I have been dreading to write this update. As the novel coronavirus (COVID-19) continues to spread around the world, it will likely take the lives of millions of people as well as trigger an economic fallout and recession that will drive millions back into poverty. While the full impact of the pandemic can yet be predicted, the economic ramifications of it will likely erase development gains of multiple decades.
Given what the world is going through at the moment, I really don’t feel like writing about passive income or financial independence. So this month, there is no “happy” or “positive” update from my side. It’s just an update for my own record.
April 2020 Passive Income Update
My total passive income in March 2019: – P2P lending: 415.89 EUR – Real Estate Lending: 16.35 EUR – ETF Dividends: 98.57 EUR – Stock Photos/Videos: 320.00 EUR TOTAL: 850.81 EUR (~919.30 USD)
P2P Lending & Real Estate Lending Update – April 2020
P2P & Real Estate Lending Overview – April 2020 Passive Income Update
As part of my April 2020 passive income update, here is a quick overview of passive income that I was earning this past month from four (4) P2P Lending and two (2) Real-Estate P2P Lending platforms that I am currently investing in.
The P2P Lending industry is at the momentgoing through what could mildly be called “rough times”. As I made some not so pleasant discoveries over the past days, I feel it is important to alert fellow investors. It turns out that some P2P lending platforms (Envestio & Kuetzal) might have been SCAMS and both have recently shut down. Police investigations are ongoing. Also, a platform that I have invested in (Grupeer) has suspended all payments to investors stating the state of emergency in the European Union as a formal reason, which is very alarming.
More than ever before, I am reminding myself that I should only invest what I can afford to lose. The P2P lending market is a high-risk investment form that is to a large extend unregulated.
The effects of COVID-19 on people, companies, and markets can yet be predicted. Still, I anticipate that a good chunk of loans will be paid back with a delay, that a higher percentage will default, and that some loan originators will struggle to fulfil their obligations to investors.
Mintos: With 32,100 EUR auto-invested on Mintos in loans from 24 loan originators (all with ratings from A+ to B) in 20 countries, my interest income from Mintos in March was 275.56 EUR (=self-calculated interest rate of 8.48% p.a.).
Mintos downgraded its ratings of six loan originators on 31 March. I adjusted my auto-invest accordingly to make sure that moving forward I continue to only accept loans from loan orginators with A+, A, A-, and B+ ratings and of course only those with BuyBack guarantee.
I have noticed that some investors have started selling some of their loans with a steep discount (see graphic below) of up to 14.5% discount on the secondary market. Either they need the money to survive the coming months or they are scared to lose it.
Given that Mintos is by far the biggest P2P marketplace in the European P2P Lending market (market share of around 45%) and that Mintos significantly ramped up its efforts to be more transparent (and responsive to investor feedback), I decide to keep my auto portfolio running and adjusted my auto-invest portfolio to buy those loans that are sold at steep discounts on the Secondary market (A+ to B+ ratings, BuyBack guarantee, discount above 5%).
A great update from Mintos that was announced yesterday is that Mintos submitted its application for an investment firm license and an electronic money institution license with the Latvian regulator Financial and Capital Market Commission (FCMC). The licensing process will increase regulartory oversight and investor protection. While its great that Mintos submitted their application, it doesn’t automatically mean that Mintos will be granted both licenses. I will follow the process as closely as possible and update this post.
Swaper:A decent month on Swaper. Most of my 9,000 EUR were fully invested and my interest rate on Swaper in March was 11.08% p.a. (= 102.61 EUR in earnings in March).
Swaper specializes in short-term loans (14 and 30-day loans) and it will be interesting to see what the loan performance will be over the coming weeks given the COVID-19 pandemic. In Mid-March Swaper announced that they increased interest rate for all investors to 14%, and to Investors with an account value above 5000 EUR to 16%. Swaper states on its company blog that sales have decreased over the past weeks which could be the reason for the increased interest rates.
Given the current circumstances in the world, I decided to temporary pause my auto-invest portfolio on Swaper and to withdraw 1,000 EUR to see if the withdrawal to my bank account comes through. The withdrawal arrived in my bank account within 48 hours, which is great!
Grupeer: Grupeer is currently facing allegations from a number of investors about fake loan originators on the Grupeer platform.
This is very alarming and a number of recent speculations about Grupeer point towards fraud. Colminey writes in this blog post about details. I currently have 12,600 EUR invested on Grupeer. I requested a 708.99 EUR withdrawal on 27 March which has yet arrived in my bank account. I am emotionally preparing myself that either some or all my investments on Grupeer might be lost. I will update this post with developments over the coming weeks.
Twino: I increased my investments on Twino to a total of 7.500 EUR. My March return on Twino was 37,72 EUR in interest payments (= 8.91% interest p.a.).
While interest rates on Twino are slightly lower than on other platforms, the platform has been around since 2009 and thus has a certain track record in the market. Numberous newspapers have written positively about Twino in past years (The Wall Street Journal, Forbes, Frankfurter Allgemeine Zeitung, Handelsblatt). According to P2P Marketdata, Twino is the second largest P2P Lending Platform in the European Market (after Mintos) with a market share of around 6 percent.
Similar to Swaper, Twino specializes in short-term loans (30-day loans) and provides payback guarantee. I expect that due to the COVID-19 pandemic a number of short term loans will be paid back with a delay, but I am fine with that.
If you wonder, why you have never heard of Twino. The platform does not pay any referral credit to bloggers for which reasons many bloggers do not talk about the platform.
EstateGuru: Another good month on EstateGuru. After I increased my investments on EstateGuru to 5.000 EUR in December 2019, I am fully invested in 15 real estate projects in Estonia, Latvia, Finland and Lithuania.
12/15 projects are performing on time. 3 projects are between 4-30 days late, which is acceptable to me. My average interest rate on EstateGuru is 10.81% p.a. For me EstateGuru is a great platform to diversify my risk by investing in real estate loans that are either secured with a first-rank mortgage (physical security), personal guarantees, or are backed with a mortgage. I will report over the coming weeks if and how projects are impacted by the coronavirus.
As I mentioned in previous posts, almost all my loans on EstateGuru are either bullet or full bullet loans, which means that either principals or both interest+principals are being paid in full at the end of the loan period. Unfortunately, that means that some months I receive large interest and principal payments, some months I receive nothing. In March, I received 16.35 EUR in interest payments.
What else? My EstateGuru review explains details as well as shows how to receive a 0.5% bonus as a new investor in the first three months. I just saw that EstateGuru has some new loans available (10.5% p.a. & 12.00% p.a.).
CrowdEstate:As I have mentioned in previous posts, my experience on CrowdEstate is negative and I am on my way out. 3 out of 6 projects are significantly delayed and bankruptcy has been filed against one borrower (H.M Seafood OÜ) for non-payment of debts and the refinancing planned by the sponsor to repay another of my loans failed (Kreutzwaldi 59c, 65610 Võru (IX)).
Overall I am not satisfied with the performance of the CrowdEstate platform, especially in comparison to EstateGuru, which is running like a charm.
I suspended my auto-invest on CrowdEstate in January and withdrew my first 600 EUR in early February and another 450 EUR in March. The transfer arrived the next day, which was great. After my withdrawal, I still have a total of 950 EUR invested in CrowdEstate, which I will slowly withdraw as princial and interest payments are arriving.
Exchange–Traded Funds (ETF) Update – March 2020 🥳
Even in times of crashing stock markets, I hold onto thatmy decision to start investing in the MSCI World ETF back in 2016 was one of the best decisions of my life. I am explaining details in my ETF portfolio post, but in a nutshell, I believe there is no better and more cost-effective way to save & invest long term (e.g. for retirement) while earning passive income from dividends.
Since I started investing in the MSCI World ETF in 2016, the value of the ETF has increased by 26.39% (despite the recent coronavirus-related shock in stock markets). The shares that I bought originally for 145.09 EUR a currently valued 164.73 EUR.
Coronavirus and my ETF portfolio
The spread of the Coronavirus (COVID-19) is severely affecting global economies and the 1600+ companies under the MSCI World are affected just as much. The UBS MSCI World that I have invested in since 2016 has dropped in value from 224 EUR to 164.73 EUR per ETF over the past 48 weeks. In total numbers, that means that my ETF portfolio (~69,000 EUR) has lost 10.25% of its value in March (-15.46 since beginning of the year).
In many ways, this looks like terrible news. But falling prices are a perfect opportunity to double down and to invest and buy more MSCI World ETF at a significantly lower price. In fact, in my most recent three monthly summaries I mentioned that I had been waiting for a good moment to buy ETFs at a lower price.
Seeing the plummeting value of the MSCI World ETF (UBS ETF (LU) MSCI World UCITS ETF (USD) A-dis), I bought an additional 10,000 EUR worth of shares in March (First 5k EUR tranche at 172 EUR/share and second 5k EUR tranche at 160EUR/share). I am currently waiting to see in which direction the market goes, but I am planning to invest another 5,000-10,000 EUR in MSCI World ETF shares over the coming weeks.
My 1,000 EUR monthly ETF savings plan
My 1,000 EUR monthly ETF savings plan which I talked about in my January Blog Post,runs in the background and keeps buying MSCI World ETFs worth 1,000 EUR on the first of every month. More about my ETF savings plan and why it was such a great idea to go back to an automated saving plan in this blog post.
That’s it for my April 2020 Passive Income Update! If you are interested, please follow my journey on my Facebook page Financial Freedom Journey for more frequent updates. And as always: If you have any questions or comments, please pop them in the comment section below. Or get in touch via Facebook or Email.
Stay safe, stay healthy, and please stay at home, Peter 👋