Portfolio Manager and expected return, how does it work?

The Portfolio Manager is a great tool for any existing or new investor who wants to set a strategy and then leave it to earn you interest. Recently, we gave the Portfolio Manager its own menu tab on your Bondora account and updated the user interface with a new slider and calculator. Here, you can set your chosen risk strategy (From ultra-conservative to progressive), enter your starting amount, how much you plan to invest on a monthly basis and for how long and we’ll show you a range for your expected rate of return.

For the more curious investors, we will explain below exactly how it works.


How does it work?

Well, quite simply it uses your existing deposits (or starting amount if you are a new investor) plus your planned future deposits and the reinvestment of cash flow from the borrowers monthly loan payments. We know that there is a probability of loans in your portfolio defaulting, so the expected rate of return is usually significantly less than the weighted average interest rate of the total portfolio. We identify the probability of defaults in your portfolio based on your current and previous risk strategy along with the distribution of credit ratings.


Investing with Bondora should be viewed as a long term investment (5+ years), for those who choose not to reinvest their incoming cash flow and invest for shorter durations it is likely you will see a lower absolute return than those with forward looking investment goals. Why? Your funds have less time to earn the rewards from compound interest, which essentially means the interest you earn from investing earns you even more interest and grows your portfolio significantly.

For any investors who are familiar with excel or SQL, you can download the formulas we use here and try it out for yourself.

Why is this important for investors?

By using our portfolio manager slider and calculator, you can get a forecast of what your expected rate of return will be over the duration you choose and most importantly an estimate of what your portfolio size will be. This can be especially useful if you are investing for a specific goal, such as paying a large chunk off your mortgage or saving for your children’s university costs.

Track your earnings from investments with Net Interest Received chart

At Bondora we understand how important returns are to our investors. That’s why we’ve provided a simple and straightforward way for investors to see the total earnings and revenue from their investments with us.

Net Interest Received tracks your earnings per month

However, it’s important to understand what goes into this calculation. The calculation consists of the interest received less any unpaid principal scheduled for the month. This figure is important because it represents income from all receivables including recoveries from overdue and defaulted loans.

Investors must remember to look at this chart as a broad measurement. That is, principal amounts will be small in the early months of the loan and will increase as loans mature. Conversely, interest payments start large and decrease as the borrower pays off the loan. For this reason the net interest received is not predictive. Moreover, declining interest doesn’t signal a poor performing loan. This characteristic is common to lending.

Use this data to gauge the performance of your portfolio over the long-term. You can explore this statistic in your personal account aswell as on our general stats page for the whole Bondora portfolio.

Easy ways to make a deposit to Bondora

Over the years we’ve listened to input from users. These suggestions have helped us improve and redesign our site. We’ve made Bondora is faster and more intuitive than ever. As a result more users are discovering the practicality of marketplace lending. Getting started with an account takes just minutes because we’ve optimised one key area: making deposits. Here are three fast and easy ways to funds your account:

Visa and Mastercard Payments

Invest with Bondora safely with our Visa and Mastercard payment option. Use either your credit card or a debit card to get started. We’ve added a layer of security with Wirecard Bank. This third party manages the transfer and no account information is submitted to or held at Bondora. Wirecard Bank meets all security regulations including PCI compliance.Adding funds to account with these simple steps:

  • enter the payment amount
  • enter your credit card details
  • log in to your bank in case of 3D Secure
  • confirm the transaction

Upon your confirmation the funds will appear in your Bondora account immediately.

SOFORT Online Payment

SOFORT is another great option to make a deposit fast and secure. Payment with SOFORT is available for investors from Germany, Austria, Switzerland, Italy, Netherlands, Poland, Belgium and Spain. Just as with VISA and Mastercard, the steps for making the deposit are similar:

  • enter the payment amount
  • choose your bank
  • log in
  • confirm the pre-filled payment order

After that, you should see the money immediately on your Bondora account and ready for investing. Learn in more detail about how to make a SOFORT payment on desktop or mobile.

SEPA Payment

The Single Euro Payments Area (SEPA) option is perfect for our European users. With this option you initiate a deposit via a bank transfer. Costs are generally the same as for domestic payments for all Eurozone customers. All details required for making the payment can be found on your Dashboard and also in your daily account summary email. Transactions can take up to three business days to complete. Today, SEPA consists of 34 countries.


TransferWise is a more affordable way to make a deposit without the extra costs incurred with a traditional international bank transfer. Banks often command a premium over the normal currency exchange rate. With TransferWise, however, you’re paying the lowest possible fee without any hidden charges. This method is a great option for users around the world.

Get a quick visual insight of your portfolio structure

Part of our mission at Bondora is to make marketplace lending simple and transparent. We want our users to be confident that they have all the information they need to make an investment decision.

However, this approach doesn’t stop once an investor funds a loan. Our users want to know how their portfolio is developing. Repayment trends, risk profiles and recoveries are all part of managing a smarter investment. Therefore, to empower our investors we offer a quick visual insight into their portfolio structure.

Bondora Portfolio structure visualized

In the statistics pages (both personal and public) you’ll find a cluster of eight pie charts. The data in this visualization is designed to provide investors with a holistic view of their portfolio. Many of the measurements allow the investor to understand their risk exposure at a quick glance.

A portfolio of numerous loans has many risk factors and countless metrics. Therefore, as an investor funds more loans it becomes difficult to see the complete picture. The statistics pie chart ties all of these characteristics together to offer a risk assessment in one cohesive screen. Here’s what each chart tells you:


An overview of what portion of your funded loans come from Estonia, Spain, or Finland.

Planned vs. Received Principal

A representation of how much more the borrowers need to pay to complete their loan obligation.

Overdue Days

Shows how well the borrowers are managing their debt by repaying the loans and what proportion of the portfolio is current, overdue or in debt. Overdue days is based on the first missed principal payment of the loans. This is a good way to control risk.

Days Since Last Payment

This chart corresponds closely with “Overdue Days.” When “Overdue Days” counts the days since first missed payment, this chart counts days since last loan payment was made. Use this data to keep an eye on what portion of your portfolio is comprised of late or irregular payers.

Loan Rating

This chart represents how aggressive your portfolio is with regard to the credit profile of the borrowers. Ideally the loans would be reasonably divided into different loan ratings which would show a healthy diversification of portfolio.

Loan Purpose

This data shows how people plan to use the loans.

Bid Size

On overview of how your portfolio is divided between different investment sizes.

Recovery Process

Once a loan defaults the recovery process data shows the effectiveness of Bondora’s efforts to reclaim principal.

Investing insights with three new statistics charts

Three new charts on the General and Personal Statistics Page offer up to date performance data for investors. This information is part of our ongoing effort to create transparency. Each of the following charts are built from an intuitive design which looks at the performance of the portfolios ordered by monthly period cohorts. Each chart shows the data by different criteria.

Statistics charts - Monthly portfolios by criteria

Monthly portfolios by planned vs. received principal

Use this chart to see the current, overdue, and repaid principal for each monthly vintage. On the General Statistics Page you’ll notice that the relationship between the current balance and the repaid balance changes as you move to the present. The portion of the total which is repaid decreases because more of the loans are new. In previous years the repaid balance is a greater portion because the loans in that group have matured. Investors will also want to pay attention to the trending overdue amounts. Again, this portion drops as you move towards recent months because issuances are newer.

Monthly portfolios by days since last payment

The information in this chart provides an overview of the timeliness of payments made. Each line is segmented to show the portion of payments that are current, repaid, or have seen the following days pass since the last payment: 1-7, 8-15, 16-30, 31-60, 61-90, 91-120, 121-150, 151-180, and 180+. Like the previous chart discussed, as you approach recent months a larger portion of the payments are current because loans have not aged as much.

Monthly portfolios by overdue days

This chart is similar to the above where investments are divided into cohorts of overdue duration. This information offers the best data for risk management because the proportions each loan status category is visualized and easy to understand. When investing in marketplace loans investors cannot come face-to-face with the borrowers. Therefore investors must rely on analytics to gauge risk, this chart accomplishes that goal. This chart has another commonality with the the first two: A rising trend of total payments. As we’ve grown our investors have grown with us. As you look across the timeline you can see loan totals increase.

Monthly vintage comparison of cumulative cash on cash returns

Do you ever ask yourself, “How long will it take for my investment to generate a return?” The cumulative cash on cash return monthly comparison chart can give you some insight. This data is another new addition to our revised public statistics page.

Cumulative cash on cash returns by month

Simply put, the chart summarizes the progress that the investments from specific vintage are making towards the goal of repayment and, eventually, earning a return. The data on the horizontal x-axis shows the number of months that have passed since the investment was made. As the duration grows, the line slopes upwards as the cumulative amount repaid (seen on the y-axis) increases. Each curved line represents another year by default.

The line extends above the 100% mark as investments surpass the original principal. Crossing that milestone means investments are starting to earn a return on top of the initial investment amount. The further back you look in years, the longer the line will be because the investments have had more time to mature.

Users can only view one loan duration (or vintage) group at a time (i.e. 12, 24, 36, 48 or 60 month). The reason: combining different vintages within the same chart leads to incomparable data. However, you can choose to isolate the data to a specified period of time. Simultaneously, you can view the data by monthly, quarterly or yearly vintages depending on how granular you want to get.

Finally, given that smaller portfolios experience greater volatility, the chart only reflects data from periods where a minimum of 200 loans were issued. For this reason you may need to extend the increment of periods (e.g. quarterly or yearly rather than monthly.)

Statistics: Expected returns and competitive bid levels

We’re offering investors new data as part of our revised public and personal statistics page. The “Expected Return and Competitive Bid Level” chart creates new insights on our loans. The chart ties together three key metrics:

  • Bid Size
  • Expected Return
  • Loan Rating

Expected return and competitive bid levels

The chart illustrates the inverse relationship between loan ratings and the annualized expected return. As the rating drops the expected return rises. This dynamic is the risk/reward relationship at work. We’ve discussed this trade off in previous posts.

However, our investors might be surprised to see how bid levels rise as ratings increase. The higher rated loans, which offer lower relative risk, command greater bids. These loans are popular among our investors especially those choosing the “Conservative” approach with the Portfolio Manager.

The data also shows how in demand the AA rated loans are with investors. The bid size for these loans is €305, nearly double that of “A” rated loans. Our “B” rated loans drop to nearly one third this amount with a bid size of €105. The competitive bid level here is the bid amount that guarantees a successful investment into a loan. The bid competitive bid amount is calculated by taking into account the historical bid data. The value is recalculated after every two weeks.

The data is helpful in setting investors’ expectations regarding annualized expected return and competitive bid sizes.

Everything you need for tax season in one place

Preparing taxes might be difficult for some, Bondora makes it easy with customizable reports.

You can get everything you need for tax season from the Reports page on our site. Most investors will want to focus on the “Tax Report” and the “Income Report.” Choose the necessary date range and generate the reports.

Tax Report

This PDF clearly lists all important balances and transactions within your account. Tax Report consists of two parts -summaries of income statement and account statement. In the “Income statement” section, you will find a breakdown of the gross income for the selected period. This section also includes interest received and profits. Those who want to drive down tax liability with deductions can use this report to get totals for principal write-offs, losses and fees paid.

Tax Report - Income Statement

The included “Account statement” lists all critical category totals including, deposits, withdrawals, principal repaid, interest received and more. For basic users this report alone will reflect most, or all of the pertinent data to prepare a tax return.

Tax Report - Account Statement

Income Report

Unlike the Tax Report, this data is generated in a CSV file for easier processing. This format is particularly useful to those with varied holdings. This comprehensive view shows category totals for more specific areas like bought principal and amount paid for bought principal (secondary market transactions), write-off or debt servicing cost components, paid sales fees among other data points. Investors seeking ways to isolate specific totals within their investments should start with this report. Additionally, the CSV format is perfect for those who want to cover a longer date range, then create subtotals within one sheet.

Income Report

Take the stress out of tax prep and use these one-stop reports to get the full picture.

Why isn’t the Portfolio Manager investing my funds faster?

Bondora investors often ask why their Portfolio Manager is not investing funds or investing at sufficient speed. The reason is the popularity of the higher rated loans. Naturally, many of our investors are eager to fund borrowers with a less risky credit profile. Resultantly, the AA, A, and B rated loans are exceedingly popular. With competition for these investments so high there are only so many opportunities to go around.

As we recently discussed in our latest portfolio performance review, the AA and A rated loans, which are available only in the Estonia market, have since Q1 of 2015 delivered realised net returns of 12,59% and 12,08% respectively. This combination of a substantial return and lower risk is attractive to all our investors. B rated loans in Estonia and Finland for the same period has generated realised net returns of 15,04% and 7,39% respectively.

To better understand the relationship between the supply and demand of high-rated loans, we calculated a variable that reflects the bid competition for each rating. Simply put, we take the total number of bids made per rating and divide by the total winning bids per rating.

Competition is high for lower risk loans

In the graph below, the steep decline of this curve represents the strong competition to fund higher rated loans versus those carrying more risk at the right side of the graph. Most notable in this data is the big drop in demand between AA and A rating. The other takeaway is that higher competition starts with the B rating. The competition factor can be loosely divided into two groups – high competition for AA, A, B rating loans and lower competition for C, D, E, F, HR loans.

Bid Competition Factor per Bondora Rating

Small bids are often outbidded

For investors this means that the likelihood of getting invested into AA-B rating loans is better when they raise the bid sizes in their Portfolio Manager settings. Portfolio Managers with minimum or small bid sizes trying to invest into AA-B or even C rating loans often tend to be pushed to lower position in the investment priority list, being outbidded by higher bid amounts. As a result, lower bids are left out of the investment. This is why some investors may experience their Portfolio Managers not investing their funds in desired speeds. The best strategy is to stay in the market and adjust your Portfolio Manager strategy or settings.

Using the Account Statement Report

The Account Statement Report is useful to those interested in a minute by minute accounting of their holdings. This customizable data is located in the “Reports” page.

Example of Account Statement Report

As with all reports, you can can set the range by entering a start and end date. The system then generates a CSV report. The data includes a detailed accounting of all inflows and outflows from your Bondora account. The “TransferDate” is a record of when each transaction occurred. Sometimes there are multiple movements within one day. Investors will notice that the “Counterparty” column denotes who is the payer or payee. Outflows will show Bondora as the counterparty while inflows are usually either from borrowers (repayments) or investors themselves (deposits into account).

Summarize transactions by transaction type

You might also get useful insight by looking the “Description” column in combination with “Amount“. By using filtering options on “Description“, you can see the aggregated sums of all transaction types for given period, for example investments (bids) into loans, principal and interest repayments, deposits into account, secondary market sales etc. Principal payments are recorded as “TransferMainRepayment” or “TransferPartialMainRepayment“, interest payments are “TransferInterestRepayment” or “TransferExtraInterestRepayment“.

Finally, the “BalanceAfterPayment” is the available and reserved balance of your account after the transaction. Keep in mind that the report always displays full days data, so if you generate the report today, it includes data until the end of previous day.

This report is a good solution for those seeking an audit of their account. This information underscores the importance of remaining invested. By staying in the market investors can continue to pursue aggressive returns that will compound over time.