Bondora Review – All About Investing on Bondora.com
What is Bondora?
All Important Data at a Glance
How Bondora Works
Investing with Bondora
Return on Investment
Bondora Go & Grow
Problems and Solutions
Portfolio Builder Strategy
Bondora in the Crisis
Bondora Bonus Programs
Bondora Experiences – What you need to know about the P2P Platform
On this website you will find my Bondora experience so far. Bondora is the largest single position in my entire investment portfolio with almost 200,000 EUR. I’ve been investing here since 2015, so I know what I’m talking about.
Moreover, I have visited them personally several times. Here you can learn everything you need to know about the Estonian P2P platform to get started. If you liked the review, you can get 5 EUR starting credit at Bondora through me. Thank you for your support!
What is Bondora?
Bondora is a P2P lending¹ platform from Estonia and is one of the oldest investment platforms of its kind. On Bondora borrowers can take loans up to 60 months and you as an investor can invest in these loans and get interest.
Bondora Review: All Important Data at a Glance
Before we go into the details for investing with Bondora, here is the most important data for you in one place.
|Company Location:||Tallinn, Estland, operated as OÜ|
|Regulated:||Yes (by the Estonian Financial Supervisory Authority²)|
|Minimum investment:||1 EUR|
|Amount of Investors:||Over 164.000 (As of 2021)|
|RoI:||Fixed 6.75% interest with the Go & Grow product or 9.4% average according to historical data (as of 2021)|
|Issuance of a tax certificate:||Yes|
|Investor Loyalty Program:||No|
|Starting bonus:||5 EUR|
|Latest Annual Report:||Reviewed & published in 2020³.|
How Bondora Works
On Bondora you have 4 options as an investor to build a portfolio:
- Bondora Go & Grow: the most popular and easiest product on the platform with a fixed interest rate of 6.75%. We will come to this later.
- Bondora Portfolio Manager: here you invest with predefined settings and can achieve more returns. But also less if things go against you.
- Bondora Portfolio Pro: similar to Portfolio Builder, but you have more settings options. But it is also much more complex.
- Bondora API: an open interface to which other external programs can interface. Not for beginners.
I myself started with Portfolio Builder. However, when the Go & Grow product came out, I switched to it completely. This decision was largely based on 3 things:
- On my Bondora experience up to that point. I trust the company far more than many others.
- On the development of my portfolio. Over the years, predictability and security have become more important to me than returns.
- The optimization of my time. I prefer passive investing to active investing. Even if it is at the expense of returns.
Signing up on Bondora is quick and easy. By entering your email address, your first and last name and your phone number you are in. The latter you need for the SMS pin for withdrawals.
How do I deposit money?
Depositing money is very easy. In your account you will see a “Deposit” button. If you press it, you’ll see transfer details that you can use. For example, I have created an order template at my house bank for this purpose. You can also transfer money directly to the Go & Grow accounts.
How do I pay out money?
If you have money in your “wallet”, you can withdraw money to your account here via the “Withdraw” button.
How long does the deposit take?
According to my Bondora experience so far, the deposit process is extremely fast. Usually the funds are in your virtual wallet on the same day or at the latest a day later. Of course, all this depends a bit on your bank. I usually use Revolut and the money is in the account within minutes.
Can I deposit and withdraw with a credit card?
At the moment you cannot use credit cards for deposits and withdrawals. These must be made with a bank account.
How exactly does it work with the taxes on Bondora?
Are you invested in P2P loans, you have to deal with it once fundamentally. Here there are generally two ways, which have their own instructions:
- Regular taxation of P2P loans
- Alternative taxation of P2P loans
Bondora Go & Grow is perfectly suitable for the second option. The so-called alternative taxation. This has already been confirmed by a tax advisor, which of course makes things easier. So if you use Go & Grow you definitely have a tax advantage!
Is there a tax certificate on Bondora?
Yes, Bondora offers a whole section of reports that you can download. One of them is the tax report in PDF form for your tax return.
Bondora Review: Investing with Bondora
Now let’s get to the questions about investing on Bondora. I can answer many questions directly from my Bondora experience.
In which countries can you invest?
On Bondora you normally invest in loans from Estonia, Finland and Spain. During the Corona crisis, however, it was decided to continue to serve only the home market (Estonia). In the meantime, the Finnish market has been reopened and the Spanish market will follow shortly.
There are also other countries in planning, which will further strengthen the Go & Grow portfolio. However, we do not expect to implement these as investments before the end of the pandemic.
In which loans can I invest on Bondora?
Those who are invested in Bondora loans generate their returns exclusively with consumer loans. I can’t imagine that this will ever change either.
What are the costs on Bondora?
At Bondora, investors do not pay any fees on their investment. Only the borrowers.
What is the return on investment on Bondora?
The return you can earn on your portfolio on Bondora varies. The historical average is around 9.4% in 2020. However, with the Bondora Go & Grow product, you have a fixed interest rate of 6.75%.
What actually is Bondora Go & Grow?
To keep it short. Bondora Go & Grow is the simplest product on the P2P market. As an investor, you simply deposit money here, and the next day the first interest will come into your account.
You also have daily availability of your money. Behind it lies a huge loan portfolio with well over 100,000 loans. The key points:
- Direct liquidity, you can always withdraw your money.
- Tax only due on withdrawal, otherwise no credit! Disclaimer: I am not a tax advisor!
- It is extremely easy for beginners, deposit ready.
- Free to use, there is only a flat 1 EUR withdrawal fee.
- The product feels like a call money account, but beware! It is not.
- I have written a detailed guide to Bondora Go & Grow.
What is the minimum investment amount on Bondora?
On almost no P2P platform you can start with as little money as here. Bondora offers investing from 1 EUR.
Does Bondora offer a buy-back guarantee?
No, the P2P platform from Estonia does not offer a buyback guarantee.
Is there an app for Bondora?
Yes, there is. However, it is still in such a rudimentary state that it is useless. Moreover, during the Covid-19 crisis, development on it was temporarily halted. However, a new app is in the pipeline!
Is there a secondary market?
Bondora has probably the most extensive time market of all P2P platforms currently on the market. You can buy and sell loans here both at a discount and at a premium, significantly improving your return. The disadvantage is, of course, that this is not automatic and you have to spend time here accordingly.
Is it possible to invest money in other currencies?
No, here you always invest in euros.
Problems and Solutions
As always, there are problems here and there. I’ll show you how you might be able to fix them.
How do I get my money out of my wallet into Bondora Go and Grow?
You can currently get money into your Go and Grow account and earn interest in 2 ways:
- By transferring money from your account.
- By enabling the “Auto Transfer” option in your Go and Grow account.
- So if you have your money in your wallet, you currently have only the second option left. After activation, the
- available money will be collected within a few hours according to our Bondora experience. From that point on, it then generates its 6.75% interest.
From our Bondora experience, the Estonian P2P platform is one of the most stable on the market. I have been invested here since 2015 and since then there have been quite a few turbulent hours that Bondora has managed. But still, earning interest can be over sooner than you’d like. We already know this from other platforms.
How does Bondora earn money?
The Estonian P2P platform earns money mainly by borrowers taking out loans. There are contract fees, administration fees and several special services, such as the borrower product B-Secure, which allows borrowers to act more flexibly. However, they pay a price for this.
What happens if Bondora slips into insolvency?
In times of the Corona crisis, such a scenario is conceivable even for companies where it was previously said to be absolutely impossible. If this happens to Bondora, all business activities will be stopped immediately. Credits that are in your virtual wallets will be paid out. Of course, the loans will continue to run, because they can’t be terminated just like that.
However, a third party will take over the further processing. All these steps are planned by Bondora itself and can be read at any time here under point 9. Mintos and other P2P platforms have similar hedging scenarios.
Does Bondora work profitably?
Yes, as one of the few P2P platforms Bondora is working profitably and has been doing so for years. You can access the annual reports here. Attached is an excerpt from the 2019 annual report and the corresponding balance sheet.
How reputable is Bondora?
Bondora is a registered lender in several European countries. In Estonia, the platform is supervised by the Estonian Financial Supervision Authority.
How safe is Bondora?
The Estonian P2P platform is one of the safer P2P platforms. However, you must not forget that investing in P2P loans is generally associated with high risk. Therefore, it is advisable to invest here only money on which you are not dependent in case of doubt.
How Safe is Bondora’s Portfolio?
Time and again, there are reports from long-time users of Bondora who report that they incur losses as soon as they stop investing. Based on this, they assume that the quality of the company’s portfolio is poor. To avoid this circumstance altogether, based on our Bondora experiences, I have, for example, completely relied on the Go & Grow feature for years, although here, of course, the same portfolio lies behind.
Is there a deposit insurance on Bondora?
No, Bondora is not a bank and therefore does not fall under any European deposit insurance. All funds you invest on Bondora are exposed to the risk of default.
The default rate on Bondora
According to a data research company, the default rate at Bondora just passed the 47% mark, meaning that nearly half of the loans defaulted across all countries, all ratings and all maturities. 30.12% of loans originated in Estonia defaulted, 56.78% of Finnish loans and 69.5% of Spanish loans defaulted.
AA-rated loans performed best, with 17.31% having defaulted. The worst performers were F and HR, with 43.98% and 74.42%, respectively. Looking at maturity dates, loans with 6-month maturities (16.58%) performed best, followed by loans with 3-month maturities (23.15%) and 12-month maturities (30.52%).
However, although it seems sufficient to set a strategy that picks the lowest default rate, given the lack of collateralization on Bondora, it is important to understand the amount of capital that can be lost in case of default.
The best strategy for the portfolio builder
Finally, another factor to consider when deciding on a strategy is the return on expected loss. This is the amount a unit will recover in the event of a default. According to research, the best return on expected loss is achieved with loans that have an A rating instead of an AA rating.
The best strategy from our perspective would be: Invest in Estonia & A loans to ensure the lowest expected default rate. However, the total number of offers for A-rated loans with 6-month maturity from Estonia is quite low (the average maturity on Bondora is 51 months).
Accordingly, it would make sense to extend the term. With this strategy, the investor is expected to receive 13.2% in interest on average, while the optimal default probability is 19.3%.
Bondora in the Crisis
Bondora was founded in 2009, right in the first financial crisis. They went through a second one in 2020, so there is no P2P platform more crisis-tested than Bondora.
How did Bondora do during the crisis?
In our experience, Bondora was better prepared for the crisis than pretty much any other platform. Although they faced the same problems, they had developed concepts in advance to get through the crisis unscathed. For example, partial payments.
What are the partial payouts at Bondora?
With the Corona crisis 2020, there were also partial payouts for the first time. The reason for this was the increased demand for payouts on the platform. Investors who are invested in loans need to understand that they will continue. It doesn’t matter whether you want your money now or not.
For this reason, Bondora limited payouts for about 2 months to protect the loan portfolio. A sensible and correct measure at the time.
What is the 1000 or 400 EUR limit all about?
When the initial horror of the pandemic was over, investors flocked back to P2P lending. Now, however, Bondora had tightened its restrictions and was only lending in Estonia and no longer in Spain and Finland. Due to the limited supply and at the same time increasing demand for Go & Grow, a portfolio limit was introduced.
This means that you are temporarily allowed to deposit a maximum of 1,000 EUR per month into Go & Grow (interest not included). For example, if you want to invest 12,000 EUR on Bondora, you would need 12 months. This limit was lowered even further in December to 400 EUR per month.
Is Bondora crisis-proof?
Nothing and nobody is crisis-proof. I wrote a very detailed article about Bondora’s developments during the Corona crisis. While this is primarily about my Bondora Go & Grow investment, it also shows how Bondora handled the crisis.
Advantages & Disadvantages of Bondora
Before we come to a final conclusion of the platform, here is a summary of our pros and cons.
- Unlike Mintos, with Bondora you effectively have only one major lender.
- There is no buyback guarantee.
- The products away from Bondora Go & Grow need a long breath and can run into the red even after years.
- Compared to other P2P platforms, Bondora has quite a low historical return.
- Apart from Go & Grow, I do not see Bondora as a platform for beginners in this investment class.
- Long track record, Bondora is one of the oldest companies in the industry.
- Coped well with the Covid-19 crisis.
- Bondora is one of the few profitable P2P platforms.
- Daily interest credits and ability to plan with Bondora Go & Grow.
- If you use banks like N26 the payout is in your account within seconds.
- Tax advantage if you use Go & Grow.
Conclusion of our Bondora Experience
If you want to invest in P2P loans quickly and easily, you can’t really go past the Estonian platform. With their Go & Grow product, they offer investors over 100,000 loans with one click for no more than 1 EUR.
No other P2P platform offers you that. Usually, you can only invest from 10 EUR per loan. The whole thing is rounded off with many years of experience and a well-coordinated team, which I have already visited several times.
It is very interesting to see that the faces hardly change over the years. In our eyes, this is a good sign of a stable and satisfied team, and even though it has already been mentioned, it is worth pointing this out again separately in the conclusion. Because this is also one of the main reasons why I entrust so much money to the platform.
Is there a start bonus on Bondora?
Yes, there is! You get a whole 5 EUR credited directly at the start on Bondora and thus support the information collections of this blog. Thank you for your support, because we also get a commission for this, from which we can continue to operate the blog and continue to collect Bondora experiences for you.
Is there also a refer a friend program?
Yes, there is. If you are invested on Bondora, you can also refer friends. They will receive 5 EUR directly upon registration and you will receive 5% of their investment in the first 30 days. The maximum value is 500 EUR per referral.
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