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How to use Bondora?
How safe is it?
I am always looking for ways to build passive income
When I studied Bondora I felt it could suit my needs, but some reviews were bad
So I tryed it myself
Now, after some years, I think that to create automatic income without having to study the financial markets, P2P lending and also Bondora can be good tools
Bondora is a Peer to Peer Lending for those investing in Euros and looking for loans paying over 25%, but ⚠️ be careful!⚠️
My opinion and my path from zero to Bondora
How I went from “Zero to Bondora”
I want to own a bank
As a child, they teach you that the house always wins… and statistics confirm this.
As an adult, the house is represented by the banks and we have learned that these, indeed, always win. Then we get angry and we curse about the charges, the untimely investments, the untranslatable accounting and, most importantly, the interests we pay on loans.
On an extremely common 100’000€ mortgage on a house, after 30 years the bank cashes in, at your expense, almost 100’000€ of interests!
Have you ever wondered if YOU should maybe be the bank? Maybe you did, but it wasn’t possible before. But now (somehow) you can!
“Bondora is one of those platforms that allows me somehow to “act as a bank” by lending, more or less indirectly, money to private parties to receive interests on their debt.
Here is not my opinion on Bondora
This is my direct experience
I will only tell what I do.
Once decided Bondora fits my needs, I went straight to learn how to set it up in a convenient and productive way.
This is how I use Bondora in a way that won’t make me worry much about it in the future.
Bondora is available to European investors and offers fractions of loans granted in Spain, Finland, (Slovakia) and Estonia. It seems complicated, but the process is smooth.
I didn’t pay any commission, either for depositing money nor for investing it. Bondora signup and use are free. Transferring money and interests accrued into my bank account is free, too.
Where does Bondora keep my money?
The money I transfer is kept by SEB Bank, a Scandinavian bank with a higher rating than many European banks. Bondora finances are separated from those of others investors, so, at least up to this point, if Bondora had to close, our money should not be affected.
Who is Bondora for?
Bondora, like other P2Ps, groups together and manages a large series of loans granted to citizens of some European countries (often consumer loans). Then, it makes me take part in the loan in an almost virtual way, by allowing me to cash-in the interests that people pay to the financial Bondora that has granted the loans.
In doing so, it transfers to us a little bit of the risk that lending involves, and of course, the interests. Bondora also deals with recuperating the debts from slow payers so that I don’t have to take care of that.
Unfortunately, the impact of slow payers isn’t always very clear in the data it publishes, but it is certain that by selecting well, with such high returns, it is difficult to be completely wrong.
The potentially late loans are mostly gathered on the “high risk” ratings, while they are obviously less frequent in the higher ratings (more reliable borrowers).
The average person who complains about #Bondora (there are a few on the web) is typically someone who looked for the maximum return in the past (see photo below) without worrying about the credit risk Click To Tweet
Instead, I have analysed the risk/return factor and I have made the following conclusions.
Before continuing, I now invite you to repay the effort and the research I have put in writing this article: just share this post! It costs you nothing, and it feels great for me! Thank you!
How NOT to invest with Bondora
Virtually, in a really short time, you can set up the system to start a considerable passive income. You’ll notice that with very simple set-ups you can have 27 to 35% yearly returns. Fantastic, isn’t it?
Not at all!
How NOT to use Bondora! ⬆ Setting Bondora portfolio to high risk may not bring to higher returns any soon.
This is precisely where those with no experience and lots of greed, normally fall and risk losing money, too!
These days, 30% is not a return that you can reach without exposing yourself to a high risk. I like to talk about investments here (a moderate to risky investment), not gambling or binary options.
I have learned from others’ mistakes.
This is why I felt the need of being careful and make more productive choices.
Let’s see how it works!
This is how I have invested with Bondora
By following my super-simple set-up, I have been able to reduce most of the risks without excessively compressing the returns.
I am an old Bondora investor now, so I can “talk”.
Before starting I’ve made the last checks. How are public Opinions about Bondora?
Bondora rating on Trustpilot is good (for now, we keep a vigilant eye on it)
The international reviews are rather good and it’s been working since 2009. Bondora works in 14 European languages (check if yours is available), serving 56’000 investors.
This data are important to me, but since I was born skeptical, I also wanted to find out the reasons of some people who don’t like Bondora at all. It’s a matter of attitude. Keep reading.
To sign up I’ve just used my email address, then I received an email and I filled in the rest. Also Facebook and Google sign-up are available (open this in a new browser window if you wish, but keep reading).
How I trasferred my funds on Bondora
Immediately after subscription I have deposited the amount of money that I wanted to invest on Bondora.
Well, not ALL the amount straight away. I wasn’t brave enough at that time.
I’ve picked the option of depositing some cash by Visa (also Mastercard is available now).
I guess Bondora now is the only P2P to make visa deposit possible and I like it.
How did I set it up
Here is exactly what I did next to speed up my investment in loans
Supposing that a credit card has a limit and I want to invest a consistent amount to get a relevant additional income, I will consider making a SEPA bank transfer instead. And this is exactly what I did after few days of investing by credit card and after my very first test was completed.
Honestly? It wasn’t an easy step, because Bondora was rather unknown in my country.
Just to get an idea, investing at 12% yearly interest rate on Bondora the amount of 10.000 euros may generate 1200€ per year approximately.
Should I invest 50’000€ at the same rate I would be able to make 6000€ yearly, which is a respectable additional flow of income in my opinion.
Once again, it is important to avoid high risk loans to achieve it safely.
15% of Bondora investors earn more then 15% or even 20% yearly (Bondora data 2019).
I am fine to settle for a little less and I’m very happy with my conservative settings
The SEPA transfer is a transaction that is normally free of charge in Europe.
Making a wire transfer abroad of a certain amount of money can be scary.
I hesitated a few days before depositing my money there, but finally I did it. It was some years ago. No regrets, so far.
Tens of thousands of small investors all around the world use P2P and Bondora now to obtain returns that don’t exist anywhere else anymore with the same amount of risk. I keep an eye open, but at the moment, I believe there’s no reason to worry.
Some smaller and exotic peer to peer lending companies are out of my radar for safety reasons.
Follow Revenue.Land and you’ll get all my updates.
The magic of compound interest
As soon as I’ve transferred the “loot” that I want to multiply, I’ve made some calculations. With a 10/15% interest, I’ll be able to double the invested amount of money in few years.
In the chart below, we see the effect of the combined interest, that is to say, how much the capital increases exponentially once I’ve started reinvesting what I’ve earned.
For example: if I invest 20.000€, after one year I will have at least 200€ more, rather effortlessly.
If then I reinvest again (Bondora will do that for me) the initial sum plus what I have accrued, with some patience and monitoring, the result across the year will be exponential, as the chart shows.
Bondora is a long-term investment.
Swooping returns with Bondora
For a number of reasons, the returns have been slowly decreasing over the past few years. Until a few years ago, an 18% “automatic” average with Bondora was no pipe dream. Now, the range of the interest paid is between 10% and 22%, as the photo below shows.
It is possible to predict that in the future I could have to deal with lower rates (but still really high and legal). Many of those who invested just 4 years ago say they have already doubled their sum.
With “safer” traditional investments, I’d need decades to get a similar result. Of course risk/reward ratio is different, so I allocated a part of my capital here.
How I started with Bondora
There are three ways to invest.
One is called “Portfolio Manager” and it’s the easiest and most direct way
Another way is called “Portfolio PRO” and it gives me more control
The last one is a system through API Bondora which is reserved for very advanced users
I’m going to talk about the first one only, the “Portfolio Manager”, useful to start as soon as possible and to start enjoying the paid interests.
Afterwards, I’ll analyse Portfolio PRO.
Let’s now go to the “Dashboard”, the splash screen.
Pressing “start” on the left bottom I will “Activate Portfolio Manager”.
Let’s set the “starting amount” and the “years of investment” and I will automatically see an estimated “expected return” in the green window on the right. On the right, I’ll also find the expected distribution by rating and by country.
If I wish to have more control on this elements I need to move to the “portfolio pro”.
This auto-investment is enough if I don’t feel too confident at the beginning.
(Image shows Bondora Portfolio Manager prediction. It says you might almost double your investment after 3 years auto investing your money but we think that this expectations might be a little optimistic in some cases).
By moving the cursor right and left, the return I see changes happen live to my potential results.
Obviously the higher the return, the likelier the chance of absorbing loans given to less trustable people. It takes some time but normally the system will later recuperate the unpaid debt).
I believe wise to “stay” at the left of the range to balance risk and profit wisely. Doing so, I am telling the platform to buy for me fractions of “not too risky loans”, whose reliability is thought to be reasonable by the responsible parties.
It can be very very tempting to move towards the right side of the range, towards the higher returns. But I won’t go there.
This is because down there I’ll bump into investment whose success is highly linked to the system ability to recover the credit, as they’re high-risk loans, often granted in Spain.
Some of the high risk/yield loans are paid with delay, some can even default.
The process to recover defaulted loans can be very slow. Bondora recently declared that the ability to recover money from who is not paying on time, has greatly improved in the past few years.
Opportunistic expositions offer really high returns but it can also delay a lot the time I need to get back my investment.
I don’t want it.
This is why I stick to the less risky ones and I resist temptation.
I consider that nowadays a 10y German BUND (government bond), doesn’t pay much (less then 1% gross). Very safe, but not profitable these days. That’s why I need to rebalance a bit my investments in a new way, and since I can get 8-14% revenue with P2P lending, that’s going to be enough for me.
By clicking “Start” on the bottom right I agreed to terms and started to invest on Bondora.
Now I’ve set up the Portfolio Manager, and I can move to “investments” to see how my position evolves.
I am done. I am investing with Bondora and it took me only few minutes!
Bondora video setup
If I feel Bondora suits my needs:
I sign up (mail, Facebook, Google)
I safely transfer the sum I’m willing to invest in loans (Visa or bank transfer)
I limit the risks by following my guidelines
I activate Portfolio Manager (or PRO)
I cash in or reinvest the returns
Micro-bonus: When I sign up I can also get a small welcome bonus.
If I want to go up a level and set up a “Portfolio Pro”, I have written something interesting.
Bondora statistically states that 98% of its users have realised positive returns. I am not sure if this is true. What I'am sure about is that to know -how to use it- is making a difference in my results. So far, I'm happy with it. Click To Tweet
If you have found what I wrote to be useful, please say thanks by sharing this article with your followers. I’m sure they’d be happy to read it.
This blog is purely for informational and educational uses (disclaimer). I don’t work for Bondora or any other P2P and I don’t advise anyone to use any of this tools or to make investments of any kind.
NOTE: The indications contained in this analysis are to be considered mere information tools and do not intend to constitute in any way financial advice, solicitation to the public savings, suggest or promote any form of investment.