December 2019: Year in Review, New Goals, and Black Clouds hanging over the P2P Industry
Hi Savings4Freedom friends! Happy 2020!
Nothing better than starting a new year by reviewing the previous one, but I also want to share with you my plans for the future.
What an experience so far! From all the enthusiasm in January 2019 with my initial post to the alarming news by the end of the year (Kuetzal is a SCAM), I learned so much! I´m really happy to have the opportunity to share with you my decisions, successes, and failures. I find this transparency as a brutal call to keep my goals and achieve them. Thank you so much for your support, questions, and suggestions.
Savings4Freedom Results from 2019
Last year key indicators are very positive:
- From 5 P2P Platforms by December 2018 (Mintos, Viventor, Grupeer, Envestio, and Bulkestate) to 11 key P2P Platforms by December 2019 (Monethera, Grupeer, Wisefund, Envestio, Crowdestor, TFGcrowd, Mintos, Viventor, iban wallet, FastInvest, and Kuetzal (read the review before investing).
- From ~200€ in monthly returns by December 2018 to more than 600€ by December 2019. This returns resulted in €1.693,83 (before taxes) in 2018 and €4.918,93 (before taxes) in 2019.
However, the key lesson from 2019 is that P2P returns are not real until they are back into your bank account, from your P2P platform. P2P crowdlending is a high-risk investment and everyone needs to have this message clear in their analysis before investing.
Savings4Freedom Key Goals for 2020
Now I want to share with you my 4 key objectives for 2020:
Objective 1: Reduce and Rebalance my P2P Crowdinvesting Portfolio
During 2019 my main goal was to maximize returns from my P2P investments. This decision drove my actions from P2Consumer crowdlending platforms, such as Mintos, Viventor, Grupeer, FastInvest or Robocash towards P2Business crowdinvestment platforms, such as Monethera, Wisefund, Envestio, Crowdestor, TFGcrowd, or Kuetzal (read the review). This increased the portfolio risk in a significant manner.
The results have been positive, as you can see in the table below:
|Internal Rate of Return (IRR)||13.02%||14.74%|
|True Time-Weighted Rate of Return||9.32%||14.83%|
However, since Kuetzal (read the review) is confirmed as a scam, all the positive outlook presented above disappears in one instant. That is one of the potential risks of these types of investments. I want to emphasize to all my friends the same warning.
In light of this reality, I will reduce in half my portfolio and rebalance my P2P investments portfolio in such a manner that I genuinely diversify my crowdlending investment, but at the same time, I gain comparative visibility over the results obtained from my different P2P platform choices on a monthly basis.
The reduction of my P2P portfolio aims towards reducing the risk of my overall investments and my exposure to this particular asset class. Until more information is available, I suggest everyone to wait.
This will be reflected initially in the €2.5K club: I will reduce the exposure I have in some of the P2P platforms I use where I invest more than €2.5K and increase in others where I currently allocate less than €2.5K. I will update this approach based on market conditions or particular industry information. This decision will pressure me to assume higher discipline and control my willingness to invest in higher return/risk platforms.
Two main implications will happen from this process:
a) My monthly returns will drop since I will move funds from P2P platforms with higher interest rates towards others with lower interest rates; but also…
b) I will keep validating the liquidity of my P2P investments, by continuous withdrawal of funds from multiple platforms every single month. This action, if successful, will allow me to keep trust in my P2P investments.
Objective 2: Explore New Investment Options
The key reason why I invest in P2P lending and crowdinvesting is the simplicity of the idea behind this investment model: money + time = interest. Also, it was my personal understanding that with an investment portfolio below €50K, I was not able to obtain true diversification by dividing my savings into other asset classes.
One of my objectives for 2020 is precisely to explore other investment options towards a more balanced and reliable return strategy. This means not only the exploration of the stock market (I’m currently learning how to invest by using eToro €100K virtual portfolio simulator) but also other alternative investments that I will share with you along this year.
Objective 3: Start a New Business
As probably some of you are aware, my wife is a pet-sitter at 4EveryPet.
With the funds made available from P2P investment withdrawals, one of my personal goals for the year is to build a digital business based on this particular niche market. This will be a particularly challenging objective, that will demand significant investment and with no promise of actual returns in the short term, but this is a long-term plan. I truly want to kick-off this project and turn it into reality until the end of the year.
Objective 4: Improve the Savings4Freedom Blog Design, Contents Quality, and Value
This last objective results from your direct feedback. I really appreciate all your direct messages, emails, and comments during 2019. I took note of your impressions and ideas on how the blog should improve and I will do my best to deliver.
As stated above, this blog works for me as a powerful motivational tool. It keeps me focused to report my findings, share my opinions and results every single month. But the most interesting aspect was the opening of conversations and network opportunities with fellow investors that face the same problems and search for the most reliable solutions.
These are the key reasons why I will dedicate more time to the blog in 2020.
But, without any further due, let’s check the Savings4Freedom returns!