Using P2P Lending To Reach Financial Freedom

P2P-Lending Platforms For Passive Income

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Peer-to-peer-lending platforms are known to be passive income. Hence auto-investment tools are available on most platforms. Likewise, I will be discussing why I have chosen the below-mentioned p2p loaning platforms.

On this page, I will discuss the reasons why I chose the platforms from my point of view. Therefore the description of the platforms will only be mentioned briefly. To find elaborating material of each platform, go to the “reviews” section.

Passive Income And P2P-Lending

The idea of having passive income is appealing to me. I like the fact that when I sleep, at work, out with friends I earn money. Regardless of what I am doing, I am getting an income from the investments. Furthermore, the nice thing about p2p-lending is it uses the compounding interest. Which means when investing 1 euro at 10% interest you get 1,1 euro – Year 1. The next year you invest 1,1 euro and gain 1,21 – Year 2. This compounding of interest will accrue to a lot over the years. Looking in the graph below, 1000 euro becomes almost 7000 euros over a period of 20 years. This is with no additional deposits.

Compounding interest over 20 years, with principle of 1000 euro.
Compounding interest over 20 years, with principle of 1000 euro.

By adding extra funds to the platforms the compounding value will be much greater. The exponential growth will be as is, however the numbers achieved will be much higher.

You can also try to make the calculation yourself with my P2P lending calculator

P2P Lending Platforms For Passive Income

Envestio

Envestio is quite the opposite of both Fastinvest and Mintos. Where Mintos and Fastinvest are providing primarily personal loans, Envestio is focusing on the corporate/business segment of the loan industry. They provide returns of up to 22% and averaging at 18.73%, while giving credible information to each loan funding. This is of course appealing when the other platforms are generating returns of 12-14%.

Envestio investor statistics.
Envestio investor statistics.

The increased returns will typically come with higher risks. Yet, with the information provided to each project/loan on the platform. You can make educated estimates as to the borrower will pay back the loans. I have yet to experience a borrower not paying back the loan. What is mainly different from the other platforms to Envestio, is the fact that Envestio only publish a couple of loans each month. While not having an auto-investment tool Envestio becomes less of a passive income. However, you are encouraged to educate yourself before investing blindly. Furthermore, Envestio is the loan originator. Hence there is no way to diversify among loan originators.

You can read my Envestio review here.

Mintos

Mintos is a very customizable experience when investing. However, Mintos provides a much higher level of detail. You can see the borrower’s interest rate, your interest rate, which loan originator provides the loan, etc. The details are close to unlimited. Some information you have to look for. It is not all displayed on the front page. For example, some loan originators pay interest at the time of a delayed loan.

Normally when the loan term is up, there is no more interest to be gained (hence the agreed amount). Some loan originators however keep compiling the interest after the agreed loan term, if the loan has not been repaid. An example of this can be seen in the picture below.

Overview of interest income on delayed loans from loan originators.
Overview of interest income on delayed loans from loan originators.

You’re in control

Within Mintos, you have more control over which attributes you want. E.g. you might want a very safe portfolio. Hence you can use Mintos’s “Mintos rating”, to control which loan originators you want to invest with. However, you might want high returns which would compromise the safety risk of your portfolio.

What I did not like was the low returns which Mintos provides. When I started investing in Mintos, my return was ~10 percent. This can be considered a high return in comparison to stocks, however, it is low compared to other p2p-lending platforms. Mintos just offers high customization, which I really like. Hence why I can compromise to a lower return.

You can read my Mintos review here.

Fastinvest

Fastinvest was the first p2p-lending platform which I have ever used. I started with the platform based on its simplistic design. The first thing you meet when visiting Fastinvest.com is their profit calculator. You can play around with the amount you want to invest, and the time frame you think of investing. Giving you an estimated profit/growth calculating. This was an extremely good initiator for me. I could visualize the profit I potentially could gain.

Fastinvest's profit calculator
Fastinvest’s profit calculator

When creating an account on Fastinvest you are met with a simple layout to administrator your own site and loans. When you log-in you are 1 click from everything you wish to know regarding your profits, investment and personal information.

Furthermore, Fastinvest was teasing with returns of up to 16 percent, with 14 percent being the average. When starting in stocks and expecting 6-7 percent returns, 14 percent is considered very high.

You can read my Fastinvest review here.

Grupeer

Grupeer is an innovative platform. They are trying to incorporate multiple elements from the P2P lending industry. The three different types are business loans, development loans and something called Grupeer Stability Fund.

Grupeer has loan originators like Mintos. All the loans are protected with BuyBack guarantee. This applies for both the loan deals and the development projects.

The Grupeer Stability Fund is for investors to purchase square meters in a development project to secure stable rental income. Grupeer Stability Fund is crowdfunding since you are not lending money to anyone.

The average interest rate on Grupeer is 13,41%. This is a competitive return compared to many other P2P lending platforms.

Conclusion

To conclude the p2p-lending platforms I have made three different decisions. Fastinvest is simple for a beginner to understand how the p2p-lending works. Mintos is for the more advanced who wants to customize their portfolio and make great diversification. Envestio is a high yielding platform for whose willing to take bigger risks. These are the p2p-lending platforms I use to get passive income.

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