6.75% Return is too Good to be True, Isn’t it?
A Short Report on my Experience With Bondora Go & Grow P2P Loans
This article is for informational purposes only. It should not be considered Financial or Legal Advice. Consult a financial professional before making any major financial decisions.
Introduction
After I had been thinking for some time about where I could invest my money with relatively low risk, “safe” from inflation and with a reasonably high return, at least higher than the 0.01% that you get on a savings account nowadays, I looked around a bit on the internet. A term that I actually dismissed as dubious or unsafe came up again and again during my research, namely P2P loans.
One obvious question, of course, is what is peer-to-peer lending? Generally speaking, it refers to an online marketplace where those seeking attractive returns can invest in loans to individuals and, increasingly, start-ups and existing companies. ¹
I have always associated it with a lot of bureaucracy and effort. You have to look at how trustworthy the borrower is, what the borrower wants to buy, how much I should lend and most importantly — do I get my money back, with as high a return as possible.
I then stumbled across Bondora and its product “Go & Grow” via this YouTube video. Since this video is in German, I have listed the most important cornerstones/benefits of Bondora Go & Grow here:
- Good for beginners, as you need almost no previous knowledge
- Bondora has been around for 13 years
- There are no annual management fees
- A flat withdrawal fee of €1 is charged, this is independent of the size of the account
- Currently up to 6.75% p.a. yield, but not guaranteed
- With Go & Grow you do not have to manage individual loans
- No minimum duration: you can request the liquidation of your investment at any time
Even if this all sounds very tempting, you should always keep in mind that there is generally a possible risk with P2P loans.
Ready to invest
Once you have gone through the industry-standard KYC process, you can access your account and deposit money. This is done by bank transfer and usually takes 1–2 days. It should be noted that there is currently a monthly deposit limit of €1000 (read more about this limit here).
As soon as the starting capital is finally in your account, you can set up your Go & Grow. First you have to choose a purpose for which you want to save, but this does not affect the return:
When selected, you can also see a forecast of the profit that you could theoretically achieve with a constant return. I followed the recommendation in the video which I mentioned earlier and set a monthly savings rate of €30 and a starting capital of €200. If you keep this savings rate constant for 20 years, you can expect a possible profit of 8947€. Of course, you can still adjust these values upwards or downwards later and thus make more or less profit.
My experience so far
I started my investment on February 25, 2022 and have been depositing money every now and then when I had some left over for this form of saving. I also like to sell used items and then invest the proceeds in my portfolio. Therefore, my current account balance looks like this:
Currently I have already saved 1470€ and with a plus of €7.28 in just under one and a half months, I am already very satisfied and look positively into the future. At least I have the feeling here that my money is not becoming less valuable due to inflation and the low savings rates.
However, I would like to mention one thing: Even if the money can actually be withdrawn again at any time according to Bondora, it may be that the partial payout takes effect when a certain amount is withdrawn. This is how Bondora describes it:
Normally, when you request a withdrawal on your Bondora account, you’ll receive your withdrawal in one complete payment. But if partial payouts are activated, your Go & Grow withdrawal will be split into multiple daily payments. This protective feature is for your peace of mind and is only activated in extraordinary circumstances to help keep the return rate as stable as possible. Throughout Bondora’s 13-year history, it has only been implemented once. ²
Summary
All in all, I can say that so far I am very satisfied with the performance of this investment option. Of course, you also have to consider this option as a long-term investment, as I expect fluctuations in returns here as well. Nevertheless, I think that this variant can be another cornerstone in any portfolio in order to diversify even better.
As mentioned above, I have already made a profit of €7.28 in a very short period of time. Every day you wait and don’t deal with your finances, you actually loose money. That’s why I think it’s important to build up a good, diversified portfolio now so that you can make provisions for later.
Regarding diversification I spread my risk by investing in other P2P platforms, ETFs or cryptocurrencies as well, but more about that in my upcoming articles.
I hope I was able to give you a good insight into the topic and if you have any questions, I look forward to your comments!
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This post contains affiliate links. If you use these links to buy something I may earn a commission. Thanks.
References
[1] Bondora. (March 11 2022–17:42). — Peer to peer lending. https://www.bondora.com/en/peer-to-peer-lending
[2] Bondora. (March 11 2022–18:52). — What are partial payouts. https://support.bondora.com/en/what-are-partial-payouts
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