Software engineer Tobias Mende spends his free time writing finance blog Der Finanzfisch where he covers topics like investment, personal development, productivity, financial education and marketplace lending.
What is keeping you up at night?
Spending time with friends or thinking about some difficult computer science problems. I am not that kind of person who worries a lot, so in general only positive things keep me up at night. Maybe I’m boring but I’ll never invest in something that keeps me away from sleep, since good investments allow me to sleep very well.
What was your first investment, how did it go and what did you learn from it?
My first investment was in my youth in a closed investment fund. Even though it developed quite well, I learned that this was a bad idea since I was completely out of control and could not see how my money evolved. Furthermore, I learned that it is very important to keep the costs in mind since they may wreck your entire investment if too high. Last but not least, I learned that I will never ever again put such a large portion of my money in one single investment since such investments are risky and it is important to diversify.
If you look back at your years as an investor – is there anything you have learned you wish you would have known when you started?
Never invest in things you do not understand!
There are a lot of financial products out there and one is more complicated than the other – some with very creative cost structures or very long package leaflets. These products are almost never a good investment. They often contain some pitfalls, high costs or large risks. I’ve learned that there are a lot of good investment opportunities out there – it is better to miss a chance than to risk everything just for the sake of investing.
How would you describe your investment strategy?
My investment strategy is mostly passive. I have a fully automated monthly savings plan that invests my money in ETFs on the MSCI World and the MSCI Emerging Markets. This is supposed to form the base of my portfolio. In addition, I invest in peer-to-peer loans with Bondora and another platform by using the Auto-Invest features since they allow me to diversify and invest my money without any time spent. Especially with such small investments (5€ per loan) it is very important to keep the time invested low since otherwise the return on time invested is lousy. Last but not least, I also pick some stocks from time to time since I like evaluating companies and business models. I consider myself a yield and risk-oriented investor since I have time and I don’t have any plans for my invested money in the near future.
How do you diversify your investments?
Whenever there are two investments with the same return rate and risk structure, I’ll pick the one that increases my diversification the most.
Meaning I would rather invest in a new company rather than increasing my shares in a company I already invest in. I also try to diversify across different asset classes such as stocks, P2P loans and private investments. When it comes to P2P loans I enjoy putting only the minimal amount of money in one single loan for maximizing the number of loans I invest in.
Do you prefer short or long term investments?
It depends. I invest to benefit from the compound interest effect over a long period (more than 10 years). That said, if an investment looks good for me I prefer long term investments since I have to care less. With short-term investments I would have to handle my money every few months and I would need to make decisions over and over again. Therefore, long-term investments are more relaxed. That is also the reason why I am more or less a buy-and-hold investor when it comes to stocks. I have a life beside my personal finances and I want to keep the time invested in financial decisions low.
In your opinion, what is the best way to start investing?
ETFs are really good. They are cheap, they are easy and you get a maximum diversification with almost no effort. ETFs are also very good for pupils or students who do not have that much money to invest. Some ETFs allow free savings plans from 25€ per month with a very low total expense ratio (TER). These products are a great way to get in touch with the stock exchange and to learn about one’s personal risk disposition. Furthermore, you do not need to spend much time to get started and there is a lot of free help on how to choose a good ETF (e.g. finance blogs).
Would you call that a golden rule of investing?
My golden rule is “Do not invest if you do not understand the investment.” You would not by a car if you cannot drive. And I really appreciate the classic saying “Do not put all of your eggs in one basket.” These two simple rules guide all my investments.
How did you find Bondora?
I have looked for alternative investment classes besides the stock market and have found peer-to-peer loans as a relatively new thing. After looking into different marketplace lending platforms I decided to start with Bondora since the website and the reviews all over the internet convinced me.
I started with Bondora due to the following reasons:
- Very transparent information on the website
- Good structured website (also available in German)
- No costs for investors
- A high estimated rate of return
Furthermore, the Bondora Portfolio Manager is very easy to set up which is ideal when starting without much experience in loan investments.
How has your experience been so far?
Very good. Bondora is evolving further and the platform has gotten much better in the last months despite the fact that it was very good from the beginning.
For investors it is very easy to trace the investment and the amount of time I spend on Bondora is very low. The estimated return looks very promising and it seems to be a good investment.
All in all, I have a good feeling about my investments on Bondora which is very important for a good night sleep.