I have around 1800 € in Mintos. I have been doing the math on P2P and it does not look good compared to stocks for long term because of foreign currency risk and taxation of interest rate gains as income.
Those 12 % or a bit more you may ideally get will translate into 8 % before inflation at a 33% marginal tax rate. (After losses you may end up at 7 %.)
This is not much more than the historical 5-7% (depending on the period) that you have for global stocks (whose gains are mostly tax free in Switzerland except for dividends).
What role might P2P have in a portfolio?
The most viable application I have found so far is using something like Bondora Go&Grow to park a few thousand Euros for a few years to be spent on vacations because it is pretty liquid. You get 6.75 % and can withdraw at short term.
Also shorter term loans (say, up to two years) might be useful to park some fun money that might or might not be needed and earn a bit more. This should yield more than Bondora GG.
How do you handle this?
Do you see any long term applications of P2P in a portfolio?
(Please spare me the remarks that Mintos, Cashare and others are just scams. I am aware of the bad reputation.)
None. It is too risky and your earnings ar capped by definition.
Why is Mintos a scam? Are there any real evidences I would have missed? Is it a Ponzi scheme?
Other people think it’s a scam.
It’s not a scam, it’s just very intransparent and not well regulated.
It’s actually one of the better platforms.
But I am more curious to know what kind of role P2P can play in a portfolio.
Highly speculative investment.
They aren’t necessarily.
But too many of them probably are.
But enough of these platforms have proven to either be run by people who don’t know what they’re doing - or be outright scams. Possibly even both. Add to that that is a badly (if at all) regulated market, and it’s a speculative investment.
Have you ever thought of lending money to people you know? Example: a couple of my colleagues are very much into property investments (flipping mainly) in the UK.
In order not to put too much cash on their own, they ask friends and colleagues for a “private loan” for a duration of appr 8 months (until the refurbish and the selling is done).
The appeal of P2P lending for me is the diversification among many lenders. And it should be as automated as possible.
Private lending does not allow it.
Also it tends to strain relationships and you need access to a number of projects for this to be effective.
To provide stable income to the person providing you the affiliate link
I wish people on the internet wouldn’t ask so often for discussion to be suppressed and threads to be deleted just because they don‘t like the replies they‘re getting.
While MrRIP‘s answer might have been tongue in cheek, once you look at the marketing of many P2P lending platforms. it seems to contain quite some degree of truth.