Meet Bondora in Stuttgart!

This week the Bondora team will be at the INVEST finance trade fair in Stuttgart, Germany. We would love to meet some of our German investors, so please come and find our booth near the main stage at the event for a chat.

The event takes place on Friday 13th and Saturday 14th April – At 4:45pm on the Friday you can see a panel of seasoned Bondora investors have a compelling discussion (and find out some exclusive information) on the main stage. Make sure you don’t miss this!

Check out the panel details below:

Lars WrobbelPassives Einkommen mit P2P Krediten


Johannes Lortz



You can find more information about the event and what to expect here –

See you there!

Start-up to stardom, Bondora turns 10 years old

“Bondora began as a dorm room start-up and now has over 34,000 investors from all over the world. I’d especially like to thank all of the investors that have been with us since the beginning, we’re just getting started.”

Pärtel Tomberg, Bondora CEO and Founder

* * *

Bondora 10 birthday

In the height of the global financial crisis, Bondora was officially founded on 11.03.2008. While it may have seemed counter-intuitive to most to create a new financial platform at this time, there was a clear need to serve customers who had been failed by the banks and disrupt the wider financial ecosystem. As a result, peer-to-peer lending was born and gave power to the individuals, allowing them to essentially become the bank and gain access to the consumer credit market for the first time.

Fast forward 10 years, banks are still recovering from the financial crisis and many P2P platforms have come and gone, with only a handful able to say they have a 10 year+ history. How have they done it? 3 things; Cutting-edge technology, market leading interest rates and an unbeatable customer experience.

Bondora achievements 10 years

We’re not sure if Bondora can still be classed as a start-up, but even as we approach adolescence the start-up (and growth!) mind-set is more prevalent than ever before. This translates to consistently improving and perfecting what we offer to investors to become the best platform in Europe.

Thank you to everyone who is part of our investor community, here’s to the next 10 years.

Invest with Bondora today

5 things you should know about Peer-to-Peer lending platforms

Peer-to-Peer lending (or P2P), is a relatively new asset class in the world of finance that has gained traction within the last decade. Most recently, the past 5 years have seen an explosion of p2p lending platforms offering different investment options, rates of return, business models and the assets they invest. As the baby of the alternative finance world, Peer-to-peer lending platforms have paved the way to a fair and competitive marketplace that challenges the traditional monopolization held by the high-street bank giants.

5 things about p2p lending platforms

The banking landscape has undergone a major shift where an individual person, like you, can now become the lender and earn the exciting interest rates that were previously not accessible to anyone outside of institutions.

Do you need to have a financial background to take part? No. Do you need access to huge amounts of cash to get started? Nope. Do you need any special licenses? Absolutely not.

Let’s review 5 things you should know about Peer-to-Peer lending, whether you’re a complete beginner or a P2P veteran.

1. Investing options

This is different across every p2p lending platforms but in general, you can break the types of ways to invest in to three different options. The first is some kind of automatic or managed option, where you essentially click ‘Go’ and the platform does the rest for you. Some platforms allow an element of choice with this, such as what risk you would like to take and what target net return you have in mind.

The second type can be classed as manual/semi-manual, meaning you take the wheel and pick a number of customer filters which allow you to whittle down your selection of investments to match your specific criteria. Some argue that this can be more lucrative in the long-run, however it completely depends on personal choice.

The third and least common option available is to invest via an API, it’s fair to say that this is only suited to investors with a technical background or those who have the availability to invest significant time learning how to build their own API.

2. Secondary Market

Most platforms now have what is called a Secondary Market, we’ll use an example of investing in unsecured loans to explain how this works. When you invest in a loan, it may have been issued to the borrower for a term of 36 months. The borrower makes their repayments each month including the principal and interest payments and at the end of the 36 months (assuming all payments have been made), the loan will conclude and the investor will have received all of their original principal back in addition to the interest.

An investor may decide after 18 months that they want to withdraw their investment in the loan and use the funds for another purpose. In this situation, the investor would have to list their investment in this loan for sale on the Secondary Market which can then be purchased by another investor. We explain more on how this works here.

3. Different assets

While P2P may be viewed as an asset class on its own, peer-to-peer lending platforms commonly offer completely different and unrelated investment opportunities. For example, Bondora only offers investments in unsecured loans which individual borrowers take out for a variety of purposes, such as home renovations or a one-off large purchase.

Other platforms may only offer investments in property, where your investment accumulates with others to fund one large total investment in an apartment building or development project. Some platforms even offer investments to fund a business loan for either an established or start-up business.

4. Rate of return & Fees

When investing in the different assets mentioned above, this can have a direct correlation with the rate of interest you can expect to receive back on your funds. Ranging anywhere from 4% to 20%+ expected return, this varies significantly between p2p lending platforms and can also be determined by the duration you want to invest for.

Some platforms also charge management fees to allow you to invest through them, others may only charge these fees once you come to make a withdrawal. Due to each platform having their own expected net return and fee criteria, it’s best to employ a holistic view when making your decision of where and how much to invest with separate platforms.

5. Third parties

This one may not be as significant for every investor as the other points, but it’s still good to know all the information and make an informed decision on where you choose to place your funds. In the most basic terms there are two parties involved in P2P lending, firstly you (the lender or investor) and the borrower.

A platform may choose to outsource their borrower operations to third parties who provide the investors with customers who need loans. In another scenario, a company might internally source all of their own borrowers and then look to larger institutional investors to fund these loans. At Bondora we keep both sides in-house, meaning we source our own borrowers and investors, with only approximately 5% of these investments coming from institutions. Overall, this lets us focus on building a product that benefits both our investors and borrowers.

So there you have it

Now you know 5 important things about p2p lending platforms, take a deeper look in to the platforms you already invest in. If you’re a complete beginner, get started today.

The most profitable way to exit Bondora

It’s a strange thing to think about. Why should you even consider how you are going to exit something you may have only recently started investing in? For any investment, it’s best to have a forward looking view and a plan in place from the day you start your journey, including your goals and what you will do once you reach them.

Euro image - Bondora

Liquidity compared to other asset classes

If you compare Peer-to-Peer lending as an asset class to stocks and shares, a fundamental difference is the liquidity. While stocks are significantly more volatile compared to P2P, it’s likely that most of the time you will be able sell your holdings either instantly or within a couple of weeks depending on the broker you are using.

A good example to use for comparison is real estate – If you have a property that you are renting out and receiving a monthly cash flow from, you may decide one day that you want to sell it. To do this, you have to list your property for sale (most likely through an agent), find a buyer, agree on a sale price, complete the legal work and finalize the deal. While P2P is much simpler than this and with less parties involved, the common denominator is to find a buyer (only when you liquidate your investment portfolio before maturity).

Selling loans before maturity

If you choose to liquidate your Bondora portfolio before maturity, the speed of this is dependent on investor demand on the secondary market. At this point, it’s important to note that selling your loans can result in a loss of the original principal, as the secondary market typically does not provide a high enough premium for current loans to compensate for the non-performing part of the portfolio. Therefore, we advise to proceed with caution and not to try and sell everything at once if you see a percentage of your portfolio is in default. We have seen many instances where an investor has quickly sold the performing part of their portfolio (and in some cases at a discount) and is left with only the loans in recovery, permanently damaging their net return.

P2P lending is a long term investment, meaning that you should take a view of investing your funds for at least a 5 year period. When selling your loans on the secondary market, it is highly likely that this will result in reduced returns or even worse, losses. Why? Because you are losing out on the monthly interest you would have received until maturity on each loan, not to mention if you sell a loan at a discount. To avoid this and to maximize your returns when liquidating your portfolio, try pausing your reinvestments and hold the loans until maturity, taking cash out as the loans are paid back to you on a monthly basis.

How quickly can I sell my loans?

The speed of the sales process depends on the market demand. In general, current loans are more liquid and will usually be sold within a day if sold at par value or a slight premium. Delinquent loans may take more time or the sale can be unsuccessful. As soon as another investor has purchased your loan, you will receive the funds directly to your Bondora account.

Dream house image - Bondora

Is it worth it?

Liquidity aside, there are many other options you should take in to account when investing in different asset classes. To draw upon the two mentioned above, stocks and shares are heavily influenced by factors such as politics, financial performance, competitors, war, regulation and much more. For example, in the year of the financial crisis in 2008, the FTSE 100 finished the year 31% lower. If you are trying to make short term gains and not hold your shares for a long period, you will need to invest a significant amount of your own time to dedicate to research.

In Bondora’s native Estonia, house prices plummeted by a huge 30.5% in 2009. In 2008 and 2009, many people across the world who purchased properties were forced in to negative equity (owing more on your mortgage than the value of your house) and lost their homes.

This is not to say that you should stay away from these fantastic asset classes and invest everything in P2P, it’s to reinforce the point that to grow your wealth you must take a long term view and most importantly “diversify and conquer”.

The most profitable way?

So, the most profitable way to exit Bondora is firstly to hold your loans until maturity, pause your reinvestments and withdraw the cash flow as you receive it on a monthly basis or if you need to exit earlier than this, ensure you sell your loans at a par or premium.

Inflation and your investments

Traditionally, banks have always advertised a savings account as a safe haven for customers to put some money aside each month with the aim of growing their wealth. When opening a traditional current account, it was quicker to add an extra account on with the same bank rather than walk down the street to open one somewhere else.

Inflation and your investments - Bondora

Now, it’s even easier to do all of your banking and investing online than it is to go in to your local town to the big chain bank. So now that everyone has access to a larger range of products, should you still keep your money in a traditional savings account?

Why is inflation important?

The truth is, the past decade has seen a huge influx of innovative financial products that make these savings accounts counterproductive when taking in to account the annual rate of inflation. Take the UK for example, from January – November 2017 the rate of inflation for the year so far is 3.10%, in 2011 this was a huge 4.20% for the whole year! It’s important to note why this is relevant.

If you have cash sitting in your bank account for 1 year earning you virtually no interest, then it is essentially worth less after one year of inflation. As an example, if you deposited €1,000 in a savings account on the 1st January 2011 earning no interest, and you then withdrew this money on 31st December 2011, using the figures above this €1,000 would now be worth €958 (95.8% of €1,000 = €958). You would have still had the €1,000 physically, but the purchasing power of this would be significantly less.

Big banks, small interest

barclays bankOne of the largest banks in the UK, Barclays, currently offer an ‘Everyday Saver’ account with a not so competitive rate of 0.20% per annum*. Meaning that even if you had your hard-earned money in this account in 2011 it would have still depreciated down to €960 after you received the interest (€958 after 4.2% inflation depreciation + €2 interest). Let’s say you found a better alternative (ahem!) and earned 9% interest that year, your total pot would be worth €1,048 (€958 after 4.2% inflation depreciation + €90) at the end of the year AFTER considering the impact of inflation on your purchasing power.

Be wise

So, while not all investors consider the annual rate of inflation when choosing their investments, it’s wise to have a target in mind and make sure your cash is worth more than when you started.

Invest in different countries across Europe and diversify with Bondora.

*Correct as of 11/01/2018

The miracle that is compound interest

Compound interest. Its name alone does not express the value that this can provide and how it is arguably the most important factor in determining the success of your future investments.

compound interest - vacation beach

What is compound interest?

Recently, we talked about setting a long term goal of generating a monthly income from your investments. This sounds like a pipedream to most people and that’s why it’s first of all important that you realize that this is tangibly possible. The power of compound interest (earning interest on interest that you have already received) means that by taking a long term view with your investments you open the doors to a huge potential increase on your monthly cash flow and initial investment.

Let’s take a look at an example.

The table below provided by the Calculator Site shows just how powerful compound interest can be, showing an initial deposit of €10,000, a regular deposit of €200 per month and an interest rate of 9% per annum – after 5 years the annual interest you receive will be more than your annual deposits.

Compound interest deposits

Now let’s say you’re a smart investor and you have an ultra-long term view, e.g. for your retirement. Based again on a €10,000 starting investment and a regular deposit of €200 per month over 30 years. We will only include years 20 – 30 below, but you can do the same calculation yourself on the Calculator Site if you want to see it in more detail.

deposits - compound interest

Incredible. So 30 years down the line your initial deposit of €10,000 and monthly deposits of €200 are now generating you an annual income of €44,174.45 in interest alone, not to mention the fact that you’ve saved over half a million euros and you’ve accumulated a total of €434,200.57 in interest.

Don’t wait, start now.

So, we’ve seen how it IS possible for your money to generate a significant monthly income for you, quite literally while you sleep and leave it to go to work for you. One of the biggest regrets we hear from seasoned investors is ‘I wish I’d started earlier’, and now you know why.

Start today with Bondora.

What are we working on this month? Improved API, new languages and mobile-friendly pages

Bondora character

1) Improvements to the Bondora API

We have been making some changes to our API services, including the investments endpoint (GET api/V1/account/investments). Recently, we have increased the maximum results you can get with one query to 10,000 (this will also become the new default value) and changed the throttling limit to 1 request per minute for investments. These changes have been introduced to improve the overall experience for API users.

2) Even distribution of DCA fees

You may notice that from time to time, the DCA fees applied to your investments in recoveries may not show an even amount each month. Inspired by blockchain technology, our team has been working on an update to the system called ‘fractional ownership’ which will make all loan repayment distributions equal across all investors for each payment.

Currently, the distribution is equal but the equality is achieved over multiple payments (by recording how ‘unfair’ the previous payment was and then correcting it the following time for the customers who received more or less). Thereafter, such fluctuations with payments will be eliminated.


3) Mobile-friendly versions of all pages

To improve the overall user experience of our platform and in response to the devices being used by our investors, we are making mobile-friendly versions of all of our pages so you can check your Bondora account on the go.

4) Cash flow forecasting

Last month, we told you we were working on making our cash flow forecasting tool more accurate by increasing the precision of the ratios used and splitting overdue loans from current loans in the forecasts. We’re still working on this and aim to have it completed by the end of January.

5) Full website in 14 languages

Bondora now has investors from 85 countries around the world, so we are working giving users the option to view our website in their own language. Once live, you can change this via the drop-down menu in the top right-hand corner of our website.

Everything you need to know about Bondora, right here

This week we released an investor presentation free to download for all investors.

history-of-BondoraHere you can expect to find detailed information on many aspects of Bondora ranging from our underwriting process, risk profile, management and shareholders.

Key takeaways:

  • In 2011, Bondora issued €1M of loans. 6 years later, this number stands at over €108M with over €16M paid out in interest to investors
  • In 2012, Bondora became the world’s first cross-border lending marketplace when it opened the doors to investors across Europe
  • Internal audits carried out by PWC and external audits by KPMG
  • 58% of customers request a loan amount of €500 – €1499
  • The majority of Bondora’s shares are held by founders and Private investors

Download the presentation here today.

What are we working on this month? Customisable tax reports, referral program and more

Welcome to another blog post from Bondora. As part of a new monthly series, we will be updating you with what we are currently working on and changes that you will see in the very near future. Take a look below at our November top 5:

1 – Updates to the referral program.

Thousands of investors are currently benefitting from our referral program. Over the past couple of months, we relentlessly gathered feedback from these investors to find out the main things that we should improve and make it even easier for you to refer your friends, family and colleagues to Bondora.

You will now find an improved reporting section helping you to keep track of who you referred, who has registered, who was signed up and your earnings. Also, you will now receive your bonus payment immediately after the 30 day period passes and the calculation has been made.


2 – Simpler user interface.

We’re working on keeping it simple. More specifically, we are splitting our core functionality (Bondora dashboard, Portfolio Manager, transaction confirmations and Portfolio Pro), to their own pages and updating the look and feel of these to make them easier to understand.

3 – Customisable tax reports.

We have recently released a beta version of the new tax report, configurable through the settings icon on the top right of your reports page. We expect this to be especially useful due to the nature of different tax laws in countries all over the world, so you can now configure which fields are shown on the report relative to the requirements of your local tax office*. For example, you can now create a report which shows the income received from your investments broken down in to separate countries. Watch out for future developments to come on this topic.


4 – Weekly and monthly portfolio updates.

Some of our customers told us that they prefer to receive weekly or monthly updates instead of daily ones. We’ll soon make it possible for you to configure the frequency of our newsletter as well as its content, tailored to your preferences.

5 – Cash flow forecasting.

Many investors use our cash flow forecasting tool to better predict their monthly income as well as their portfolio yield to maturity. We are currently working on making this tool more accurate by increasing the precision of the ratios used (currently these are rounded down to the nearest 5% increment, e.g. 63% is rounded down to 60%) and splitting overdue loans from current loans in forecasts, improving the overall efficiency of the forecast.

What’s next?

That’s all for this month, we hope you find the upcoming improvements useful. If there was one thing you could ask us to work on next month, what would it be? Leave us a comment below and let us know.

Does P2P lending respond to geopolitical stress like stocks do?

It has been said that the stock market loves good news and can even handle bad news. It’s uncertainty that makes people panic.

Most investors take their reading of the stock markets’ blood pressure using the CBOE Volatility Index, or “Fear Index.” The figure represents the broad sentiment of equity investors. When the number is high investors are nervous and uncertain about the stock market and its future. When the value is low, investors are complacent and without much fear.

CBOE Volatility Index vs S&P index

If you look at this chart above overlapped with the performance of the market there is a clear correlation. When the market is fearful stocks drop and vice versa. Occasionally these fears are rooted in economic indicators like unemployment rates and interest rate movements. However, sometimes more complex factors can drive pricing shifts. The most recent example has occurred in the U.S. market were renewed concerns about North Korea’s provocative actions have roiled the market.

P2P lending market performance and political volatility

Yet, for the diversified investor with holdings in marketplace lending, do these same rules apply?

Data from the Orchard Index offers clues. The data “tracks the aggregate performance of loans to consumers originated and funded on eligible US-based online lending platforms,” but is also a good general read on the state of P2P lending globally. While marketplace lending is relatively new, the data from Orchard presents a reassuring picture that helps answer the question of sensitivity to geopolitical stress.

Orchard US Consumer Online Lending Index

Across a one-year, two-year, and three-year horizon the performance of the Orchard US Consumer Online Lending Index (image above) has been consistently strong with little interruption despite major upheavals like Brexit, and a contentious U.S. presidential election. This upward movement despite geopolitical uncertainty makes intuitive sense: the movements in stocks are largely influenced by indirect factors. As the economy becomes increasingly global more people are learning that what happens in China happens in the U.S. and what happens in the U.S. happens in Europe. Orchard summarizes this finding best by explaining “while public markets owe their volatility to numerous factors, consumer loan performance is very much a function of the financial health of the American household.” Stocks and P2P investments have separate influencers.

P2P investments and stocks influenced by different factors

Today, the marketplace lending industry remains strong because of considerations more connected to the home, rather than the world of international business. Again, Orchard explains “Households’ financial obligations as a percent of their disposable personal income have decreased significantly since the over-leveraged days of the early-2000s. This means that consumers would conceivably have less trouble making debt service payments, a hypothesis seemingly confirmed by the very low charge-off rates on credit cards.”

P2P lending is not free from influence. However, the important takeaway is that the influencers are different than those driving stocks. The result: investors holding marketplace loans have a deeper diversification in comparison to holding a collection of all equities.