Having really started her serious investor career on Bondora, Aili Mitt is not your average investor. Now she is looking increasingly on other asset classes to spread the risks. She writes about her investment experiences in Estonian here.
How did you get into investing?
I have always had a habit of saving up, and at one point I understood the saved money just sits there on a bank account with a zero percent interest rate, there must be a better option. Then I read some books and made first serious attempt.
What was your first investment?
It was around 2005 when Estonian bank SEB offered 2-year investment savings which eventually had roughly 30% return. It closed exactly at the peak so it showed a very nice return.
The 30 percent return sounds too good to be true.
The times have changed. I also had a long pause in investing and around 2 years ago I picked the topic up again and created account in Bondora. I invested the first 200 euros, then looked into descriptions and details for a couple of months – after that I set up the portfolio manager, since it was really time consuming to handpick each loan.
Mostly because of the ability to make small investments and it offers easy access. It’s very easy to understand how much you invest, where you invest, you can read up on the person on his or her background, and then you get some kind of understanding. Stock market is very difficult for the beginner as you do not really understand what’s going on there.
Now roughly a third of your investments are in shares, what triggered the move and what is your focus there?
Entry barrier is quite high for a beginner there, costs are reasonable from 700 euros upwards per one deal on Baltic bourses. The first deal I made a year ago when I felt I had enough information to take the step and start spreading the risks. At the moment I have in my portfolio Baltic dividend plays.
How deep do you investigate?
In the beginning, when the investment sums were also small, I looked into it and worked out my criteria – decent income, age, education. When I did handpicking I tried to rule out cars and business and health loans.
Have you used other similar platforms?
I make real estate investments in CrowdEstate.eu and EstateGuru.eu
Is it different from Bondora?
Minimal investments are larger and there are less of them so I read through and think and see whether the location is good. I consider whether I would move to the place like this. Do I see someone buying it?
How would you describe your investment strategy?
I am definitely a long-term investor. Everything which is coming from interest rates or dividends I put back into investments – I do not have plans to exit in 5-10 years.
Have you noticed any differences in investment behavior of men and women?
Mostly through education – women tend to have longer perspective, men act on it if they see opportunity. They often make the deal and later see whether it was a good deal or not. Men have also more of the herd effect, a friend invested and so I will follow.
Do you have any or follow any golden rules in investing?
The most important thing – think the strategy through and then stick to it.
Every time you hear advice, someone suggest this and the other one suggests that, you don’t have to run on every detail and run to new platforms with all your money like many people in Estonia do with their pension funds. Think your plan through and spread your risks.
You stress the importance of spreading the risks but still almost half of your portfolio is in Bondora.
I am working on it. The ideal split for me would be having 25% in crowdfunding, 25% in shares and 50% in real estate.
What could be the optimal spread when you start investing?
It will always depend on the sums. If you invest 100 euros you use crowdfunding platforms and are 100% there because there is no point to split that money between different asset classes. However, when you start with 1000 euros you could already split it between crowdfunding and shares – the larger the portfolio the more important spreading the risk will become.
What’s the best way to start with investing?
I think my way was pretty good – read through some books and make your first attempts in crowdfunding, you get the understanding pretty quickly if this really is for you. You seek for more answers, dig into blogs and go to trainings.
I think the most crucial is to make that first investment.