How P2P is becoming the leader in FinTech

Financial technology, or FinTech, is a broad term encompassing any technology designed to facilitate financial services. Individuals and businesses are both benefiting from the emergence of these digital solutions. Examples include virtual currencies, robo-advisors and of course peer-to-peer lending (P2P).

While FinTech exists as an ecosystem of services and tools, peer-to-peer lending has become the hub of the wheel. Why? It represents all of the key features inherent to a FinTech solution. In this article we’ll look at these three aspects of P2P lending which illustrate its future as a leader in the fintech revolution.

Built For Speed

Amid the global financial crisis of 2008, many banks closed their doors. Customers found that loans were increasingly difficult to obtain. Banks, strapped financially, became more risk-averse as most mortgage-backed securities became toxic to balance sheets. P2P lending emerged from this disaster as a new way for borrowers to obtain financing. Additionally, investors lending money, discovered P2P lending could generate returns thereby boosting growth amid a then floundering stock market. Today, analysts forecast the P2P market will be worth $897 billion by 2024.

The modern roots of P2P mean that the infrastructure is wholly digital. This aspect enables marketplace lenders to adapt fast to market changes. Expansions can occur with speed. Borrowers in need of fast capital can get decisions swiftly. Some have reported that consumers require an average of 32 hours to complete the paperwork for a conventional bank loan. P2P platforms require only a fraction of this time. In many cases borrowers can receive funds on the same day. Moreover, this speed enables P2P providers to operate with lower costs.

A Cheaper Model

Technologically enabled speed drives down costs. “Platforms are also able to match borrowers and lenders (because they are not holding any of the loans themselves) without any interest margin,” explains the European Credit Research Institute. This aspect of the model means cheaper loans compared to banks.

Banks have built their infrastructure over decades. The results of this aged model are outdated technology and processes. Research determined that “banks planned to spend 77.6% of their 2012 technology budgets on maintenance.” These “legacy systems” are costing borrowers in the form of higher interest rates. Given that P2P firms are mostly digital, rather than physical, changes are swift and with reduced costs.

A Stronger Social Contract

For good reason consumers have become disillusioned with banks. Each year delivers a new group of headlines about unethical practices from even the largest institutions. One recent example comes from Wells Fargo. Finding from the U.S. Consumer Financial Protection Bureau resulted in fines for the bank totaling $185 million. Authorities alleged that the bank opened as many as “two million deposit and credit-card accounts without customers’ knowledge.” These practices have become all too common and customers have lost trust.

P2P lending enjoys a better reputation because investors understand that they’re funding individuals and not a bank’s balance sheet. This is a stronger social contract because you have a large group of people agreeing to engage in a practice that serves the common good. In many cases the group most concerned with social responsibility is millennials.

The millennial generation consists of a total $2.45 trillion in spending power. Why is this number important? Millennials will be judicious in their allocation of these funds given that “millennials are 66 percent more likely to engage with brands when issues of social responsibility are brought to the forefront,” according to research from Cone Communications published by The American Marketing Association. P2P lending engages with this sense of social responsibility.

The P2P world is just a piece of the fintech revolution. However, alone it represents the key characteristics of fintech’s spirit – it’s cheap, fast and acts to serve the greater good.

Register today to our first investor webinar on March 23, 2017

As we mentioned in our last weeks announcement, we are launching our first investor webinar on March 23, 2017, 3:00 PM EET.
We want to offer new ways for our investors to stay informed on what’s happening on Bondora and in the finance industry in general.

The topics that we’ll be discussing in the first webinar are:

  • An overview of Bondora – what we do, our company structure and shareholders, where do we operate etc.
  • The rigorous underwriting, collection and other processes we have in place to protect our investors.
  • Exciting news about our future plans.

To join the webinar, be sure to register at:
https://attendee.gotowebinar.com/register/6038856890680462081

After registering, you will receive a confirmation email containing more guides and details on how to join the webinar live stream. If you have any questions or topics you would like us to cover in the webinars, write to webinar@bondora.com.

Four ways to create an investing plan that works

Investors starting today have access to more information and technology than ever before. However, with these benefits comes a problem – how can new investors cut through the noise and learn how to invest effectively?

A smart plan will put the investor in the best possible position to generate returns while managing risk. In this post, we’ll learn why smart investing is simple investing. Use these four immutable rules to succeed in any market.

Start Early

Let’s start with a riddle. What advantage does a first-time investor in their mid-twenties have over an industry expert of 60 with decades of experience?

The answer is deceptively simple: youth. With a greater time horizon comes more earning power. Moreover, a young investor is better suited to withstand the inevitable ups and downs of the market. Markets fail investors. With a long-term approach, these bumps smooth out. An older investor nearing retirement cannot weather these changes because they’ll soon need to withdraw cash and if the market crashes they’re in trouble.

Consider someone who is twenty and opens their first account. This person makes a €5,000 investment. Left untouched, and returning 8% annually, the value reaches to €180,000 by the time they turn 65. Now, imagine this same person waits. At 40 they make the same investment with the same return. Upon reaching 65, the total grows to less than €40,000. The penalty for waiting is more than €140,000. Bottom line: start now.

Diversify

Many consider diversification to be the most critical rule when investing. The practice of spreading your investments across various asset classes is important for two reasons. First, diversification mitigates risk. A significant interest rate hike can immediately decimate the wealth of an investor holding a portfolio consisting only of bonds. Holding 100% stocks can see savings cut in half as they did during the global financial crisis when the Dow Jones Industrial Average fell more than 50%.

Second, diversification allows an investor to enjoy the outperformance of different sectors. As we’ve discussed in earlier posts, investors who want to grow their savings while outpacing inflation will need to expand beyond the conventional approach of just stocks and bonds. Marketplace lending is becoming an increasingly popular asset class for investors. Marketplace lenders in the U.S. alone generated more than $10 billion in originations in 2014. The following year this total more than doubled to almost $23 billion. Diversification allows investors to get in on the ground floor of this kind of explosive growth.

Control Costs

Remember this phrase: Costs kill. Keep investing fees low. At first, a fee of 1% seems inconsequential. Do the math. One analysis determined that such a fee could eradicate more than half a million in wealth. How is this possible? It’s easier than you think.

A 25-year-old has €25,000 in a retirement account. Over the next 40 years, they add €10,000 annually while earning 7%. When it comes time to withdraw this 1% fee reduces the total value by €590,000. This 1% fee is a reasonable assumption given that the industry average expense ratio is 1.01%. Moreover, funds commanding higher fees regularly perform worse than their low-fee counterparts. “Equity funds with the lowest expense ratios had a 62% success rate over the five years ended Dec. 31, 2015 — three times greater than the success rates of funds with the highest expense ratio,” explains a writer reviewing research from Morningstar. Keep costs low. You’ll keep more of your money while earning a higher return.

Remain Disciplined

The greatest enemy of an investor is one’s self. Remain unemotional. Market downturns create panic leading people to sell rather than play the long game. The way to win is to stay invested and outlast market fluctuations. At Bondora we help people do just this with our automated Portfolio Manager tool. With automation, you are invested and continue to invest without distraction.

Discipline also keeps an investor grounded within their risk tolerance. That is, discipline is sometimes the practice of getting too speculative with your investments or consolidating too heavily in one asset.

Why more millennials are looking beyond stocks and bonds when investing

The economy has recovered since the global financial crises. However, there is an unspoken side to this story; the economy that rose from the ashes is different than the one we lost. Today, people are discovering that they need to work three times as hard for one-third the gain. Wages have stagnated, and risk-averse companies have been hesitant to make capital outlays for growth. The painful memory of the downturn is still fresh and therefore strains the trust in our financial system.

Today, young investors are understandably skeptical of financial advisors and major equity firms. Millennials came of age among the ruins of Enron and toxic CDOs. They are choosing instead to leverage their considerable resources to inform their investment decisions. In doing so, they’re learning that the common strategy of a portfolio comprised of 60% stocks and 40% bonds is inadequate. In today’s world, a reasonable return amid manageable risk requires more options than stocks and bonds.

The rise of FinTech has empowered Millennials to seek these new tools. Among the most useful of these solutions is marketplace lending. In this article, we’ll look at how accessibility, transparency, and growth are the three reasons millennials are turning to this innovation.

Accessibility: Born From Technology

The intuitive design of marketplace lending platforms appeals to millennial’s sense of expediency. “What’s making me successful (is) the ability to deliver millennial-relevant services,” remarked the chief information officer at Accenture. Traditional investment instruments like stocks and bonds have adapted to the internet over the decades. However, marketplace lending developed entirely from digital roots. This foundation means investing in online loans is faster and more intuitive than accessing information on publicly traded companies.

Accessibility isn’t just a technological aspect. Those who are new to investing want products they understand. Marketplace lending is an accessible concept because the idea is simple: individuals borrow and lend among themselves without the intermediary of a bank. Conversely, stocks and bonds are inherently complex. Investors must understand not only what the issuing company does but other measurements like beta, P/E ratio, volatility, duration and market capitalization.

Marketplace lending is engaging because it adheres to the investing rule that you should “never invest in a business you cannot understand,” as Warren Buffett put it. Too often the underpinnings of a publicly traded company are obscured. However, Millennials can immediately connect with the idea that when borrowing and lending are simplified, both sides win.

Transparency: A Way To Build Trust

Lending platforms achieve this simplicity by making their framework transparent. An analysis from Deloitte determined that “millennials tend to not fully trust their adviser.” Additionally, the same report recommends that “To overcome this negative attitude, wealth management firms initially need to focus on the pricing transparency.” It is easy to understand why trust has eroded. Millennials have witnessed one of the most disastrous economic upheavals in history. Moreover, financial firms were the catalyst for the vanishing billions of wealth.

It is easier for Millennials to develop trust with marketplace lenders because performance isn’t buried behind balance sheets or income statements. Rather, the critical numbers are plainly visible with a simple review of the borrower’s credit score and repayment history. Many marketplace lenders offer an array of data to investors. For investors seeking more in-depth insights firms like dv01 have emerged to provide “technology designed for lending market transparency.” Young investors understand that the Great Recession was the result of the obscurity surrounding CDOs. As a result, they seek the clarity available in many P2P platforms.

Growth: Prospering With Returns

The recent stock market run up belies the long-term prognosis shared among economists. “Global trade is in a grim state,” remarks a journalist writing for The Economist. The basis for this assertion is that “On September 27th the World Trade Organisation slashed its forecast for growth in trade of goods from 2.8% in 2016 to just 1.7%, implicitly predicting that for the first time in 15 years, trade would grow more slowly than GDP.” These downshifting returns have led many market prognosticators to deliver an equally grim forecast of stock market earnings over the long-run.

Vanguard CEO Bill McNabb offered this clear assessment of the market: “Stocks are pretty highly valued, and bonds you can project clearly over a decade. … So when you do the math, you end up 2 percent lower on an absolute basis.” These muted stock and bond returns coupled with expectations of higher inflation put long-term investors at risk. Resultantly, Millennials are broadening their asset classes to recapture the annual returns enjoyed by investors in previous eras.

The world is changing, and major events like the Great Recession only work to accelerate this change. Millennials are navigating their future with investing options that move as fast as they do through accessibility, transparency and a reach for higher returns. Our new economy requires new solutions and marketplace lending is at the fore of this phenomenon.

We are launching our new investor webinar series on March 23, 2017

We have been putting in a lot of effort for the past year to improve our investor communication and provide more information to our investors about a variety of topics. Transparency has always been one of Bondora’s key strengths, with all our loan data and transaction ledgers made public and extensive reporting features available for all our users.

We aim to continue this trend with the launch of our new webinar series, where we invite everyone to take part of the discussions about Bondora and P2P lending industry in general.

Our first webinar will take place on March 23, 2017, at 15:00 UTC+2

Our first webinar will be a unique opportunity to learn more about Bondora, where the main topics discussed are:

  • An overview of Bondora – What we do, our company structure and shareholders, where do we operate etc.
  • The rigorous underwriting, collection and other processes we have in place to protect our investors.
  • Exciting news about our future plans.

We will share more details on the webinar next week. If you have any questions you would like us to answer or discuss, please submit them to webinar@bondora.com before the webinar begins.

Our team is looking forward to connecting with you on March 23, 2017!

How do returns and volatility in marketplace lending compare to the stock market?

Many believe equities to be king when it comes to annualized returns. Investors commonly use an estimated 7% annual return for stock holdings. However, this expectation is optimistic. Credit Suisse reports that the inflation-adjusted annualized return of stocks is just 5.4% over a period of 1900-2011. Bonds, over the same time frame, only deliver 1.7%. Housing offers even less at 1.3%.

It’s no wonder investors today are looking for other avenues to build wealth. For many, marketplace lending is serving the goal of higher returns amid reasonable risk. In this post we look at why the industry is primed for growth and how marketplace lending returns and volatility compare to the stock market.

The start of an industry

During the upheaval of the global financial crisis individuals needed loans. Increasingly risk-averse banks were turning away from borrowers. This is when marketplace lending, built from technology, came to the fore. In contrast, banks are an invention from an analog era. The digital advantage means customers receive loans faster within a low-cost model. The industry continues to grow.

As recently as 2014 marketplace lending issued over $23.7 billion in loans. Despite these towering numbers “the market-penetration achieved by MPLs is to date still well below one per cent,” according to Deloitte. This creates enormous opportunity for the future of a new industry. As the industry matures its legitimacy grows. More investors are embracing this innovation. As a logical next step, these investors are looking to analytics to understand the returns.

Measuring marketplace lending returns

To understand expected returns from P2P lending investors can use the US Consumer Marketplace lending Index from Orchard. This database includes a collection of marketplace lenders who have originated and funded a minimum of $250 million of US consumer loans.

The index is a powerful tool for cutting through the marketing language and understanding real returns. Though the data is limited to US marketplace lenders the index provides a general baseline for expectations. The list below, from Orchard, provides an overview of how 983,685 P2P loans have performed in Yield-To-Date as of February 21, 2017.

2016 3.95%
2015 6.93%
2014 8.71%
2013 7.83%
2012 6.96%
2011 6.70%

Marketplace lending is often grouped in the category of “Alternative Investments.” The below chart provides an overview of how some alternative investments have performed between 2001 and 2015. Many of the Yield-To-Maturity rates in the above list from Orchard fall in line with the general performance across sectors like commodities, managed futures, and global macro strategies.

markeplace-lending-returns-volatility

Source: Informa Investment Solutions & BlackRock

However, the value is not just in the return. As the right side of the above chart illustrates, risk (volatility) is a consideration for investors. The volatility rate of 16.28 for a portfolio consisting entirely of stocks is relatively high compared to a spread of stocks, bonds and marketplace lending investments. Research indicates that a diversified group of holdings with as much as 16% devoted to marketplace lending can have volatility less than 2% or even as low as 0.9%. Interestingly, this same research shows that as one reduces the marketplace portion of this portfolio, and increases the equity and REIT holdings the volatility increases.

optimum-portfolios-asset-allocation

Source: “How much should you invest in Marketplace Lending?“, LendingRobot Research

Moreover, the volatility of a stock/bond portfolio with no marketplace lending is approximately 40% according to the same research. That is, if you were to invest across all the above funds while excluding marketplace lending you would in fact expose yourself to more risk.

Even if we shift focus to the European stock market volatility is relatively high compared to the 1-2% that comes with including marketplace lending in a portfolio. The 5-year annualized return in the Euro Stoxx 50 is 9.9% with a volatility over the same period of 19.7.

Since inception Bondora has generated an annualized net return on investments of 15.3%. Therefore, investors who choose to our marketplace lending platform can further diversify their portfolio while reaching for a stronger return.

The returns in marketplace lending are worth consideration given a widespread expectation of lower equity returns in the future. “Market returns on stocks and bonds over the next decade are expected to fall short of historical averages,” according to Charles Schwab. This expectation comes amid low inflation, low interest rates and tepid growth in price-to-earnings ratios.

The investing landscape is changing. Investors have more options than ever before. Bolstering returns means bolstering the variety of instruments while managing risk wisely. Remember, investor returns can be volatile and there are no guarantees. For those interested in getting started visit our General Statistics page for an overview of total performance on Bondora.

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.