Health, Wealth, Relationships, Wisdom
Over the past few years I’ve been doing a ton of research on investment opportunities and asset classes.
An opportunity that I came across is investing in startups.
However, I haven’t really taken a big dip into this asset class. I’ve conducted some small investments to test the waters, as I always do with any investment I’m considering. I’ve learned quite a bit but I am not convinced that I should be investing a significant portion of my net worth into this.
Mintos is a peer-to-peer lending platform in Europe. Like many other FinTech companies of this type, it is based in the Baltic region; in Latvia specifically.
Currently, Mintos has four offices employing more than 160 people in Riga, Vilnius, Berlin and Warsaw.
Mintos started operating in 2015 but has experienced rapid growth due to getting many things right and becoming popular with financial bloggers due to its ease of use and transparency.
The average interest rate is around 12%, with close to 500,000+ investors registered worldwide and 600m euros under administration.
Another important statistic to look at is the loan book growth, and here again, Mintos is doing very well as can be seen in the following screenshot.
The total money invested so far is higher than 8 billion Euros, which is a staggering number for such a young platform. There is no doubt that Mintos is the biggest player in P2P lending in Europe at the moment, with over 50% market share of the total p2p lending market. There are some good competitors, but none of them provide the security and track record that Mintos does.
The management team of Mintos is clearly displayed on the website with links to the Linkedin profiles of each person on the team. Mintos is currently the biggest employer in the P2P lending space.
Being able to view the team and also check out various YouTube videos with their CEO Martins Sulte enhances the feeling of transparency and peace of mind. I am one of those who take a look at these pages on a website and use them when judging whether I should invest on a platform or not. Everything counts.
I have personally interviewed Martins on my podcast Mastermind.fm, so be sure to check out that episode if you like podcasts.
Mintos is a platform that is in line with EU law, so when you invest you won’t have any trouble with your accountant or tax authorities back home in terms of explaining what you are doing.
Finally and very importantly, Mintos as a company is profitable, so they are not only running on investor money but are actually turning a profit, which means that they have a much higher chance of standing the test of time compared to some other competitors that are still in startup mode.
The biggest number of investors come from Germany, Spain and the Czech Republic respectively, but this is mostly a reflection of those countries’ familiarity with this type of investing. There are more than 340,000 investors that have used Mintos and they come from 90+ countries.
More than 60 lending companies offer their loans on the Mintos platform, with over 25,000 people working at these companies and spread over 33 countries, so you can have a global reach when investing on Mintos.
The company supports 10 languages via its multilingual support team, while the website is available in 6 languages and there are loans available in 10 currencies.
In May 2019, UK lending platform Lendy (previously known as SavingStream) went into administration following an announcement by the FCA.
This didn’t come as much of a surprise to many investors on this platform since things had been going downhill for some time. However, it’s always a sad moment when a platform you’ve invested money in goes out of business, possibly taking with it your money.
It’s also a moment to learn some lessons that will serve us well for future investments.
Lendy was a platform where property developers could apply for and obtain bridging and development loans. Most of these loans returned 1% per month and Lendy sometimes paid bonuses on loans that were overdue or simply defaulted. The loans were for the ranges of 3-12 months however many of them ended up defaulting or running for much longer than agreed.
These loans were secured against property or land with LTV ratios of 11-70%. There was also a discretionary provision fund that allegedly held 2% of the entire loan book in reserve.
All loans were secured against property or land. Lendy used to loan against boats and other items but they veered away from these types of loans in favor of property developments. The loan-to-value ratios on the properties and land ranged from 11-70%.
According to estimates, around 20,000 investors were operating on Lendy, with a total of ÂŁ165m invested in the firm at the time of its closure. The platform had offered returns of upwards of 12% before things went south. It had been operating since 2013.
The money investors had invested in loans on the platform is now in jeopardy. Many investors also had uninvested money on the platform, and there are also doubts whether that part of their funds can be obtained eventually or not.
Concerned investors have launched the Lendy Action Group (LAG) that has the following aims as stated on its website:
ORCA Money’s chief executive Iain Niblock has slammed failed peer-to-peer platform Lendy as a “typical example of poor P2P lending”, as he urged investors to seek out less risky loans.
Niblock who also co-founded the P2P investment aggregator and analysis firm said that it was “no surprise that Lendy had gone into administration, citing the platform’s “extremely poor” loan book performance and regulatory issues, which had been a cause for concern among investors for some time.
“Disappointingly, the lender was at one time one of the more popular UK P2P platforms with cumulative lending volumes reaching £428m,” Niblock added. “Over 22,661 lenders were attracted to its simple one percent interest per month offering.
“The platform grew rapidly in 2016 with cumulative lending growing from £79m by the end of 2015 to £271m by year end 2016. The company has suffered from extremely poor loan performance with worryingly high numbers of loans in defaults. Currently, on the platform there is £97m worth of loans in default and, only £65m of loans repaying.”
Now that an investigation is underway, it has become apparent that there was foul play by the owners of Lendy, Liam Brooke and Tim Gordon (see video of them further down):
Detailed investigations have been undertaken into the Company’s affairs during the period covered by this report, with the assistance of the Joint Administrators’ instructed solicitors Pinsent Masons LLP. The investigations have included carrying out reviews of the Company’s books and records, performing detailed analysis of the Company’s bank statements and reviewing the results of key word searches of the c480,000 Company emails held by the Joint Administrators. The Joint Administrators have now also carried out interviews with both Liam Brooke and Tim Gordon, the former directors of Lendy. The investigations have been concerned with a number of transactions, most significantly payments of approximately £6.8million that were paid to entities registered in the Marshall Islands for apparent marketing services carried out for Lendy. It is the Administrators’ position, however, that these payments were ultimately for the benefit of Liam Brooke and Tim Gordon. As a result of these investigations, on 1st June 2020 the Joint Administrators made an application to Court for a worldwide freezing injunction to be granted over the assets of Liam Brooke and Tim Gordon, as well as proprietary injunctions on the properties owned by companies linked to the directors, RFP Holdings Limited and LP Alhambra Limited. The Order was granted on the 4 June 2020. Proceedings have now been commenced against Liam Brooke, Tim Gordon, RFP Holdings Limited and LP Alhambra Limited. Owing to the nature of these claims, the Joint Administrators are unable to provide further information at this time. The Joint Administrators are continuing to investigate the affairs of the Company, however again, we are unable to provide further information at this time so as not to prejudice these investigations.
It is quite evident that they were scamming investors, as can also be indicated by this other article.
So let’s talk about those lessons I mentioned earlier. One of the biggest reasons behind my investing in P2P platforms and real estate crowdfunding is to learn how to invest as well as analyze my feelings when an investment is a success or when it tanks. The knowledge I get and the awareness of my feelings will guide my investing decisions further on in life, when being careful with my money will be of even more paramount importance due to aging, lower earning potential, and the necessity to support my children.
Investing in the stock market carries inherent risks. Just like gambling, it involves the risking of capital in the hope of future financial gains. Both involve speculating on an outcome that can’t be guaranteed – however, there are also some key differences to bear in mind. Let’s take a look at the similarities and differences between gambling and investing.
Both gambling and investing offer the chance to fall back on a safe option. For gamblers, this might be playing on slot games that have a high payback rate – though offer less than you might stand to win at a high-risk slot. In blackjack, there are certain approaches to the game – and ways of budgeting – which can make a big difference to the house edge you’re up against, and how much you walk away with.
For example, the Martingale means you double your previous stake for every losing bet you make – so if you eventually win a hand you’ll have adequately compensated for your losses. We’d recommend putting these to the test when playing American blackjack before taking the table for real. Who knows, you might even prefer the experience, as so many gamblers do.
In investing, you can also choose to take a punt on tried-and-tested shares that have been rising in value incrementally over months – as opposed to throwing all your eggs into the same basket and investing in a start-up.
A common question in the property scene is whether one should buy a south or north facing property.
South facing provides the best conditions for sunlight, considering factors like the difference between morning and afternoon sun. Suitable lighting and direct sunlight impact directly in a very significant way many things from mood to electricity costs. A south-facing apartment tends to be warmer in winter, and breezy and not as hot in summer.
You should also think about how you are going to use the house? Are you a night owl or an early riser?…..sunset or sunrise? How will you use it at different times of the year? Now that so many kids go to daycare and most parents work, many prefer a West-facing house or apartment because you get the sun and light in the evening when you are home from work.
However, when buying a property as an investment, it might be worth thinking twice about automatically going for a south-facing property. A study in Japan found that North-facing property is actually a better deal if you plan to resell that property.
On average, north-facing units tend to increase in value after purchasing from the developer, while South-facing units tend to depreciate.
This is an interesting point to consider when you are looking to purchase a new apartment from a developer.
Data on over 196,000 apartment sales from 2006 to 2010 was collected by Attractors Lab. The price of north-facing units on the second-hand market increased by an average of 11.4% from their original price when new.
The price of south-facing units, however, decreased by an average of 5.4% from new.
Some of the reasons for the change in prices are:
I’ve lived in both south and north facing apartments in Barcelona, and found advantages and disadvantages in both; I personally don’t have a firm favorite if I have to choose between the two.
Do you prefer south or north facing properties? Why?
