New Metric in Statistics

I added new cool metric to my statistics page – Implied IR. This is my estimate for the annual return on the invested balance. Compared to ADI% and ADB%, this goes a little bit further. First, the time-space is better aligned. By comparing interest earned in current month to end-of-month balance of previous month it is much more stable and usable metric. If you assume that you are fully invested (and I am running at 99%+ ADI/ADB) this is basically the return you get monthly on your balance (again, assuming you get interest monthly, what is mostly the case). By annualizing the return using (1+ Int/EOM Balance)^12 – 1) you get return estimate that assumes re-investment of the earned interested.

My Mintos page currently says my annual return is 11.98%. With my calculation I run a little bit higher at 12.76% for May/19.

My calculation (link opens new tab with my statistics):

It is good to know that Mintos calculation is somehow close to my own estimates. I mean, I don’t really care about the 0.7% difference. The important thing is that the annual return with earned interest re-investment can run at 12%. For me that is a very good result, especially when compared to my stock portfolio – there I target 12.5% annually, but the volatility is much higher. One day +5%, another -6%. This makes Mintos investment so cool – stable, above average revenue stream.

Strategy that is not working

For a while, I had auto invest strategy investing in short-term loans that have length between 1 month and 1 month. Why I would do that? I commented on this before – the short-term loans are cool, however the return is bigger on longer short-term loans :). Most lenders actually significantly under-deliver on the loans that are very short, like 7 days, or 14 days. Today, this actually stopped working and I wonder what has changed. My strategy is not picking any more 1 month loans anymore. I have question pending with Mintos support and will see what they have to say.

For me, it is unfortunate, as I prefer not to invest into loans shorter than 28 days and don’t really want 2+ months either. If you have some workaround let me know!

Added Funds to Mintos

Today I added additional ~ 19,000 EUR to Mintos, bringing overall invested funds to 145,000 EUR. This is because I have high confidence in Mintos business model. Currently, I have 25% of my liquid assets on Mintos platform. Mintos brings me reasonable revenues, and represents stable counterpart to my USD stock investment portfolio. I really believe and hope that Mintos will be around for next 10-20 years.

Staying Fully Invested on Mintos

One of the topics that I have not discussed before is the importance of staying fully invested. On Mintos, when your auto invest strategy is not set properly you may end up with significant portion of your funds unused.

Such situation is affecting your overall profitability on Mintos as measured against the total amount of money you have on Mintos. This is actually only the only metric that makes sense. Consider an example where you have $10,000 on Mintos overal, but only $1,000 is invested with %10 interest rate. This way you would end up with only 1% interest on the total amount you sent to Mintos, not really impressive.

To avoid such situation you need to keep checking Mintos for the balance that is not invested. Best you would like to $0 as your balance every day. This is not really achievable, but you can get close by having auto-invest strategy that is reasonably configured. This means that:

  • there are always loans that can be invested in (you need to sacrifice a little bit of interest income for this)
  • there is always some unused limit of the auto invest strategy

In my statistics I report two useful numbers – average daily balance (ADB) and average daily investment (ADI). To calculate ADB I will sum end of day balance for each day of the month and then take average. For ADI I will take sum of end of day investment for each day of the month and then take average.

Comparing ADB and ADI will give you good insight into how good you are in utilizing all of your funds. Best you would want for ADI to be equal to ADB. This is almost impossible, but you can get close. My statistics report on the ADI/ADB ratio to inform me how well I can utilize my money. Over last 7 months I have been able to stay above 98%. As an example, with interest rate of 11.5% on invested amount, interest on all my funds would be 11.27% (11.5% * 98%).

Dineo – new lender on Mintos

One of the loan originators who will be among the first additions to the Mintos marketplace in 2019 is Dineo, a company based in Spain. Founded in 2014, Dineo now offers short-term loans for investment and you can expect a net annual return of up to 10%.

Ever since its inception, Dineo has experienced exponential growth. From its foundation, the company has achieved a consistent increase in the number of new customers and stable portfolio growth. By October 2018, the company had more than 170,000 clients to whom they have issued more than 827,000 loans.

Dineo operates through its website and via its more than 70 points of customer service throughout Spain, where loans can be granted and disbursed at the time when clients meet all the necessary requirements.

Spain-issued short-term loans placed on the marketplace by Dineo range from EUR 50 to EUR 500. The average loan term is 5 to 30 days and loans are repaid in a single instalment.

All loans placed on Mintos by Dineo are secured with a buyback guarantee and will be repurchased if they are delinquent for 60 days or more. In addition, the company will keep 15% of each loan on its balance sheet to maintain its skin in the game.

A loan originator with confidence

Dineo views their physical presence across the country as one of their strengths. This is because the process is client-friendly, brings transparency to the transactions and adds to the customer’s satisfaction as they are able to receive the loan in cash instantly.

To investors on the Mintos marketplace, according to Dineo, it will offer “an interest rate which is competitive and hence will move as the market does.” The initial net annual return rate will be 10%. At Dineo, they are confident about giving Mintos’ investors “peace of mind” which will come from the company’s track record and reputation.

As of October  2018, the net loan portfolio of Dineo is EUR 6.6 million, equity is EUR 3 million, and the gross loan portfolio is EUR 14.4 million.

Dineo’s creditworthiness

Dineo makes strict controls to guarantee its solvency. The company is doing check-ups every time a client performs a new operation to ensure that the situation remains optimal. Alongside checking the payment capacity of their clients, the company also addresses queries to the bureaus for credit. If the client has problems with the payment, Dineo proposes formulas for agreements to help the client plan their payments and settle their debt.

Mintos – about visibility and credibility

About joining Mintos, the global marketplace for loans, Carmen Gayo , the Manager of Dineo says: “Mintos is a marketplace that allows the lender to monetise part of the amount invested, and in addition, the marketplace helps to give visibility to the business and the brand. Having a presence on Mintos guarantees to the investor that a series of controls have been approved, and this also helps to give credibility to the business.” 

Dineo - short term loans in Spain
Dineo – short term loans in Spain

As of 2/4/2019 there are no loans from Dineo on Mintos, I will check later.

What Loan Originators are Providing EUR Loans on Mintos

Can you list what companies, that offer investments in EUR loans are actually providing loans in EUR? For me as an investor it is important to understand what loan originators are expected to FX risks, which is even more significant for countries like Russia where RUB had really wide swings in last few years.

Currently, such loan originators Mintos are:

  • AgroCredit
  • BB Finance Group
  • Bino
  • Capitalia (in Latvia, Lithuania and Estonia)
  • Creamfinance (in Latvia)
  • CreditStar (in Estonia, Finland and Spain)
  • Debifo
  • Dindin
  • Dineo
  • EBV Finance
  • EuroOne
  • Fireof
  • Hipocredit
  • ID Finance (in Spain)
  • Mogo (Latvia, Lithuania and Estonia)
  • Mozipo Group (in Lithuania)
  • Placet Group
  • Vizia

Very likely, you should use additional caution when investing in companies that do offer investments in EUR but provide loans to borrowers in other currencies.