More than 2 months ago I did a stupid experiment - took out a 3000 EUR loan to invest it in Mintos loans. The upside was very limited - at best case I could make maybe 50 EUR, but downside was much bigger. So how did it go? Worse than expected.
Kristaps, generally your posts are very biased and structured in a way to prove your overall thesis that all P2P is crap, but this one beats them all. Whole setup and timing is severely biased. I will explain why.
1. Too short term. P2P is not cash account in bank - so making experiment for only 2 months with loans with 60 days buyback and cashing out 100% before loans being repaid or bought back is just something you do to prove some thesis you are aiming at.
2. You are setting example with getting a loan with 51% annual interest?!? - of course it will go wrong. Who gets leverage at 50%?!?
3. Cashing out at the worst possible moment.
Don't get me wrong me - I totally support the idea that getting a loan to invest in loans is majorly stupid and many things can go wrong especially for average Joe that thinks P2P is safe investment.
But for such an experiment to be concise and have any valid conclusions I think that it needs to be setup in a totally different way:
1. At least 1 year
2. Get widely available consumer loan at 3-5%
3. Cash out only as much as needed to cover the loan repayments.
4. See what is left at the end of the year.
As you would like to put this guide with the banner - Prove me wrong
Thank you for comment! Yes, this was probably the worst timing possible, but when I started this experiment - I had no idea what will happen in next couple of weeks or months regarding Covid19 or the liquidity problems in all P2P platforms. About my loan - yes, 50% is a lot and I would not use it if I had to pay interest, I just used the first 2 months which were with 0% interest. I don't know where you live, but in Latvia I don't think it is possible to get a consumer loan at 3-5%, realistic would be maybe 15-20%.
I have a draft post in my blog about borrowing to invest.
I intended to take a 1 year loan, invest it until the end of the loan, and use some of my own money to pay back the loan. I intended to make a profit a year later, at the end of the loan.
I reach conclusion number 2 : too much hassle for too little profit.
On the other hand if you would have taken out 3k right after the panic sales, you could have made a nice profit. But, this is gambling, so one should use the money that can afford to lose...
Funny timing - I also took a loan on 26.02. and invested a big part of it to Mintos - but with 180° different results. I was able to profit from some hefty discounts on the secondary market and have a plus of about 4% after two months (scaled to your example 139€). Admittedly only "play money" on my Mintos account, not in my bank account. So I am planning to pay my loan over 6 years with my own income, and reinvest the earnings from Mintos. So far it is looking great. But I agree with everyone else that you normally should not do it and if - then only with money you definitely do not need to access fast in any way!
Unfortunately, my small Grupeer investment was not so great. In about two months I should compensate for that with Mintos / other P2P earnings.
An account not in my name with 0 balance before experiment was started - used it to have a clear picture of what is happening and it would not mix with my own account.
Kristaps, generally your posts are very biased and structured in a way to prove your overall thesis that all P2P is crap, but this one beats them all. Whole setup and timing is severely biased. I will explain why.
1. Too short term. P2P is not cash account in bank - so making experiment for only 2 months with loans with 60 days buyback and cashing out 100% before loans being repaid or bought back is just something you do to prove some thesis you are aiming at.
2. You are setting example with getting a loan with 51% annual interest?!? - of course it will go wrong. Who gets leverage at 50%?!?
3. Cashing out at the worst possible moment.
Don't get me wrong me - I totally support the idea that getting a loan to invest in loans is majorly stupid and many things can go wrong especially for average Joe that thinks P2P is safe investment.
But for such an experiment to be concise and have any valid conclusions I think that it needs to be setup in a totally different way:
1. At least 1 year
2. Get widely available consumer loan at 3-5%
3. Cash out only as much as needed to cover the loan repayments.
4. See what is left at the end of the year.
As you would like to put this guide with the banner - Prove me wrong
Thank you for comment! Yes, this was probably the worst timing possible, but when I started this experiment - I had no idea what will happen in next couple of weeks or months regarding Covid19 or the liquidity problems in all P2P platforms. About my loan - yes, 50% is a lot and I would not use it if I had to pay interest, I just used the first 2 months which were with 0% interest. I don't know where you live, but in Latvia I don't think it is possible to get a consumer loan at 3-5%, realistic would be maybe 15-20%.
I have a draft post in my blog about borrowing to invest.
I intended to take a 1 year loan, invest it until the end of the loan, and use some of my own money to pay back the loan. I intended to make a profit a year later, at the end of the loan.
I reach conclusion number 2 : too much hassle for too little profit.
On the other hand if you would have taken out 3k right after the panic sales, you could have made a nice profit. But, this is gambling, so one should use the money that can afford to lose...
Funny timing - I also took a loan on 26.02. and invested a big part of it to Mintos - but with 180° different results. I was able to profit from some hefty discounts on the secondary market and have a plus of about 4% after two months (scaled to your example 139€). Admittedly only "play money" on my Mintos account, not in my bank account. So I am planning to pay my loan over 6 years with my own income, and reinvest the earnings from Mintos. So far it is looking great. But I agree with everyone else that you normally should not do it and if - then only with money you definitely do not need to access fast in any way!
Unfortunately, my small Grupeer investment was not so great. In about two months I should compensate for that with Mintos / other P2P earnings.
What is a "Mintos test account"?
An account not in my name with 0 balance before experiment was started - used it to have a clear picture of what is happening and it would not mix with my own account.