Experiment How to open a Mintos account and invest 1'000€ in peer to peer lending in 8 minutes (~10% wished return)

Important: 09.03.2020 update

It seems that I have been victim of the worst disease an investor can have: the boredom of passive investing.

I will explain all my learning about P2P in a future article but I wanted to add two more warnings to this article:

1. My investment strategy now only allows maximum 1% of my portfolio in P2P. And potentially I’m going to remove it completely. Until I decide, I won’t exceed this limit because it’s too much risk and complexity if I want to manage my P2P investments properly. You should do the same
2. As you can see, I’ve changed the title of the article to “Experiment” just like the cryptocurrencies. And this is until I make up my mind more definitively about P2P loans. Thanks again to the readers of the blog and forum for the constructive exchanges over the last few days

Why I invest in P2P lending?

Since I started on the blog, I had a strategy of investing only in ETFs. My goal with this portfolio was (and still is) to generate between 6-8% return over the long term (i.e. 10-15+ years).

Except my 40th birthday is coming up. By that date, we’ll have to have reached our net worth target of CHF 2'156'000 to be financially independent.

So in addition to looking for other sources of income (like with this personal blog project), I spent 2019 exploring investment options that could bring in more than 8-10%.

We have already discussed the two options that have complemented my investment strategy, namely rental property and value investing.

The third option I tested at the end of 2019 is the investment in peer-to-peer loans (also commonly called P2P loans).

Except that when you start in this world of P2P lending, you face two things: a huge amount of blogs that swear by it but mostly by the juicy affiliate commissions, and a few well-done sites that you have to find after many Google searches…

So, as usual, I’ll share with you a short summary of why I chose Mintos (affiliate link let’s be clear, but because I trust this platform and invest my own cash in it).

What is Mintos?

In case you don’t know anything about the world of P2P loans and all the platforms that have been created around it over the last few years, here’s the one-paragraph overview.

On the one hand you have companies lending money to individuals, and on the other hand you have investors like you and me who want to make our savings grow. In the middle you have companies like Mintos that connect those loan companies with investors.

On average, these platforms offer returns between 10-20% depending on the degree of risk taken.

Do such returns seem too good to be true? Think again because it’s actually quite simple. Imagine that someone borrows 1'000€ for one month and has to pay back 1'050€ the following month. Not so shocking isn’t it? And yet, that’s 60% annualized interest rate! No wonder these loan originators are OK to leave us a few crumbs with these 10-20% expected returns.

Until now, I did not invest in it because of the ethical side of it because on the other side of the lending companies, you find people who make consumer and car loans for the most. But when I dug a little deeper, I realized that yes, there were a lot of them, but there were also other loans available, for example in agriculture, for small businesses, or in real estate.
I let you judge for yourself where the cursor of your values lies.

Also, remember that if your cash is sleeping in your bank account, the bank does not do any better by using your cash to offer car loans, consumer loans and mortgages as well.

The different ways to invest with Mintos

On Mintos, you have three ways to invest your money:

1. Invest & Access: you can let the platform invest everything automatically for you but at the same time you can’t exclude certain types of loans or certain loan companies that you potentially don’t trust. But with this you don’t have to wait until your loans are paid back before you can withdraw your cash with interest (i.e. you can withdraw all your money anytime you want). But, because there is but, when you want to withdraw your money, you can usually only withdraw 60-80% directly from your invested cash because the other 20-40% are usually late payment loans. You therefore have to either resell these loans on the secondary market on Mintos (not yet possible automatically), or wait until they are regularized, or wait 60 days of default for the buyback guarantee to come into play. So be careful not to invest cash that you need in the near future
2. Auto Invest: with this system you can filter all the loans with criteria such as type (consumer, agricultural, car, business, etc.), lender (which company), maximum loan duration you want, minimum and maximum rate of return, and others. And it is Mintos that takes care of investing by diversifying the amount you tell it, with how much maximum per loan you want to put. On the other hand, you have to wait for the loans to be fully repaid before you can withdraw your money. Unless you manage to resell your loan on the secondary market (i.e. other investors buying back a loan that has already started) also available on Mintos
3. Manual investing: as its name suggests, with this last option to invest with Mintos, you will go and get each loan one by one and decide how much to invest in it

For my part, in order to get my feet wet without thinking about it for hours, I have for the moment invested 1'000€ via the ‘Invest & Access’ strategy. This is the method that I explain below.

An important criteria: Buyback guarantee

When I’m going to invest by filtering loans with the “Auto Invest” method, I’ll tell you about the different things to watch out for.

But for now, there is an important concept to understand: the “buyback guarantee”.

I will only invest in loans with this “buyback guarantee”.

What it means in concrete terms: if the loan is more than 60 days late, then the loan company will buy it back from me and pay me back the outstanding principal and accrued interest.

All the platforms I’ve seen so far offer this filter and have many loans with this guarantee.

The goal, as you will have understood, is to minimize the risk of losing money as an investor.

How to open a Mintos account (in 8 minutes)

Mintos is at the time of writing “only” available in English, German, Spanish, Dutch, Czech, Latvian, Polish, Russian and Czech. As a result, many French-speaking readers who are not comfortable with these languages have asked me for a good old Mintos tutorial to be sure to invest correctly and not click on a wrong button :)

First step: open a Mintos account. To do so, go to the Mintos website.

Also, remember to have your passport or ID card with you for identity verification.

Mintos account creation

Next, follow these screenshots:

Enter your email address and click on the 'Create account' button

Indicate your name, first name, password, country where you live, and accept the terms and conditions (the last checkbox is to receive their newsletter, no thanks ;))

In case you've changed your mind since the last screen concerning their newsletter, they ask you again if you want it... Click on 'Maybe later'

Verifying your identity

The following screens show you the identity verification process to finalize the opening of your Mintos account:

Click on 'Verify' to start the verification of your identity

Bottom of the screen of the ID verification section that explains you how it's going to happen

Enter your address: 1. your city, 2. your address, 3. your zip code, then click on 'Register'

Are you a politically exposed person? If yes, answer 'Yes', if no, answer 'No'

Fill in your job type (employee, freelancer, etc.) and your field of activity

Click on 'Open camera' to launch your camera

Mintos explains here that the audio and video of your session will be recorded, that you'll have to do a selfie, that you'll be asked to take your photo ID, as well as a selfie with it

Select the country that issued you the ID that you will use to verify your identity with Mintos

Select the type of your ID (Passport or ID card)

Take a selfie of yourself. Make sure your face is in the circle. Then click 'Continue'

Take a picture of your passport (the part with your picture on it) then click 'Continue'

Take a selfie with your passport open on the page with your picture on it and click 'Continue'

That's it, it's over, and Mintos is now checking your identity...

Just a few more questions from the Mintos marketing team to find out where you heard about them? If via my blog then select this option

Then you have to mention the website/blog where you heard about Mintos (thanks in advance if you put my blog, it might give them the idea to make our partnership evolve with more advantages for you and me ;))

Penultimate question: when did you first hear about Mintos?

And the last question: how much do you plan to invest via Mintos?

Click on 'Submit' to submit the form

Click on 'Back to Mintos' to return to their site while they check your identity

As you can see, your account creation (1) is complete, and your identity verification (2) is in progress

In the next few hours or even the next day, you will receive an email telling you that your identity has been verified. You can now click on 'My account' to continue with the next step

How to add money to your Mintos account (with the best CHF-EUR exchange rate via Revolut)

Now that your Mintos account is open, and your identity has been verified, it’s time to get down to business.

To start with Mintos, I chose to go with €1'000 to test the platform for a few months before injecting cash back into it.

Knowing that you and I live in Switzerland, we speak in CHF. And we don’t want to lose out on exchange fees.

My summary process for transferring funds in CHF to your Mintos account in EUR is: from my Swiss online bank Zak or via my Cumulus MasterCard, I send the CHF to my Revolut account. Then I use the Revolut exchange function to convert my CHF into EUR with the best CHF-EUR exchange rate. And finally, I make a bank transfer from Revolut to Mintos.

And here’s what it looks like with screenshots.

First the step on Mintos where you will look for the transfer information:

Click on 'Add funds'

Choose the currency in which you want to transfer your funds

For my part, it's euros that I'm going to send...

I put below the summary of the steps to make a money deposit on Mintos, as explained by them:

How to make a deposit on Mintos

1/ Select 'Bank transfer', 2/ copy all the information in your e-banking, and 3/ don't forget to indicate your Mintos ID so that your funds go to your account (and not the neighbour's)

And then we make the transfer via Revolut. I’ll skip the Zak to Revolut transfer step because I’ve already described it in other articles such as this one in step 3).

Click on the button to change money

Indicate the amount in euros (1) that you want to change, and click on the button (2) then

Add Mintos as a recipient in Revolut so that you can transfer your money there afterwards

Click on the '+' symbol to add your Mintos account

Choose 'Bank account'

Choose 'To a company'

Indicates 'Estonia' and 'Euro'

Indicate the name, IBAN, and BIC/SWIFT of Mintos (be sure to look at the information they give you to make sure it doesn't change between the time you do it and the time I write this)

That's it, it's done, you can now transfer euros to Mintos from Revolut

Search for 'Mintos' as recipient in your Revolut app

Click on 'Send money'

Indicate the amount (1) (I put 10 euros because I forgot to make the screenshot when I transferred 1'000 euros) then add your Mintos ID (2)

There you go!

Once you have completed these steps on Revolut, all you have to do is wait for this email from Mintos:

Email notification from Mintos to let you know that your funds have arrived on their platform

How to invest 1'000€ on Mintos in 9 seconds via “Invest & Access” (~10% expected return)

Now that your cash has arrived on Mintos, all we have to do is invest it. As mentioned above, I started with the Mintos “Invest & Access” program where you invest literally in one click. And your loans are very diversified and all have the famous “Buyback Guarantee”.

So go back to the site Mintos.com and follow these last steps:

Login to your Mintos account

Click the 'Invest & Access' investment program

If you scroll down on the previous view you can see the two types of Mintos' automated portfolios

Let's get down to business: choose how much you want to invest (1) and read and accept the Mintos terms and conditions (2)

And that's it! Your portfolio is now being created automatically

Click on 'Overview' to check that everything went well with (1) your invested funds and with (2) the fact that all your P2P loans are in 'Current' (i.e. they are not yet in arrears, obviously as you just started)

If you go back to the 'Invest' > 'Invest & Access' section, you can also see the summary of that particular portfolio (this is also where you can withdraw or add money)

In the 'Portfolio' section you can see statistics on your different P2P loans: (2) interest rates, (3) remaining terms, (4) types of loans, and (5) loans detailed one by one

And finally in the 'Account statement' section you can see your account statement with all the P2P loan purchase transactions you have just made automatically thanks to the Mintos 'Invest & Access' program

You can see on this last screenshot the status of my account after a few days with several loans that are in arrears. If one of them is more than 60 days overdue, the originator of the loan will reimburse my invested capital and interest thanks to the famous buyback guarantee

Important notes

I must remind you two important notes about these P2P investments and Mintos:

1. I’ve only invested 1'000€ to test Mintos for now, and will add cash up to 5-10% of my total portfolio to the maximum (and I’ll probably test other platforms but you’ll be the first to know)
2. Mintos seems to be the most reliable platform according to my analysis, but if you go for it, do your usual checks and don’t put all your money into it or into other platforms if you don’t really understand what you’re doing

My next steps with Mintos and P2P investing

Here are in two points what I plan to do with P2P and Mintos:

1. Evaluate other P2P loan investment platforms to be diversified from Mintos
2. Create my own Mintos portfolio by excluding certain originators of loans that are too risky, as well as certain types of loans

BONUS: special cashback offer Mintos account opening for Team MP

I signed a special partnership with Mintos for the members of the MP Team. If you use the link below to open your account, we will both benefit from a bonus cashback of 1% of your average daily balance which is paid in 3 instalments during the first 90 days (I thank you in advance). The best is to explain it with a concrete example:

Imagine your name is Sara and you use my Team MP’s special link to start investing in P2P loans via Mintos. After 30 days, your average balance invested over this period is 3'500 euros. Mintos will then credit 1% of 3'500 euros (35 euros) to your investor account, and another 35 euros to my Mintos MP account. After 60 and 90 days, Mintos will review the average invested balance and, if it increases, they will credit your investor account and mine accordingly.

And you, have you ever dared to take the step of investing in P2P? Or is it “I’ll never do so in my life” because it’s too risky?

PS: just as I was finishing this article, Mintos announced the release of their mobile application which, for the moment, only allows you to check your portfolio. You’ll find the download links for the Mintos app on the Apple App Store and Google PlayStore at the end of this article.

Challenge March 2020 between CHF 1'500 and CHF …

My Swiss tax deductions for 2019