Investing during turbulent times – my 2020 experience

The views and opinions expressed in this article are those of the guest blogger and do not necessarily reflect the official policy or position of Bondora.

Hi, my name is Claus Lehmann. Since 2007 I have invested in p2p lending. I’ve also been blogging about it at P2P-Banking.com and P2P-Kredite.com (the largest German resource on the topic), as well as the very active P2P Kredite forum with over 3,500 investors. For several years I have moderated panels at the Lendit Fintech conference in London. Over the last decade, I’ve experienced P2P lending as an exciting asset class, with an ROI that was well worth the underlying risk for me. I tried over 20 platforms but mainly concentrated on about 6-8 favorites.

Claus Lehmann
Claus Lehmann

P2P lending has only been a small part (10-15%) of my total investments. I’ve invested mostly in ETFs (exchange-traded funds). I am a typical buy-and-hold investor. However, at the end of January 2020, I became concerned about what effect the coronavirus crisis (at that time, only in China) would have on world trade and the world economy. And so, I deviated from my buy-and-hold path and sold all my ETFs at the end of January. From mid-March until April, I started to reinvest into ETFs.

In hindsight, I was too hesitant to reinvest, but overall, I’m satisfied with how it went. I now have far more assets in cash than usual. A tiny portion of my investments is in fintech start-ups.

How my p2p investments fared since the begin of the corona crisis

Diversification has always been one of my principles in P2P lending. I diversified over platforms, loan types (consumer, SME, property), currencies (EUR, GBP, AUD), and geographically.

Diversifying your investment is crucial.
Diversifying your investment is crucial.

In March 2020, I considered the implications of the looming crisis. At that time, I thought that the effect could be most severe for SME loans, and there would be concise term effects on liquidity. Both proved to be true. I also conducted a survey to gauge the reaction of investors. Many were reducing their stake in P2P lending, partly to redirect funds into the stock market. I shared the findings in this article.

I stopped the auto-invest option on most platforms and withdrew funds instead of reinvesting to watch how the situation evolved. On some platforms, I reduced my investments via the secondary market.

In the six months since then, my P2P investments were mostly stable and satisfactory. Yields and default rates on my Bondora portfolio stayed unchanged. The default rates on platforms with SME loans, however, rose, and some payments are still suspended.

More than ever, investors are looking for stability and consistency.
More than ever, investors are looking for stability and consistency.

My outlook

I plan to reinvest my cash into ETFs within the next six months. I’ll continue with my P2P investments as I have done until now.

I believe that the older, more established P2P platforms will emerge stronger from the crisis as investors look for stability and persistence. Bondora, with its 12-year track record, is well-positioned in the market.

This text was originally written in German and translated to English. All translations were done based on the translated English document. Even though we try our best to provide accurate translations, there might be slight differences due to the different languages and cultural nuances.

Related posts

First seen on Bondora Blog

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top