When you use a peer-to-peer loan investment platform such as Mintos, it is essential to set up auto-invest so that you avoid cash drag and lots of manual work.
Cash drag means having cash standing idle in your account. This is typically due to loan and interest being repaid back to you, which means that the cash will be in your account waiting for you to go back in and selecting what you want to invest in.
Obviously manually selecting thousands of loans to comprise your portfolio is a very inefficient way of doing things, although it might be a good way to test the waters if it’s the first time you are dealing with a peer to peer loan platform. It is perfectly OK to invest a set amount and then just wait a month or two to judge the results of your investment and learn how the platform works. Once you’re confident about the platform, you can then set up an auto-invest strategy and be well on your way to passive income.
You have to be careful when setting the auto-invest parameters on Mintos, because the biggest risk you face is that of a loan originator going bankrupt, and that has happened in the past. Check out the Mintos lender ratings post on Explorep2p as well as the Mintos loan scanner to see which are the most trustworthy lenders on the platform.
In 2018 Mintos also introduced risk ratings for loan originators offering their loans on the marketplace. The Mintos Ratings are on a scale from “A+” to “D”, representing the lowest and the highest counterparty risk respectively.
A German guy created this Google Sheet which is automatically updated with the latest interest rates from all Loan Originators on Mintos. It’s really nice to get an overview of the current and past interest rate levels.
Mintos Investment Strategies
Investment strategies are predefined Auto Invest portfolios that will help you achieve your investment goals with just a click of a button.
Short-term strategy
The short-term strategy is perfect for investors who only want to invest their money for a few months, but still want a well-diversified investment portfolio to balance their risk and return.
This strategy meets all of those requirements and provides the quickest return on your principal investments. The strategy will only invest in loans with maturities of three months or less and with an annual gross interest rate from 8%. The investment strategy will include loans with and without the buyback guarantee.
- Perfect for investors who only want to invest their money for a few months
- Includes loans with gross annual interest rate from 7%
- Only has loans with terms of three months or less
- All applicable loan originators included
Diversified strategy
The diversification strategy is perfect for investors who want to build the most diversified loan portfolio across different borrowers, loan types and maturities, loan originators and countries. Investing in loans with varying degrees of risk is the most basic – and effective – strategy for minimising risk. The diversification strategy will invest in all loans available on the Mintos marketplace and you can expect an annual gross interest rate of 12.5%*.
- Provides the highest level of diversification – best balance between risk and return
- Includes loans with gross annual interest rate from 8.5%
- The weighted average loan maturity is 25 months*
- Includes all loan types, loan originators and countries
Secured loan strategy
The secured loan strategy is perfect for investors who are wanting to achieve their longer-term investment goals by investing in loans which are secured by collateral. The loan-to-value (LTV) ratio of loans in the secured loan strategy is less than 75% and you can expect an annual gross interest rate of 12.4%*.
- All loans are secured with collateral and the loan-to-value (LTV) ratio is not greater than 75%
- Includes loans with gross annual interest rate from 7%
- The weighted average loan maturity is 40 months*
- All loans are secured with collateral, includes agricultural, business, car, mortgage and pawnbroking loans
* The weighted average term is based on past data and is calculated by averaging the maturities of all applicable loans. The investment strategy will invest in loans based on their availability on the marketplace. The actual maturity of loans in any individual portfolio may vary.
Investment strategies will invest in loans based on the criteria as set out in the investment strategy. To diversify your investments, the strategies will invest EUR 10 per loan across different loans from different loan originators, countries, etc. Diversification will be based on the outstanding funded portfolio of loans that correspond to the criteria of the particular strategy. If there are no available loans that suit your selected investment strategy, there may be some uninvested funds until new loans are placed on the marketplace.
Unfortunately, at the moment, there is no way to choose an auto-invest strategy that features only loans with a buyback guarantee. For this reason, I advise setting up a custom auto-invest strategy instead of using the preset strategies that Mintos provides as described above.
Custom Auto Investment Strategies
By setting up auto-invest with a custom strategy, we are looking to combine the benefits of compounding interest with the safety of the buyback guarantee.
The first step when creating a custom strategy is that of choosing the loan originators you want to invest in. Keep in mind that there are several loan originators that are not profitable and are relying on their seed investment runway until they do achieve profitability. I prefer to use those that have already proven that they know what they are doing and are turning healthy yearly profits.
We have to keep in mind that peer to peer loan investing is in itself a risky proposition, so there is no sense in increasing that risk by going for unprofitable loan originators. Once you consider all loan originators, you might end up with 15-20 of them that you are comfortable investing in.
Beyond that, you can set up a bunch of other parameters like the loan duration, rate of return, countries, loan types, whether they have buyback or not etc.
A lot of these parameters will depend on your goals, so there is little sense in telling you my exact parameters, because even then, I go in and change them every now and then depending on what I want to achieve during a particular period.
However, if you have any questions on particular parameters, let me know in the comments section and I’ll be happy to answer you.
I’ve been able to achieve 11,42% returns during my two years of investing with Mintos.
I’ve personally invested more than €150,000 on Mintos and I’ve had great results, with my average rate of return currently standing at 11,42%. Not bad at all compared to leaving that money in a bank account dying a slow death due to inflation.
The earning opportunities on Mintos have only been getting better over the past year or so, with the average interest rate on the marketplace ranging from 11% to 13%.
There are nearly 400,000 loans on Mintos to invest in, with interest rates of up to 19%. If you have any questions about auto-invest strategies or Mintos in general, please leave a comment below.
Hi Jean,
Really good information you shared here!
I have one question though that is not covered: what diversification settings do you use in the custom auto investment settings where it says “diversify across loan originators”?
Some use for every loan originator the same share, as 2%, but does that even make sense, I’m wondering. Because originator A offers many many more loans than originator Z, for example. Like this, you would have to wait for a loan from originator Z, because you reached your 2% with originator A.
What’s your view on that?
Thank you very much!
Good question. I look at the ratings on Mintos as a first filter, and only invest on the top rated platforms. There are other websites that also review loan originators, so I look at those two, and finally I also take a look at the websites of the originators and their financial performance in recent years. I only invest in the loan originators that pass all the mentioned filters.