Help us find our new Head of Investor Relations and earn €1,000

Bondora Capital searching for Head of Investor Relations Poster

Bondora Capital is searching for Head of Investor Relations. Finding the perfect person will help you getting the best service possible from Bondora. We are also giving away €1,000 in cash to make it worthwhile for you to support us.

Let us know if you have a friend, colleague or a family member that would be perfect for the Head of Investor Relations position at Bondora.

  • First take a look at the job description and make sure the person you are thinking of really fits the bill.
  • Talk to the person you think would be suitable and see if they are interested.
  • When pitching the position, make sure to refer to the job description in our blog.
  • If they are interested, forward their contact information along with their CV or link to their LinkedIn account to partel.tomberg@bondora.com (along with a reference to this offer) and make sure your friend knows we will be contacting them.

In case your friend is hired, we will pay you a reference fee of €1,000 four months into the contract.

Share the word and help make Bondora better!

Taxation of P2P investments in Estonia

Tax filing season has once again started in Estonia and many investors have been asking about declaring the earnings from their Bondora investments. To answer this question we gathered the relevant information and provided a step-by-step guide on where to get it on Bondora. The information has been collected with the help of Estonian Tax and Custom Board.

Below we have provided:

  1. A short summary on how peer-to-peer lending is taxed for Estonian residents and,
  2. A step-by-step guide on where to find the relevant data on our platform.

Summary: How P2P Lending is Taxed for Estonian Residents

What type of personal income is taxed in Estonia?

Taxable income in Estonia includes income from:

  • Employment,
  • Business income,
  • Interest (§ 17),
  • ental income and royalties,
  • Capital gains,
  • Pensions and scholarships,
  • Dividends,
  • Insurance indemnities and payments from pension funds
  • Income of a legal person located in a low tax rate territory.[i]

Charging income tax from interest (§ 17. Interest of the Income Tax Act)

Income tax is charged on all interest accrued from loans, leases and other debt obligations, as well as securities and deposits, including such amount calculated on the debt obligations by which the initial debt obligations are increased.

Interest also includes monetary payments made to unit-holders on account of a contractual investment fund, excluding the payments specified in subsection 15. The fine for delay (late fee) payable in the event of delay in performance of a monetary obligation is not deemed to be interest. Find more detail in English or in Estonian:

How income in peer-to-peer lending is taxed in Estonia for a private person?

The income tax rate in Estonia is 20%. In peer-to-peer lending the yearly declaration consists of:

  1. Earned interest (received interest payment from the borrower)
  2. Earned interest from defaulted loans
  3. Secondary Market capital gains (profit earned from selling and buying loan shares)

For Bondora investors that means declaring “Total Interest Received”. This column consists of all earned interest and earned interest from defaulted loans. This information is on the Cash Flow page. Read on to learn where and how to find the data from Bondora.

Citizens must still declare the earned interest even if your net profit are purely virtual and your strategy is to reinvest all your returns.

If for some reason you haven’t earned any profit in a calendar year, then you have no duty of declaration – you only pay on actual received interest payments.

Keep in mind that you cannot use Investment Account (§17-2) to invest on Bondora. And when declaring your income as a private person you cannot offset any losses or fees against earned interest and income tax is payable on gross interest received.

Are capital gains earned from trading on the Secondary Market also taxed?

Yes, you are obliged to declare any capital gains earned from profitable sales on the Secondary Market. Here is an illustrative example: Let’s say you bought a €5 loan and sold it with a mark-up for €6 from which you made a profit of €1 – this €1 you declare as the Secondary Market capital gain.

Step-By-Step Guide: Finding Your Earned Income on Bondora

REPORTS – Tax Report PDF

Go to the Reports page, choose the period and click on the PDF icon. The Tax Report will be created for you immediately. On the Tax Report PDF the most relevant rows are “Interest Received” and “Interest Repaid from Loans in Default”. Total interest received is the sum of the two.

If you want to know the earned capital gains from Secondary Market trading, the relevant values to look at are “Profit from secondary market sales”, “Profit from secondary market purchases”, “Losses from secondary market sales” and “Losses from secondary market purchases”.

Bondora Tax Report

Tax Report - Income Statement

Tax Report - Account Statement

REPORTS – Monthly Overview

The second option is look at the Monthly Overview report in the Reports page. Click on “Create new report” and check “Monthly overview” and choose your period. The relevant rows for you are “Repaid Interest”, “Repaid Penalties”, “WriteOffInterest” and “DebtServicingCostInterest”.

——

[i] According to Estonian Income Tax Act chapter 3 Taxation of income of resident natural persons – § 12.

Bondora Capital is searching for Head of Investor Relations

FinTech is the industrial revolution of our time and Bondora is at the center.

We are looking for someone join us as Head of Investor Relations.

Why Bondora is different

Bondora empowers communities by leveraging technology to connect investors and borrowers. Our model makes affordable, fast lending accessible for underbanked regions.

Our marketplace investor base is largely retail with over 22,000 investors from 40 countries. The transparent framework of our business has given users the confidence to invest more than 80 million euro delivering over 17 million euro in interest.

The result: 89% of investors earn more than 10% annually and borrowers get loans without hassle. Our marketplace lending solutions have generated returns above peer groups since 2009.

We want someone to broadcast our message of value as we
continue to usher in an era of financial prosperity.

We’re looking for someone who

  • Understands the power of marketplace lending to transform the world of finance.
  • Has experience in managing public relations and social media communication and you
    do not buckle when faced with complex questions
  • Has the ability to lead and support a team of investor relations associates.

What are the responsibilities?

  • Management of Bondora’s investor relations strategy and implementation.
  • Handling of all our social media channels.
  • Establishing and growing personal relationships with key customers.
  • Creating a network of external partnerships relevant to investor relations.
  • Sustaining a high performing, well-trained team that delivers results.
  • Stay ahead of industry developments.
  • Remain vigilant of competitors and regulatory changes.

Join our team and get…

  • A chance to engage with an international team of high energy, young professionals ready to change the world of finance.
  • A chance for potential long-term growth in an environment built for your success with a casual start-up feel.
  • A direct engagement with our CEO and a clear line of communication to all team members to create change.
  • A family of supportive team members committed to collaboration.

The bottom line: We’re offering the opportunity to stand at the fore of the most powerful innovation of today: the democratization of finance.

The location of the job is Tallinn, Estonia.

To apply: Please send your CV and cover letter to partel.tomberg@bondora.com.

Why you need marketplace lending to diversify your asset classes

The most important rule for investors is diversification. Spreading your savings across a wide group of holdings mitigates risk. Traditionally, investors commit to the popular blend of 60% stocks and 40% bonds. Many believe this simple approach satisfies the goal of diversification. While such a portfolio contains many different companies the strategy is flawed because only two asset classes are in play. In this post we’ll take a look at the two reasons why stock and bond diversification is insufficient for building long-term wealth.

Domestic and International Equity Correlations Are Rising

The idea behind diversification is simple. Holding a broad group of stocks means an investor can weather downturns isolated to a few companies. The misfortune of one stock in a portfolio may be the windfall of another. This phenomenon creates balance over the long-term. However, in recent years, this inverse relationship has faltered. “Since the post-financial crisis market bottom in 2009, the rally in equities has been extremely broad. Not only is every S&P 500 sector up since that point, but so are 96% of the S&P 500 components,” remarks a reporter for MarketWatch. For the moment this is good news for investors. However, the reverse side to the coin will be equally powerful when stocks inevitably decline; the effect will be across all equities.

One way to combat this problem is with exposure to both domestic and international stocks. Unfortunately, rising correlations are a problem here as well. Research from BlackRock shows that between 1980 and 1989 the correlation between U.S. and international equities was just 0.47. Between 2010 and 2015 this figure grew to 0.88. This trend undermines the purpose of diversification. There are many reasons for this development. Our global economy has become increasingly interconnected as trade increases between countries. Additionally, technology has enabled more cross border engagement which builds more symbiotic relationships. Simply put: domestic/international diversification isn’t as effective as it used to be.

Stock and Bond Correlations Are Rising

One Morgan Stanley Investment Management portfolio manager recently remarked, “There’s no getting around the fact that when assets are highly correlated it’s difficult to construct a diversified portfolio.” Unfortunately, this is exactly what is happening in today’s market. As bonds rise and fall in lockstep with stocks, investors are not getting the diversification they need. More troubling are the lower returns. That is, bonds offer a lower return than stocks because of their lower risk profile. However, as correlations rise between stocks and bonds this risk/return trade off becomes less attractive.

Why has this trend emerged? “Historically, the value of a fixed- income asset was mainly driven by economic fundamentals, with a smaller component coming from other kinds of risks. Today, the opposite is true,” lamented the portfolio manager. The ultimate result is that market volatility has a greater impact on investors. Losses are compounded. In mid 2016 Morgan Stanley Research reported that the previous 12 month correlation between stocks and bonds increased 22%.

The Solution: Asset Allocation

With correlations rising investors need to be more cognizant of diversifying across a greater number of asset classes. Relying on stocks and bonds is not enough.

Consider research from Vanguard citing “From 1988 through 2007…a portfolio allocated 50% to U.S. stocks and 50% to U.S. bonds would have averaged a 9.9% annual return with a standard deviation of 7.4%.

How does this compare with a more diverse array of assets? “A portfolio equally weighted among the six categories of assets…in addition to U.S. stocks and U.S. bonds (12.5% allocated to each) would have averaged a 10.9% annual return with a standard deviation of 7.6%.” This comparison illustrates how numerous asset classes can deliver a higher return for nearly the same risk.

Other asset class include commodities, real estate, emerging market funds and of course marketplace lending. Investing with Bondora’s P2P investment platform does carry some risk. However, this risk is different than those inherent in stocks and bonds. Moreover 89% of Bondora investors earn over 10% annually. This is extremely competitive with the 5.4% inflation-adjusted annualized returns (1900-2011) of stocks according to Credit Suisse.

Boost the diversification and return of your portfolio with the growing business of P2P lending.

How compound interest returns can be magnified by peer to peer lending

Albert Einstein called it the eighth wonder of the world. Warren Buffett has become one of the world’s richest men by leveraging the power it has to provide.

Compound interest has been a source of wealth consolidation for many of the world’s richest people, yet its secrets are often cloaked in mystery for the average investor. The process however is not as complex as many believe.

Principle of compounding interest

Wikipedia describes compound interest as the principle of earning interest on interest. Rather than spending the returns, any interest or income earned from an investment is immediately reinvested in the initial investment. The true power is in how quickly these returns can accelerate. Let’s illustrate with a non- financial example.

If you folded a piece of paper in half 100 times how high would it be? If you guessed the height of your house then try again – if you could achieve it the height of your paper would actually reach the edge of the known universe.

How? Exponential growth. A constant doubling can then double on itself. Two becomes four, which becomes eight, then sixteen, thirty two, sixty four and so on. Each fold takes you to double the height you had before.

Compound interest works on the same basis. You might not be able to find an investment that can double every year but if the return was 10%* per annum the same principle applies.

Examples of interest compounding over the years

Let’s assume an investor invests €10000 into an investment that yields 10% per annum. They reinvest the funds each month back into the market, earning them 10% on their 10%. How much money would they have after 10 years?

Thanks to the benefits of compound interest the initial investment would have grown to over €27000. If they retained the investment for fifteen years their return would be more than €44000 – the additional five years would have provided them with the same amount of dollar growth as the first ten years put together. By twenty years the balance of their investment would be €73000 and after twenty five years €120,000. All of this from doing nothing other than reinvesting. Now, if funds are regularly added to the investment from other sources aswell (e.g percentage from the salary), the benefits can really accelerate.

Example of compounding interest

Better returns with P2P lending

So how does peer to peer lending help this acceleration? One of the principle benefits of peer to peer lending is its ability to remove the middle man – lending institutions – from the equation. Let’s assume the investor above had made their investment through a lending institution, like a traditional bank. Assuming a margin of 2% for the institution our investor would have only yielded 8% return on their investment.

Running the same numbers based on an 8% return our investor would have achieved just over €22000 after investing for ten years, approximately €5000 less than they would have accumulated at the ten percent return. By fifteen years the funds would be €33000, after twenty years €49000 and by twenty five years the balance of the investment would be €73000 – approximately €47000 or nearly 40% less wealth than would have been achieved at the higher rate of 10%. Our investor would have only achieved in 25 years what they would have achieved in 20 years at the higher return. And this comes from only 2% difference in the yields. You can reinvest in peer to peer lending without compromising your risk profile as we detail in this blog post.

Despite the mysteries that surround it, the formula for calculating compound interest is not that complex. Rather than diving into it, you can try using any of the compound interest calculators available online that will allow you to calculate compound interest using different scenarios. You can find one here.

* the figures cited are an example and are not set to indicate expected returns.

Join the Bondora community on Facebook

Many of the most encouraging stories don’t come from us, they come from our users.

Bondora Facebook page

Bondora has a wide community of users that share their experiences, tips and insights. Now, you can join this group on Facebook. We provide regular update on topics like portfolio performance, new site features and tools.

As this community grows you’ll see how many different strategies our users leverage to beat their bank by generating better returns through marketplace lending. Through the power of social media you’ll be able to engage in discussions to learn how you can maximize the value of Bondora and become more comfortable with our features and tools.

When you join us on Facebook, you’ll receive daily updates that deliver concise data and writing to keep you informed with the latest news. You can also use our Facebook page to message us directly with questions or suggestions. We keep an open line of communication and wish to initiate a dialogue with our users.

Discover us on Facebook and meet others like you interested in seeking a better investment returns.

 

Check out our Facebook page

VIDEO: Weekly summary – December 7, 2016


POSTS FROM PAST WEEK

Monthly origination summary for November 2016

Originations in November marked a new record for us with € 3,338,570 of loans originated. The previous record was €2,782,475 in August of 2016. In comparison to October 2016 our originations have increased by 36%. While each country experienced an increase in originations over October Finland saw the most dramatic change. Finland’s October origination was €499,185 while November totaled €1,040,950 representing a 108% increase in just one month.

Read more about it

Weekly industry news roundup – December 5, 2016

In our regular industry news roundup we reviewed the many marketplace news stories over the previous week. On Thursday the Los Angeles Times reported on a recent move from Office of the Comptroller of the Currency to allow bank charters to be issued to online marketplace lenders in the U.S. CrowdFund Insider published an article about a strategic partnership between PeerIQ, a P2P analytics provider, to better inform lenders of market data. AltFi News posted an article on the connection between marketplace lenders and financial health apps. Banking Exchange discussed the growing number of underbanked regions in which marketplace lending can continue to grow.

Estonian Business news site Äripäev published an article by Bondora CEO Pärtel Tomberg about how the burst of Swedens real estate bubble will have a large impact on Estonian economy due to Swedish banks controlling nearly two-thirds of Estonian credit market.
Bondora was also listed among 25 fintech companies to watch in 2017 by technology news site Silicon Republic.

Read more about it

A closer look at loan statuses

In this post we provided more detail on the meaning of the color-coded Bondora rating system. The various colors assigned to different loans provide a quick visual reference for investors gauging the activity on a loan. Current loans are green while overdue loans are red. It is important for investors to understand the meaning of these colors to better set their expectations for a given loan.

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How Bondora strives to achieve diversification for investors

On Thursday of last week we explained the parameters and calculations we use to achieve diversification for our investors. We outlined the process by which the Portfolio Manager tool strikes a balance between the pursuit of returns and diversification. Bondora uses such characteristics as available cash balance, expected cash flow, desired capital deployment and more in these calculations.

Read more about it

VIDEO: Weekly summary – November 30, 2016


POSTS FROM PAST WEEK

Statistic reports: Investment statistics by criteria

Yesterday we took a closer look at the investments by criteria feature on the personal statistics page. Users can get a visual of their portfolio using the five metrics of loan status, loan purpose, loan rating, country and bid size. This graphical representation allows users to quickly see the composition of their holdings to better manage risk and return.

Read more about it

Weekly industry news roundup – November 28, 2016

In our regular industry news roundup we looked at a new event called “Startupbootcamp” which aims to help emerging FinTech businesses many of which are marketplace lenders. Forbes reported that between 2010 to 2016, investments in the Fintech jumped from $1.8 Billion to $5.2 billion in the first quarter of 2016 alone. Other news sources wrote about the trend of borrowers choosing P2P models over traditional banks. P2P Lending Experiences and Bobsguide.com both cited Bondora as a key player in the emerging marketplace lending world.

Read more about it

Bondora portfolio performance – November 2016

In our monthly portfolio performance report we shared that our realized net returns for Q2 exceeded four of the five previous quarters. Estonia and Finland outperformed their targets by 519 basis points and 376 basis points respectively. Some loans in each country experienced a decline in performance. However, since Q4 of 2015 the actual realized net return across portfolios has exceeded the targeted figure.

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Customizing cash flow projections with Forecast Settings

On Thursday of last week we looked at the forecast feature on the cash flow page. Investors can use this easy tool to predict cash flow from their investments. Users with a limited personal investment history can view cash flow forecasts based on the overall Bondora portfolio history. More established investors can choose to use their personal portfolio history for projections.

Read more about it

VIDEO: Weekly summary – November 23, 2016


POSTS FROM PAST WEEK

A deeper dive with the Investment List report

Yesterday we provided information on how users can leverage the granular detail of their holdings through the investments list option on the “Reports” page. By choosing a date range and exporting the information to a CSV file users can sort 129 different metrics comprising their investments. This is a great option for those seeking greater oversight to their Bondora account. In the coming weeks we will provide detail on other reporting options.

Read more about it

Weekly industry news roundup – November 21, 2016

On Monday we brought you our regular review of the most pertinent news from the world of P2P lending. We discussed findings from Juniper Research indicating that revenues derived from FinTech lending platforms will exceed $10 billion globally by 2020. We posted an article from the Financial Times on some marketplace lenders seeking to expand via a traditional banking license. Additionally, The Hindu Business Line shared data indicating that P2P lending grew to £4.4 billion in 2015. The Huffington Post released an article detailing how P2P platforms are the best alternatives for investors looking for higher returns.

Bondora was mentioned in two German articles – one about it’s decision to remove Primary Market from the user interface; and another about how P2P platforms are currently the best alternatives for investors and borrowers in countries that are underbanked.

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Statistics reports: Track the performance of your defaulted loans

On Friday of last week we showed investors how they can track the effectiveness of recovery efforts with regard to defaulted loans. The “Recovery Rate” feature is a convenient measurement for those seeking to monitor risk within their portfolio. The report can be generated from a variety of parameters to inform the users future investment style.

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Loan funding per channel for October 2016

On Thursday we provided our monthly loan funding by channel update for October marking the final month for manual investing in the Bondora platform. The Portfolio Manager carried 86% of the investment inflows for the month. Manual investing and the API platform represented 8% and 6% respectively. The automation of the Portfolio Manager tool continues to make it a favorite with investors.

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VIDEO: Weekly summary – November 16, 2016


POSTS FROM PAST WEEK

Build earnings through the Bondora affiliate program

Yesterday we announced our new affiliate program. In only three steps you can begin making money. The program allows affiliates to earn 5€ for every registration that results with a at least 5€ deposit originating from their unique affiliate URL. You’ll earn even more when you receive 5% of the total invested amount from a new user. Simply contact us using affiliate@bondora.com to start today.

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Weekly industry news roundup – November 14, 2016

In our weekly industry news roundup we reviewed the growing P2P marketplace opportunities in the UK and even New Zealand. CrowdFunder reported on investments flowing to these new platforms. Business Insider wrote a piece on the influence of the recent US election on the FinTech world and regulations. EveryInvestor shared five questions new P2P investors should ask themselves. Finally, DEAL-Magazin discussed Bondora’s ability to leverage the market gap between big banks and microlenders, creating a win-win situation for both investors and borrowers.

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Finding profit opportunities in the Secondary Market

On Friday we shared some great way investors can take advantage of the 29 different filtering options available to those investing in the Secondary Market. We discussed how discounts, recent payments and strong credit all create profitable opportunities.

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Statistics reports: Compare your returns with other investors

On Thursday we provided a review of the investment return comparison tool available on the Bondora Statistics page. Many investors find this tool useful when measuring the relative performance of their investment. This feature is also helpful for those who want to set a benchmark for success before making their first investment.

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