A long waited update - what is my status and strategy
It has been quite a while since my last update. 2020 has been a very different year than the last one so far. I wish I could just uninstall it and then reinstall 2019 again, because 2020 definitely came with a virus! In the worst case I lost almost 19% of my crowdlending portfolio in a matter of a few months. It did not happen from defaulted projects or bad loans as expected, but from platform fails or possible scams. That is still to be determined. As you already know I choose to look at the worst case case scenario, unlike some P2P publishers, and that means that all principal invested and the accrued interest is completely gone. I have learned an important lesson in terms of the real platform risks of crowdlending. As investors, we need to know a lot more about these companies and I will do my part to deliver a lot for information in the future.
On the other hand, this year has also brought about some amazing opportunities! The last months I have been focusing a lot on stocks with discounts of 30%, 50%, or 70% on many shelves. The 13000 EUR I had set aside for this is now down to 4000 EUR. I had a feeling that something would happen in the market. Any investor did. It had to, after more than 11 years of bull market. But who could have imagined a pandemic like this with months of quarantines and lockdowns worldwide.
Never in my life have I experienced anything that comes even close to this. Some stocks have recovered somewhat in a short time and some of the tech stocks have skyrocketed during the crisis. It looks like we are almost back on 2019 price levels with some indexes. However, I don’t believe that it is over yet. It usually takes a little more time than a few months for everything to catch up and we could see another big dip in some parts of the stock market during 2020. A lot of other things could happen as well. The USD value is very high. The global real estate market will for sure take a hit, and depending on how long this goes on, travel will be restricted. As long as there are places in the world with a large number of new cases, travel and movement will be restricted and the countries that cannot successfully lower the number of cases fast, will hurt bad economically. I think that a lot can still happen. Just have a look at Brazil and the daily number of new cases.
Does it look like Brazil has been in quarantine for the last two months? Not really, right? For the first month people took it half way seriously. Now the number of people on the street and on public transport looks like a normal day out of quarantine. I am of course staying far away from anywhere with crowds like this! Restaurants, gyms and everything is still closed down, but clearly a lot of people are working behind closed doors. As long as there are still a lot of new outbreaks, the world cannot go back to normal. Even if things are opening up in Europe. USA, Russia and Brazil are still pulling big numbers and this will restrict travel and things going back to normal. The longer this goes on, the bigger the impact in the longer run. Just have a look at some pictures from the evening news here in Brazil. Does it look like Brazil is in a quarantine?
So what is my strategy in all of this?
I plan on visiting the platforms a lot more in the fall and spend a lot more time with the strongest and most promising platforms, when I can travel again. I still think crowdlending is an very interesting asset class and great for generating residual passive income. I already have all the contacts and I like traveling in the Baltics. It fits very well into my budget, opens possibilities to learn new languages, meet new people, and learn a lot about crowdlending. So I plan to spend a significant amount of time there each year, learning as much as I can and sharing it with you. There is still a lot of interesting topics to write about and, as investors, we need to dig a lot deeper into these companies.
However, for the last months I have been mostly focusing on other types of investing. Apart from buying cheap dividend stocks, I have been looking at real estate in Brazil for a few years. The Brazilian currency was historically low before COVID-19 and the last three months it has dropped even more. Just look at the buying power of the Euro here in Brazil at the moment! Very cheap! This is probably not the worst time to buy real estate in Brazil. However, the currency could recover fast. But for now, there are some very good options in my price range. I have looked at many different projects in the last months.
What specific real estate development projects am I looking at?
If you are interested in learning a bit more about the properties I consider investing in, these are the three projects I am currently looking into. They are all in very good central locations in one of the biggest cities in the world.
Well, enough about that for now. I will fill you in on how things develop on that front, in the the next few monthly updates. Please let me know what you think about me adding a bit of information on my other investments as well. Now, let us get back to crowdlending.
How will the purchase of another property affect my crowdlending portfolio?
In the start of March I stopped most of my autoinvest strategies. As I spend most of my cash on stocks, the money will have to come out of my crowdlending portfolio. I will need somewhere in the area of 31000 EUR depending on the price of the apartment and the value of the Real at the time of the transfer. This is about half the value of the apartment, but if I pay this amount up front, I can negotiate a good discount on the price and take advantage of the current situation. The rest can be split up in smaller monthly payments. Most of the money will come from Mintos, Peerberry, VIAINVEST, and Swaper. EstateGuru are long term investments and Crowdestor has a pause in payment due to their nature of having only business loans. From the rest of the platforms I will only withdraw smaller amounts. Where I withdraw the most money from is not a sign of which platforms I think are the weakest. It is simply the platforms that has the most liquidity at the moment. Later, I will rebalance everything with the amount I want on each platform like I have done earlier. Illiquidity is actually one of the downsides of crowdlending, especially in the current environment. It takes some time to either sell investments or wait for projects and loans to mature. You cannot just sell everything when you need the money for something else, like you can with stocks. The liquidity on the secondary markets, where they exist, are very different.
I has actually been really sad that I did not have a chance to write about investments in the stock market and real estate investing. My blog is purely on crowdlending. At least until now. I don’t even believe that you should have all your money in crowdlending anyway. I used to have 10% of my investments in crowdlending. This will now be lowered to about 7%. Stocks and real estate are old and proven methods of investing and I could write about this as well. I would like to write more about a full picture. Real estate, stocks, crowdlending and compare the 3. I am sure other investor are also interested in other asset types as well and how they perform next to crowdlending. Let me know, by leaving a comment, what you would think about me changing the scope of the blog to include my other asset types and comparing them.
I am feeling positive about Crowdestor as well and especially EstateGuru, as they have been running equity campaigns successfully, to cover future operations and expansion plans. So I don’t think they are in danger of a platform shutdown. So I don’t mind having such a big part of my portfolio with them at the moment. There will most likely be defaults, though. But I expected that from the beginning for all platforms. Some platforms seem to have been doing amazingly well during the last months though. Just look at the amount of late loans I have on Peerberry. Not so long ago one in four loans were late. Right now there in not a single one. However I did make the term in my autoinvest longer after my visit at Peerberry last year.
I asked Rita from PeerBerry about this. Maybe I have just been good at setting my autoinvest or it could be an error in the dashboard. But 10% is also not too bad. But this is what mine look like what all loan originators enabled and term set to maximum 12 months.
The same goes for Debitum Network. Not a single late loan at the moment. When I visited them in Vilnius last year I was impressed with their different and more careful approach, and it now seems to be paying off for them. Have a look at the article I wrote about them after my visit. They seem to be very stable.
Where did I withdraw funds during last 3 months and how much?
I lowered the amount of money on 18 of 21 platforms and one, Grupeer, is no longer in my portfolio.
Bondora: -942,75 €
BulkEstate: -4,02 €
CrowdEstate: -530,01 €
Crowdestor: -77,74 €
Debitum Network: -90,27 €
DoFinance: –0,81 €
EstateGuru: –879,50 €
EvoEstate: -1219,65 €
Finbee: -43,56 €
Grupeer: -569,81 €
Housers: -11,21 €
Iuvo Group: -45,2 €
Mintos: -8726,52 €
NEO Finance: -248,88 €
Peerberry: -1872,26 €
Robo.cash: -652,30 €
Swaper: -3573,54 €
VIAINVEST: -3086,09 €
Remember, these numbers shows a lot about how liquid the different platforms are. They are not a sign of my trust in the different platforms. I now hope that the Brazilian Real does not suddenly skyrocket and that I manage to secure a a great little apartment in an awesome location before I need to leave Brazil in 6 weeks.
My portfolio in the start of June 2020
I currently only have minor funds on BulkEstate, Swaper, NEO Finance, Evoestate, Finbee, Debitum Network, Robo.cash, Iuvo Group, Bondora, Housers, Brickshare, Reinvest24, and DoFinance. These are platforms that I am currently testing, or platforms with high liquidity where I will put more money in later as I rebalance. I try to diversify both on loan type and loan provider but also on sector, country and platform. In the pie chart below, you can see my distributions on June 1st 2020. If you are seeing this post later than June 2020, you can find the newest numbers on the My Crowdlending Portfolio page.