New crowdlending platform in my portfolio

As you might know, I am already in Grupeer and Bondster. Now I have decided to diversify my crowdlending investments further and inspired by financiallyfree who has praised Crowdestor on several occasions I decided to take a closer look at that platform.

They have not as many open investment opportunities as Grupeer or Bondster but interests are high and furthermore, they have a buyback fund. Grupeer provides a buyback guarantee on most of their loans but this works differently.

Crowdestor has initially invested € 50,000 in its Buyback Guarantee Fund. Furthermore, they devote 1-2% of each investment project into the fund and their goal is to reach € 100,000 in 2019. With this fund, they are able to compensate investors if the borrower’s loan defaults.

It’s a relatively young platform as they opened up for investments in 2018. But they have done well so far and almost all their projects are 100% funded. It goes really fast when they open up for a new project, so you need to have funds available on your account if you want to invest in a specific project.

Initially, I would have invested in a drum school in Latvia (my 5-year old son plays drums so I had a personal interest. It’s a project worth € 40,000 but I was too slow. The project was funded a few hours after opening up for investments. Too bad, but lesson learned.

Whit that opportunity our of sight I turned against a Riga based hostel renovation project. This is the 2nd stage of the thorough refurb which will bring the next building levels and its furniture, toilets, and kitchens up-to-date.

The first renovation project was worth € 200,000 and fully invested. The maximum target for the 2nd stage is € 450,000 and as of writing it’s 58% funded which makes € 191,410 still open for investments.

The project opened up for investments yesterday (August 8th) meaning I expect it to be fully funded within a day or two.

The loan period is 12 months and the interest rate is 15%.

What I like about Crowdestor’s project is the amount of information about each project provided. You can even watch a small video about the hostel project on their homepage.

As you can see from the below screenshot it’s secured by the Guarantee Fund and interest payments start from day one of your investment.

A small platform review (I know, it’s not even a review, merely information about my new investment).

Oh, I almost forgot: I used Revolut for the transfer to my Crowdestor account. It worked well as the money I sent was ready for investing the day after I pressed “send”.

I wish you a nice weekend 😊      

Grupeer transfer methods

Two days ago I received this mail from Grupeer (which is one of my favourite crowdlending platforms):

This was the bank account I normally use when transferring money from my Revolut account. Initially, I believed I had to make ordinary (and costly) bank transfers from my Danish bank account from now on, but luckily that was not the case.

I wrote them an email today at 08.42 and asked if their Baltic International Bank account could be used for Revolut transfers and shortly after (at 08.58 actually) they confirmed it can.

Some investors in various Facebook groups have often complained about long response times when having contacted the Grupeer support, but I have never experienced that. And in my opinion, a response time of 16 minutes is very acceptable.

However, Revolut can still be used for transfers and I am happy as I hate paying for a money transfer when I can have it for free.

I wish you all a nice day 😊

When will the next financial crash hit?

And how will it affect the crowdlending markets?

My best guess (and it is a guess) is somewhere between tomorrow and the year 2099. And my guess is exactly just as good as a prediction from any Wall Street-stock-market-white-collar-analysist or a high ranking European Central Bank boss.

The correct answer to this simple question is: we don’t know!

Why can’t this be exactly foreseen? For several reasons:

  • Which new idea will pop up in Donald Trump’s head tomorrow regarding the US-China trade war?
  • Will he lose the 2020 run for The White House election? And how will the markets react if a Democrat enters the Oval Office on January 2021?
  • What will the outcome of the BREXIT be? Deal? No-deal? – and what to follow then??
  • Will the media uncover a big Lehman-Brothers-size financial scandal which can cause an economic downward spiral?
  • Will the real estate markets in the US, Europe or Asia collapse due to mortgage debt defaults?   

All the above scenarios can push the global economy in the wrong direction and lead to a global crisis.

And I say can, not will because of even if the housing market in parts of Europe or Asia collapses it will not automatically lead to a global financial crisis. Several more factors are part of that and both governments and financial institutions have their instruments to go up against it.  

Thousands of scenarios can be set up and are more or less every day. One day a global recession will eventually appear and the last journalist or financial analysists who predicted an economic collapse was on its way can proudly claim that he/she had foreseen this would happen.

Like Eeyore from Winnie the Pooh says: it will start raining, sooner or later it will.

Mark my words: sooner or later it will start raining.

But most probably a recession will happen one day. We just don’t know when it will happen, how it will happen and the scale of it.

Will it affect the crowdlending markets? Yes, I assume it will but it’s hard to see in which direction.

If the banking sector refuses to finance new business or development loans it can literally boost the crowdlending markets. That is likely to happen if it is a new financial crisis derived from issues internally in the financial sector.

If the crisis, on the other hand, starts with a decrease in consumer demands it can lead to unemployment, default bank loans, lower export sales, more unemployment, etc.

Then we might see an increase in personal loans in the crowdlending markets which is fine from our perspective, but are the customers able to repay the loans?

Are the crowdlending strong enough to withstand that? Are the loan originators? Or will the crowd panic and make a bank-run on the crowdlending sites, withdraw their money causing the market to collapse?

Again, I don’t know and frankly, nobody does.

I am not employed in the financial sector, I am not even blessed with financial education so who am I to claim that the next collapse can’t be foreseen?

In September I will turn 43. I realize that it is not very old, but I am old enough to remember the ‘90s when parts of the Asian markets collapsed. Some had foreseen it, some had not.

Later in that decade all traders said “buy IT shares and you can make a fortune”…..which was true if you sold the again before the bubble burst in 2000. Some had seen it come, some had not.

I recall a conversation in 2003 or 2004 with someone who claimed you should invest in real estate as housing prices will only go one way: up! True….until 2008 and the housing market collapsed……as it did back in the ’80s in Denmark.

The same happened with my pension saving in December 2018, when I lost about 10% of its total value. It has however recovered and has grown since. Just like in 2008.

So, what is the point with this article? Well, as history shows the economics go up and down. So do the stock and housing markets and unemployment rates. We can’t prevent it – nor predict when it occurs.

I am not a pessimist, I am not an optimist – I am just realistic that it will eventually happen.

What I am doing to minimize the damages is to spread out my investments on crowdlending, stocks, and bonds. I consider blockchain currencies but do not know much about this technology. And most important of all: I do not panic when it happens.

Naturally, I will hate to take a loss. All investors will. But I still believe that I will earn money in the long run.  

With this, I hope you will close the newspapers and shut your TV whenever the doomsday preachers turn up and claim the next economic collapse is near. They are just guessing!

I wish you a great day 😊