest loans, with a 14% interest rate minimum. And if that fails, I’ll set up another one with a 13% rate minimum. And so on. Hopefully, these profiles act like a waterfall, and whatever is not caught in the first auto-invest profile will be invested in the second one, and so on. At least that’s how I understand it works.
The account statistics Fast Invest has on their website is at most laughable. I can see that in 2016 and 2017 when I didn’t have an account, I didn’t earn anything, and in total, I’ve earned 83.41 EUR. I can use some basic math and see that for my 2010 EUR initial investment, this amount to a 4.15% increase in the 4 months I’ve had the account for. That’s a lot better than keeping my money in the bank in a savings account, which is exactly where they stayed before I moved it to Fast Invest.
More detailed portfolio statistics
I wasn’t too happy with the account statistics Fast Invest lets me see, so I took the list of all my transactions from the website and played around with the data to see what I find. I was mostly interested if there was anything I could do to get better returns from the platform.
The list of transactions exported from the website contains 2 types of transactions I’m interested in:
– Repayments – these are either instalments for the loans I’m invested in, or full principal if the loan ended
– Investments – obviously, this is the amount of money invested in each loan at a specific date
I was also interested in the account balance at the end of the day. Ideally, I should have a zero balance at the end of each day and all my funds should be invested in loans.
So, this is what I found out.
If my money was invested with 100% efficiency, the repayments line(orange) would overlap perfectly over the investments line(grey). It almost does, but not quite.
Even more, the account balance should be zero at the end of every day. I don’t want funds lingering in my account that is not invested in anything. This is how my balance looked over the last 4 months.
In the 120 days I’ve been investing, 68 days were ended with me having an uninvested amount in my account balance. In total, this amounts to 310 EUR in my account that could have been invested in some loan and earn interest, but they weren’t.
If these funds were invested in 15% interest loans, with monthly payments, I would have received so far 6.13 EUR from interest. It doesn’t sound like much, but that’s 7.35% more profit I could have gained if my portfolio was ideal.
This happened because my auto-invest profile has a minimum loan limit for investment set at 10 EUR. If the balance in my account is less than 10 EUR, that money won’t be invested. I also had a fluke for 2 days in November when I set my minimum investment to 20 EUR while playing around with the auto profile. It was a bad idea and I quickly changed it back to the 10 EUR minimum.
Of those 68 days when I didn’t have a zero balance in my account, in 22 of them, the auto invest profile did investments, but it did them poorly. This means I received some payments on the current investments, my balance went up above the 10 EUR line, Fast Invest invested the amount, and then I received some other payments, but these were less than 10 EUR, so they didn’t get invested anymore.
If the auto invest tool was smarter, it would first gather all the payments and then invest. Maybe Fast Invest will work a bit more on the tool and make it more efficient.
My feeling so far on the platform
There are good and bad things on Fast Invest, but mostly good. I’ll continue to invest a part of my funds on the platform and see how my investment performs.
What I like
– The interest rates are great. 15% is among the highest you can find on most of the p2p lending platforms
– Not only interest rates are great, but the default guarantee also makes sure those instalments are paid after 3 days if the borrower is late with their payments
– The buyback guarantee, while not ideal, is a good insurance policy that you can exit your investment at any time you want to
– It has an auto-invest tool. While it’s not great, it makes your life easier
What I don’t like
– I don’t know too much about the loans. If some of the loan originators would be in bad shape, I’d like to know and stay away from those loans
– There’s no secondary market. I’m sure I’d get a better deal on the secondary market if I would sell my loan there instead of selling it back to Fast Invest and forfeit any earnings I received from that loan. This being said, if these 2 were exclusive, I’d rather have the buyback guarantee than a secondary market.
– The auto-invest tool doesn’t act in your best interests. It will always pick up the lowest interest rate loans from the market, maybe because Fast Invest wants to keep a list of attractive loans available for new investors accessing the platform. It also has some inefficiencies, because it doesn’t wait to collect first all the payments before investing and you’re left with small amounts of money in your account that are not invested.
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