P2P REVIEW: 2019 YEAR TO DATE
February 2019 Update
(Disclaimer at end of post)
If you’re interested in how we did in 2018, you can check out our January post on that topic.
We started 2019 with funds in two different platforms: Mintos Marketplace and Lending Loop. We have done our best to curate as much useful information from these two services as possible, but let us know in the comments, in a message through this site, or on twitter @fiscalfrontiers if you have any questions about other things you’d like to know, or of things that you think we should be keeping track of.
THE BIG PICTURE
Both of our P2P accounts are on track for double digit return on investments (ROIs) in 2019 after two months in the books, summarized as follows:
Read on below for a month-by-month breakdown of how these accounts are earning their income and how we track it. The Lending Loop calculation is a little more complicated, since Lending Loop loans can go bad and the principal can be lost forever, while, for Mintos, loans that go bad are repurchased and, even if interest is forfeited, principal is, in theory, never lost.
If you are interested in investing on Mintos, then you can click this link to receive 1% cashback on your average daily invested balance over your first three months.
One of the great things about Mintos is the guaranteed buyback of defaulting loans. What this means is that your account should always be on an upward trend, even if there is some variance in the ascent from month-to-month. The history of our account looks like this so far:
The 2019 ROI row simply shows what our annual ROI would be if we earned income at the rate based on all the information we had available up to that point (without any compounding). For example, if we continued to earn €8.40 every month, for all of 2019, like we did in January, then our annual ROI would be 10.29%. Alternatively, if we continued to earn €16.49 (or €8.40 + €8.09) every two months, like we did for the first two months of 2019, then our annual ROI would be 10.10%
Through 2019, the graph of our account looks like this:
As of February 28, 2019, we had €967.38 of outstanding notes on Mintos, broken down by loan grade like the chart to the right. The more dark blue on the chart, the better. And, luckily there is a LOT of dark blue on that chart! And, even better, there is no red, which we were going to use to signify the delinquent category of loans, which are set to be bought back. The good state of affairs will be a little clearer in the next chart.
The next chart is one we debuted last month and shows our whole portfolio on a day-by-day basis, as it becomes more or less delinquent. Looking at it, the two shades of blue represent the loans which are in good standing or in their grace period. Alternatively, the warmer colours (yellow, orange and red) represent loans that are progressively more delinquent. The more blue on the chart, the better!
There was a definite upward trend in the portion of our account that was in the blue areas, the areas we want it to be in, where more of our funds are dedicated to quality loans in good standing, a definite decrease in loans in the top most tier, where the loans are starting to go bad. Now, admittedly, this may just be cyclical, that is, our oldest loans may have all gone bad and been repurchased and the funds recycled into newer loans which could very well be on their own way to being bad. Only time will tell if we are in a cycle or not. For now, we are happy our portfolio is more blue than red.
If you are interested in investing in Lending Loop, then you can click this link to earn an additional $25 once you lend your first $1,500 on the platform.
Unlike our Mintos account, our Lending Loop account can be a little harder to track the performance of. While Lending Loop will show you the value of your outstanding principal and cash balance at any given time, this is not necessarily the best reflection of your account, since it does not account for the fact that some of that principal is going un-repaid and may be lost forever. Because of this, we at Fiscal Frontiers like to dig through the data to come up with a better reflection of our account's performance.
The below table shows how much interest we’ve earned in a particular period, but we subtract from that number any fees paid to Lending Loop or missed principal payments. To be fair, if a principal payment that was missed in a period gets paid in a later period, we add that in as income in that later month.
For example, if you look at the table to the left, we made $22.72 of income in 2018, but we missed $2.35 of principal repayments. At the end of the year, there was no telling if those payments would be made, so it made sense to subtract them from our income.
Now, having sifted through the data, that $2.35 has actually been repaid in 2019. Once we get our calculation of profit for a given time period, it is easy to take that and calculate our return on investment:
The 2019 ROI is calculated just like we did for Mintos, with the percentage under a particular month representing what our annual return would be if we earned income at the pace we did up to the end of a particular month for the remainder of the year.
As of February 28, 2019, we had $1,017.70 of outstanding notes on Lending Loop broken down by loan grade like this:
Our account is on an upward trend, though.
To the right is a simple chart that shows the upward climb of our account. Note that the chart does not account for the fact that some of our loans may default and the remaining principal may be lost. Over the long-term, those will show up eventually as dips in the account value, so we are not overly concerned when looking at a long term trend like this.
Our post next week will cover how our two robo-investors have been doing. We look forward to checking in on those, especially since the stock market has been surging to start 2019.
We at Fiscal Frontiers are not investment advisers and our only goal is to report to you on the performance of investments we have made so that you can consider our experience along with all the other information available to make an informed decision on what is best for you. Peer-to-peer loans are inherently risky and all of a particular loan could be lost.