Bondora showed up in my portfolio as one of the first P2P lending platform back in 2016. It was the first time I invested into P2P lending. And I started with Mintos, Twino and Bondora – back than already trying to keep my money diversified. And our relationship was okay so far.
In 2018 Bondora launched their product “Go & Grow”, which is very easy to work with and gives you a “fixed” interest rate of 6,75%. This rate is fixed for Bondora, as they are not paying more thant 6,75%. But by checking their terms and conditions you would recognize that they do not fix it to investors. As far as I know I has never been less than 6,75% for investors.
Bondora’s story starts with an end
There were days back in 2018 and 2019 where I was really upset about the figures in my Bondora dashboard. It seemed like most of the loans were failing and I just received a tiny bit of the scheduled interest income. I started shifting my investment to their new product Go & Grow with 6,75% interest rate. That was more, than I received with their usual investment strategy. It was just 5,72% some days and was still faling.
Go & Grow was really easy. And Bondora was the first to launch such an easy product for investors. Just pay your deposit into it (or transfer your funds from the “usual” Bondora account) and push “start”. But after a while I was to be honest, more attracted by other P2P platforms. It was mainly because of the bad interest rate in my main account at Bondora.
You are able to sell your account
I do not know, when it was exactly, but one day I found the option in my Bondora account to seel it back to Bondora. I was like “eh, either I seel my loans on the secondary market or all in one back to Bondora” – this was more or less a nobrainer. So I sold my whole loan portfolio back to them. I received the sum one or two days later on my account and was happy.
Since October last year I wanted to re-enter Bondora for a simple reason: diversification! The current situation in P2P lending is not really suprising me. The P2P market was overheated since a while and this is what happens after overheating. So it is quite usual. I awaited the financial crisis in P2P lending in a different way, but I am not shocked from what happend now.
To get prepared for this event I wanted to spread more investments among the P2P platforms. And within this scenario Bondora played a role again. Honestly I was just concentrating on Go & Grow and nothing more on the platfrom. But this would have been a good (new) part in portfolio and would spread the risk to one big more platform.
For some reasons it has not worked out yet
I cannot really tell you, why I have not made my investment yet. Maybe the sunshine, maybe less snow than usual – there is no specific reason for it. And this card “Bondora Go & Grow” is in my trello-board for quite a long time now. So why not start right now?
2020 is a good year to invest – just as any year is, as long as you invest your money wisely. I do not know what is happening on the stock markets soon. Therefore I decided to deposit my outcome of my April challenge at m old Bondora Go & Grow account. This is somethiny I was happy with before. Why not start a new trial and increase the diversification?
Right, there is no reason against this idea. And this is why I will send a fixed percentage of my income to my Bondora account during April and see, to what total it will sum up in the end.
Who is Bondora and what are they dealing with?
I do not know, whether Pärtel, the CEO of Bondora, sees any connections, but Bondora was as well founded in his student residence. Just like Facebook – so maybe Pärtel is the estonian version of Mark Zuckerberg. Founding a P2P platform in 2008 was a great idea – for sure. All over the world people were dealing with the financial crisis. But wait, what was the intention of Pärtel back then?
As it was getting less easy to get a loan from the bank, Pärtel thought about a platform. A place, where investors with money could meet lenders, who needed a loan. And everything at a time, where there was less trust to banks due to the events of the financial crisis. Seems, like this idea was brilliant.
And it was. Bondora gained customers and investors and made everything themself. They were offering the platform, where people could place their wish for a loan. With some general conditions those people were able to receive their loan from investors. Of course, they had to pay interest rates.
The rise and no-fall of Bondora
With its 12 years of experience now Bondora is quite an old lending platform. What was and still is the advantage of Bondora?
Pärtel says: “Speed. It is well known that traditional banks are often very slow when it comes to dealing with customers, even today. Those who apply for a loan usually have to do the following: make an appointment, gather mountains of documents, drive to the branch, let a consultant interrogate them for an hour, wait for the consultant to copy all the documents and send them to the head office, wait another six weeks for a reply and then you have three days to accept the offer if the application is not rejected. The customer experience is terrible.”
And even more: “If someone applies for a loan from Bondora, they get an immediate decision and don’t even have to leave the house. We can do this because our credit model is much more advanced than that of the banks and we focus on automated solutions wherever possible. This way we create a seamless experience for our customers.”
Today Bondora is a platform with nearly 140.000 investors and a total lending volume of more thant 370 million Euro.
From the customers point of view: What makes Bondora special?
Usually customers need loans immediately. As they are surprised by any event, they need money to solve their problems. One solution might be to contact their bank. But this would mean you have to bring a lof of copies of your life, your salary, your costs and whatever with you. Afterwards, as Pärtel said, the decision will be made within days and weeks.
The other solution is to contact services like Bondora. You still a lot of stuff and documents, but this is necessary to get rated. The more you bring, the better people are able to calculate their risk. If you already have ten loans from different banks and have not paid them in time, investors will charge you a higher interest rate. When it is your second loan and you always paid in time for the first one and are able to show with your documents, that you have enough money to pay the loan rates, the risk is less high.
Bondora tried to automatize things as much as possible. Documents, ratings, events in your life – everything could possibly be sorted by an algorythm. This helps to speed up the answer to the request and is also saving a lot of time for both, the potential lender and Bondoras workload.
Bondora – a super-smart service right on the button
In my eyes Bondora still offers a very good service to their customers. As I am not a customer I have to rely on reports and reviews of the company, which you can search on Google.
And there is another indication: Bondora is still there! And they are still rocking the market.
So it seems like Bondora is doing a lot right and correct to be the best opportunity to customers. And Bondora is able to keep investors on the other side of their platform as well. Therefore it can work smoothly and bring advantages to both sides. They add value to the market, which is essential to survive (also stormy times like 2008 or 2020).
Bondora 2020 – why you should invest here!
Guess, I made it sounding like an advertisement. But those facts are just, what you find on the internet. Additionally there is my personal idea, how things work together at Bondora as well as work out for any sides. Maybe you have another conclusion to their business model? Just give me a short comment below.
I was not really unhappy with Bondora over the years. It was more the feeling of “Well, I am supposed to receive more (as shown in the statistics)”. And this is, why I left Bondora after three years.
Today, in 2020, I am happy to still have my investors account and be able to return to the platform. I decided to have in try in 2020 again with Go & Grow and maybe a smaller part with the Portfolio Manager Pro. This tool gives you as an investor the possibilty to adjust your investment strategy. I never used it before, was I have not invested more money into Bondora. But now I want to give it another try by adjusting it myself.
Three reasons to invest
Just as I mentioned in the topic, there are three main reasons for me to start over with my investment again. Today I would like to introduce those to you. Maybe this is interesting for your portfolio as well?
Please note, that those reasons are “my reasons”. I am just an investor and I am on the hunt for passive income. I do not want to have the highest interest rates, but the most sustainable and substancial passive income. Therefore I need sources, where I am able to diversify as much as possible to lower the risk of loosing money or decreasing income stream.
#1 Easy going – Go Grow is an auto-invest pro
I would give this title “auto-invest pro” to Go & Grow, as this product was launched years before Mintos Invest & Access. You are not really able to compare those two products in my eyes, but the idea behind both is making investments easier.
Until today you have to adjust an auto-invest on nearly every platform. Here you have to choose where you want to invest in – and of course which is no investment case for you. And with every new loan originator, loan type, new rating or whatever, you have to update your auto-invest. This is great and gives you a lot chances, but you are forced to follow your P2P investment minimum once a month.
Go & Grow is even more easy than the auto-invest. You are just depositing money to your account, which is another account as the “usual” or “normal” investors account at Bondora. And than you just have to activate Go & Grow ONCE in your Bondora backend. From here, the platform will do anything for you.
It works like a big investors account. All deposits are brought together and invested from Bondora on the market. So you do not own loans yourself, but the Go & Grow account does. Therefore you are able to see, which loans you are invested in. But usually people who want to save time while investing are not interested in those details.
#2 Investing at up to 6,75%
Go & Grow offers investors an interest rate of up to 6,75%. If you check the terms and conditions you will find a part, where Bondora says, that this rate is not fixed. So it is NOT a daymoney account and it is NOT sure, that you will receive this interest rate for the rest of your life. And still – P2P investments are risky! Go & Grow is making things easy, but not less risky.
I can not remember a single month, where Bondora has not paid the 6,75% to their investors. But to be honest, during the Corona crisis there was something like a bankrun. This made Bondora act within their agreements to not pay you full investment to your bank account within some days. Once again, Bondora Go & Grow is no daymoney account. You should not invest money there, which you might urgently need.
In my eyes the reaction of Bondora to split the withdrawals to some percent of the whole sum is completely okay. I mean, still we are receiving 6,75% on our investment, which is some kind of picture, that there is still a risk. I can not understand why some investors blame Bondora for keeping their money. The P2P platform tries their best to regroup the P2P loans to other investors. But as Bondora is just the agent for those loans, they have to find new investors for the loans being sold through withdrawals.
Usually the yield from 6,75% is not too attractive compared to other platforms. But as Bondora makes investing super easy and allows withdrawals within the investment period, Go & Grow is something I do not want to miss in my portfolio. Additionally Bondora is one of the biggest platforms in Europe, which gives me quite a lof security.
#3 Big diversification and easy withdrawal
As I already mentioned in the last paragraph, my invested investment is more or less available. If you invest into a P2P loans at Bondora (or any other platform), you are agreeing to contract. Depending on which factors you are searching for your investment, the duration is between some days up to several years. So if you invest into a loan of e.g. 24 months, you will receive your investment plus interest within the next 24 months.
Sometimes in life things change. But with this contract you will not be able to get access to the full amount from your P2P loan. Several platforms solve this “problem” by installing a secondary market. There you are able to offer your part of the loan to other investors. If you find somebody to buy it, you will be paid your money immediately. But if not, you still have to stick to your agreement.
Go & Grow is different from this. On the one hand it makes investing easy, but on the other hand you are just investing into something like a fund. And this fund is doing the agreement of the P2P loan. Depending on how much money is invested and how many new investors decide to invest into Go & Grow you will be able to withdraw your investment even faster.
Every time to Bondora Go & Grow “fund” is able to pay parts of your withdrawal request from their cashflow, they will. This is great as me as an investor do not have to stick to agreements with a third party. Go & Grow is managing it for me and still pays me 6,75% interest on my investment.
Why Bondora Go & Grow needs no Buyback Guarantee
Asking investors about Bondora and Mintos you will often hear about the Buyback Guarantee from Mintos or their loan originators for loans. Never mind, it is a great deal for investors. But this guarantee is just as good as the company offering it. Bondora decided to move into another direction. In an interview Pärtel Tomberg, CEO of Bondora answered to the question about the Buyback Guarantee:
“There are no plans to introduce such a “guarantee”. If you offer a buy-back guarantee for investments over 100 million euros and a balance sheet of one percent of that amount, it is more of a marketing gimmick than something you can trust. Instead, serious investors prefer to know in advance what return they can expect. So we simply adjust their expectations accordingly when they start investing.”
Clarifying things seems to be their focus. That sounds good for investors. When comparing Mintos and Bondora you have to put (up to) 6,75% without restrictions into relation to 11% from Mintos Invest & Access including several restrictions. There is no right or wrong, but investors have to devide which way they want to go.
How does Go & Grow diversification works
Let’s call it the Go & Grow fund, which is the partner of the loans. Keeping themself able to pay withdrawal request their moneymanagement is organized as Pärtel describes it in the interview:
“The loans in the Go & Grow portfolio are spread across all countries and all risk levels from AA (low risk) to HR (high risk) […] The ceiling of 6.75 percent has been withdrawn so that we can give our investors a reliable return they can rely on from the outset, compared with a more volatile product […] If higher returns are generated, these are reinvested and added to the reserves to ensure a continuous return and enable faster liquidity for our investors.”
That means, that from their average interest Go & Grow is building something like a withdrawal fund. Therefore their product is just able to pay 6,75% interest to their invest. At first this looks like a bad deal, but economically it is clever. Investors do know from the very moment, what their interest is and Bondora is taking care that withdrawal request are paid within a scheduled time far before the loans are ending.
Do not care about P2P, but focus on your target
I wanted to show, that investing via Go & Grow is not less complex than the typical P2P investment. As the Go & Grow management is holding investors a lot of work and decisions away, you should focus on anything else. The tool itself offers you something like an investment target, which you can adjust. In my eyes this target tool is very good especially for P2P beginners. As well as experts they might adjust their tool to the sum, they want to to reach. And afterwards they do not have to care about the rest, but just work on reaching that target.
It is not that easy to give away your financial control. And you do not have to, when using Bondora. But if you want to make investing easy and still receive an interesting yield of 6,75%, Bondora Go & Grow is one the best possibilities to work with. As Pärtel mentioned it in the interview “Go & Grow is especially for investors aiming for passive income” – and it looks exactly like he described it.
A huge archive of reports and questions
There is one thing I have to add. It might came short within this blogpost, but here I focussed on investing as simple as possible and wanted to introduce Bondora Go & Grow to you. Due to their 12 years of experience Bondora they collected a lot of data. There are a lot of questions as well as financial statements available.
Before investing you might check their FAQ in several languages. Additionally their blog is full of interesting blogpost and their support gives you a lot of information about their products and anything else which might be interesting for investors. I think those tons of content are worth to read and absolutely not usual for P2P platforms. Therefore I wanted to let you know about it, as it is another indicator of trust into the platform.
My summary and my special No-Spend-Challenge
First I would like to end with a conclusion about Bondora. I was invested with their usual Portfolio Manager before until the beginning of 2019. Somehow it was not really working for me, BUT it was mainly me making mistakes. I changed the Portfolio strategy too often and therefore had quite a lot of bad loans in my portfolio.
Go & Grow makes investing super easy. And this is why I will have another try and invest at Bondora. Their trackrecord is great to read and see and is far more, than I made over the last years on my own at Bondora. Just as Warren Buffet mentioned it:
“Only invest in things you understand”
I invest in a fund, which is managed by people who know, what they are doing.
Bondora made a post on Instagram the other day. It was about a No-Spend-Challenge. The idea is to check you daily, weekly and monthly expenses and cut those, which are not worth it. By saving the money you are able to invest it and generate passive income from it.
Will you join the challenge?
Who ever wants to join the challenge is warmly welcome. Bondora Go & Grow is a great tool to invest your money, which you saved. I decided to do the challenge during the next 90 days and invest anything I saved. Let’s see what will be the final sum. I will keep you updated on my Instagram channel.
You do not have to take the challenge. But starting the new quartile with another great challenge might be a great kick off to increase your passive income. And if you do not have any passive income until now, it is a great moment to start with Go & Grow and your first passive income stream. Keep my updated below in the comments or on Instagram about your progress!