I can’t believe that it is now 6 months since I started with Mintos. I will show you how I did over last half a year, what my returns are, and how my strategy and usage of Mintos changed over time
Since I started, I sent 125,722 EUR to Mintos. This represents roughly 20% of my liquid assets. I am still trying to convince myself that Mintos is a great and more importantly safe platform that has bright future. Allocating so much money to single platform does concern me a little bit, however I have most of my other assets in stocks so my risk appetite might be a little different than yours. By all means I think that Mintos is a great platform and I have not seen any obvious signs of weakness over last 6 months. I might disagree with some of their ratings or be concerned about quite aggressive buyback policies of some lenders, but overall I strongly believe that Mintos is a stable and growing platform that can and will support both established financing companies and new fintech companies looking for reasonably priced sources of receivables funding.
Few high-level numbers (amounts in EUR):
- Incoming Payments: 125,722
- Invested in Primary Market (including closed loans): 408,512
- Invested in Secondary Market (including closed loans): 13,411
- Interested received: 4,072
- Finished Investments (units): 18,750
- Finished Investments (amount): 285,582
- Current portfolio balance: 130,124
- Average Investment Amount: 15.2
The real interest I am making on my investment is at 12% currently, using annualized calculation based on average daily balance. This might be slightly underestimating the results as I am not really including the compounding effects of interest payments I receive. Does it make me happy? It sure does, as 12% is not something you would easily find elsewhere. Sure, you can make it on stock market (maybe even more), but the volatility is much greater and risk is definitely not lower either on the stock market.
If you read my blog before, you know that I have much more detailed statistics that are being updated every two hours. Coming from a financial world, I found the statistics provided by Mintos insufficient and created my own.
What Changed over 6 Months
There are few things that I have changed over the last 6 months. Some of them are a little bet contradictory to what I have been advising, so I suggest to read carefully.
On The minimum Investment Amount
I have wrote many times that you should invest only minimum amounts (10EUR if you are investing in EUR as I do). For those interested, here is why I have said so. Since I published the original Mintos guide, I updated it. It does not make sense to always invest lowest amount. It might be the seasonal effect, but especially in the short-term lending space where I invest most the selection of high-interest loans got much smaller in Q1 of 2019. Because of this, I found myself investing higher and higher amounts per investment. Ideally, I would love to see 10EUR as my average investment, right now I am at 15EUR. Does it make me concerned? Not at all! The 10EUR rule gives you benefits in diversification and learnings, but with so many thousands of investments I have, the marginal benefits get much smaller.
In other words. If you have options:
- have 1,000 investments at 14% , each 20 EUR
- have 1,000 investments at 14%, each 10 EUR, and additional 1,000 investments at 12%, each 10 EUR
I will go for the first option. The 2% incremental income is for me more important than the diversification I get on additional 1,000 investments.
On the Daily Usage
As with many other things that are new for you, it is expected that you lose some of the interest. I spent a lot of time trying to understand Mintos for the first 4 months, creating my own statistics, translating sites of individual lenders and whatnot. I will admit that I was checking my Mintos account like 10 times a day to see what changed. Crazy.
These days, I will go to Mintos at most once per day. I will check my statistics page daily. If I see that my balance is more than 1,000EUR I will go to Mintos and invest into some loans manually, using the pre-set filter on primary loan listings.
I will check my concetration statistics from time to time. Currently my biggest concentrations are Poland (25%) and IuteCredit (22.8%). The first one does not bother me at all, I consider Poland one the safest countries where Mintos operates. IuteCredit is a little bit more concerning, especially all of the funds are in Albania or Moldova. I will be looking into ways how to decrease exposure to this IuteCredit. Not that there is anything wrong with it, but 23% is just too much risk, especially when from performance point of view, IuteCredit is more in the middle, sitting at 12.1% IRR for last 250 loans.
On Performance Metrics
So this is interesting. Originally I thought that I can just go by measuring IRR on my finished investments (and I still do measure that). While this is generally still true I learned that it is necessary to account for changes in the behavior of individual lenders. Each loan originator has its own procedures on how exactly the interest calculated, when it is paid and what the buyback strategy is. At the end this affects the rate of return you get in relation to rate of return stated by the loan originator. Some of the loan originators constantly under-deliver: Dinero, Tengo, ExpressCredit Zambia being the worst performers here (check my statistics page). Moreover, the originator’s behavior can change over time, so the good ones can turn into bad ones and the other way around.
To adjust for the changes in behavioral patterns I am now using time-constrained profitability metric. More specifically, I have metrics called wIR250 and wXIRR250:
- wIR250: calculated for last 250 finished loans from the same loan originator, weighted adjusted internal rate of return, weighted by duration of investment and amount of investment;
- wXIRR250: calculated for last 250 finished loans from the same loan originator, weighted adjusted internal rate of return, weighted by duration of investment and amount of investment
Because I do invest in short-term loans primarily and I have a lot of them, using last 250 loans give me both statistically significant sample which is more likely from recent past. Obviously the time window is different for each lender, but that is not something that I am concerned about.
I am mainly looking at the difference between these two metrics to see whether there are loan originators who constantly under-deliver. This all in attempt to drive the overall revenue up.
After 6 months, there is not much to complain about. I am happy about the interest I am getting from Mintos, the predictability and stability of revenue is great. There are ways how to improve the profitability by focusing on good loan originators. However, the upside is not huge making Mintos great opportunity for less savy investors who are afraid of stock markets or some fancier alternatives like forex or cryptocurrencies.