The purpose of this post is to understand weather P2P lending in Bondora is good or not.
I have invested 17.000 euros in this ”asset” and even though, Bondora shows 17.56% ROI for me at the moment which is great, i can’t tell if this investment is good or no. Each month i will share results
What worries me is defaults. Current total defaults is 2,254.78€ on 2016 March 7th and it constantly exceeds the profit made.
Basically if i will get 50% of the defaulted investments, i will be in a loss. I will keep updating this page so we will see the progress in Profit vs Defaults.
Also i have found one analytical article on Bondora
|Date||stated XIRR||expected return||Principal overdue||Defaulted||Profit||Withdrawals|
|March 16, 2016||19.08||14.24 - 14.61||2109||1396||1070|
|April 15||19.60||14.07 - 15.80||2635||1489||1329|
|May 15||20.48||14.20 - 15.74||4052||2025||1676|
|June 15||20.59||14.33 - 15.69||3097||2695||1981|
|July 16||20.48||14.46 - 16.11||3389||2704||2267|
|Aug 15||20.56||14.53 - 16.52||3833||3631||2585|
|Sep 15||20.24||14.46 - 16.17||4530||3841||2873||298|
|Oct 15||20.22||14.41 - 16.91||3947||4184||3122||300|
|Dec 19||18.79||12.27 - 16.16||5386||5584||3485||550|
|Jan 15||18.37||11.87 - 15.49||6588||6372||3574||0|
May 15th My newest strategy doesn’t give me many loans to invest in. And the very few i get are oversubscribed. Therefor May 15th there are 446 Euros in unused funds
having 20k on account and 20% IRR, theoretically i could take 300+ euros a month, which i started doing.
October 15th (Saturday). First thing i withdraw 300 again, but the interesting thing there are no loans on the market to be funded. Only auto-invest programs can do that. And the rules, unless you use API, to set are very limited. (Compared to Mintos).
December 19th. I have missed the November month. The defaults are still growing massively: they grow more than the profit.
17k deposited. Outstanding principal is 19k out of which 5.5k is defaulted. If i sold non-defaulted loans at their purchase price, I would be at a loss, though my return at the dashboard says 15%+ return.
- the auto invest program sucks. I stopped using it because sometimes when i see AB rating loans defautled, i check them – it is very obvious that they had too good rating – where with my experience i would have marked them as HR.
- one interesting notice: all my current defaults, defaulted on first payment. I do not have any defaulted contracts with second payment.
My defaulted contracts by the purchase date. Hopefully these are the last 🙂
December 22d. By my calculations, and theory that defaults are on first payment, i can say that i have reached (hopefully) that total defaults are 5764€. If my profits at this moment are 3.5k so i should break-even in 5 months from now, and in total it comes 7 months after i stopped investing and starting cashing out. If this happens after 5 months, it means that from then on i will start receiving profit and Bondora is good as a passive investment form. Even if it doesn’t earn double digit rate or return I will have a percentage of my portfolio at Bondora.
What is the Return on Spanish loans?
assume Spanish loans give 50% interest and 50% of spanish loans default to 0.
so if we have 10 loans for 100€. Total investment is 1000€, with 50% default our loss is 500€. Remaining 5 loans of 500€ in 5 years will generate 868€ + 500€ of principal = 1368€, so total 36,8% during 5 years comes to 6% annual return.
Personal Update 1 (December 27th) from my 75 Spanish loans, 33 have defaulted (44%) and average interest rate is 56% so my expected return on Spanish loans is greater than 10.2% which i think is ok. (44% defaul: 560€ principal on 1000€ investment generates 1068€ in 5 years of interest. total invested 1000, total received in 5 years 1628€. Also this calculation has upside of loan recovery). 7 loans with interest rate 72-76% has no defaults. 7 loans with interest rate 60-64% has 2 defaults, 7 highest interest 72-80% rate loans have 2 defaults as well. If i could reduce the default rate the returns could be drastically bigger
I can say that my manual picks of loans were better, because the defaults are lower than average for that country and the only way i can keep having same is start using the API.
Hand pick Spanish loans in secondary market, that are i
- in at least second payment
- interest rate 50%+
- XIRR 50% +
These are my picks:
I believe i should have none defaults in this group, therefor i could achieve 50-100% yearly returns. I will keep updated on this strategy and if it works – i will need to develop the API, so i don’t have to do that manually.
I was shocked to see my defaults increased even though i was not expecting anymore at the end of December, but i have missed something back then. What i am happy about is that my spanish loans with #strategy3 are not overdue or defaulted. I have another 375€ and i will invest them in same strategy:
total defaulted loans 6692€
bought another 21 loans on same #strategy3.
from first batch of this strategy none of the loans defaulted
Total defaults 7235€.
First defaulted loan from #strategy3 with only 10€ of principal. Skip this month investing and will do it in April.