Studies of Life

Learning by doing.

P2P Investing with IsePankur: 21.7% ROI

08 May 2013 by Jim

# Original post: Since I’m currently trying to save enough money to buy a home for myself, I’ve been looking into investment opportunities . Once you have a sizeable chunk of money in your bank account, what do you leave it there for? 1% annual interest? That’s not even enough to outpace inflation, so there has to be a better solution.

Investing in shares / CFDs has been the first answer for me, and to this date it seems to be working fine. But there’s a new and somewhat more social and positive way to go about this. Yes, even people who invest like a clear conscience every now and then. The solution? Peer to peer lending.

IsePankur is an Estonian peer to peer lending bank which offers lenders lower interest rates than commercial Estonian banks and investors a lot higher interest rates than in most other countries (between 20 and 30%, to give you an approximate idea). As you can imagine, 20% is quite an attractive return on your investment, so many people flock to isePankur. So many, in fact, that it is currently overrun. Which is the main disadvantage I can see right now. Since this post was written in May 2013, a lot has happened. IsePankur has branched out into the Finnish and Spanish credit markets, and this increase has made investing a lot faster. I can now, without much trouble, find enough loans to invest 2500 EUR per day in. That’s a sizeable chunk of money and ensures that this particular service becomes more liquid and therefore even more attractive. Have a look at the rate at which the business of isePankur is increasing:

IsePankur Growth

# Update October 19, 2013: IsePankur has not disappointed until now. I’m seeing only 3.16% overdue loans right now, which doesn’t even mean they’re defaulting, just late, and an annual ROI of 17.3% (the overdue loans are NOT included in that figure), which is pretty great as far as investment opportunities are concerned, and a lot safer than anything stock-related. The net ROI seems to be increasing over time, first rapidly and then ever more slowly. Here’s a graph.

isePankur net return over time

Apparently I am not yet in the top-tier of investors, it seems I’m still in the 15-20% income range, but I don’t think that’s a bad thing because asking for higher interest rates means that more investments are refused, so I wouldn’t be able to invest my funds as quickly as I do now (about 300 EUR per day are definitely doable) if I asked for higher returns. The highest returns come from the riskiest loans anyway, and I want to keep away from that.

Net return compared to other investors

Finally here’s a bar graph of my total income composition, where you can see that the overdue loans represent only a very small minority of loans, and they are usually paid within 60 days of becoming overdue, as can be seen through the 0% on the graph.

isePankur income composition


# Update January 16, 2014: My current annual ROI is at 21.78%. Not bad at all. According to the statistics tool, that annual ROI is the 132st in the overall ranking of all investors having invested more than €10’000. Not bad, but we can definitely do better.

Screen Shot 2014-01-16 at 10.47.37

Screen Shot 2014-01-16 at 10.48.02

The investment risk per issued month shows that some loans have become overdue from July and August, which was to be expected.

Screen Shot 2014-01-16 at 10.47.54

The ROI has been steadily climbing, but it is reaching its peak. Every time I inject new capital, it temporarily declines since the available capital with an ROI of 0% is then larger for some time before everything is invested successfully. Once the capital is fully invested, however, the ROI climbs because loans that are paid back before the year is over can be reinvested again to earn more interest in that same first year. This additional increase is useful for setting off the potential drawdown because of bad loans.

Screen Shot 2014-01-16 at 10.45.34


As you can see here, my forecasted income is composed of mainly current loans, with all overdue loans making up less than 10% of the total.

As an aside, I have decided to remove a smidge of capital from my Piotroski stock portfolio to invest more heavily in isePankur, since the return in peer to peer lending is less subject to variability than the returns of stocks are. I am shooting for about half a salary’s worth of monthly income on isePankur, which seems entirely doable thanks to the rapid expansion of the P2P lending provider in other European markets. This guarantees a wider reach and plenty of new loans to invest in.

It seems that isePankur truly stands a chance of becoming THE pan-European P2P lending service.

# Update January 27th, 2014: As a service, the quick growth if isePankur now truly allows for quicker investment of funds. The recent shakiness in global equity markets has convinced me to diversify further, keeping about 40% of my net worth in stocks, 20% in cash and another 40% in isePankur, mostly because of its dependable return, which beats investing in stocks in uncertain times. I am now trying to get up to the point where I earn an entire month’s minimum salary (about 2000 EUR in Luxembourg) just from isePankur. I should get there within the next six months.

# Update April 10th, 2014: I’m continuing to invest in Bondora with really great results. Have a look at the numbers for my Bondora portfolio after 10 months. I’ll be doing individual posts for every update from now on, so I can add more charts without cluttering up this post.

# Update July 13th, 2014: Here’s the post for my Bondora portfolio update at 14 months.

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