One of my favorite asset type is Peer-to-Peer lending, which consists in lending money to individuals via online platforms, in exchange for payment of interests over time. Peer-to-Peer lending has a high-yield, can be completely automated, and also has a low level of risk if you do it right.
In order to diversify my portfolio and reduce the level of risks of my investments, I am always looking to invest on new Peer-to-Peer lending platforms. In this article, I will review Envestio, a Peer-to-Peer lending platform based in Estonia. I heard of them by searching for new Peer-to-Peer platforms and realized many of my friends that are also investors already tried it out. It's a quite different platform from the usual Peer-to-Peer lending platforms, so I really wanted to try it out & share the results with you.
The Envestio Platform
Compared to other Peer-to-Peer lending platforms, Envestio is quite different, especially in the type of projects that they propose. On the surface, they are quite similar to other platforms: you basically invest in loans that are tied to projects that are featured on the platform, and in exchange, you will get interests on the money that you invested.
Where Envestio is different is in the type of projects that they propose: you will find the usual business development loan or real estate development loan on the platform, but they propose mostly really innovative and unique projects. For example, on the first projects I invested in with Envestio was a project dedicated to funding a company recycling electronics to produce raw materials out of it. You will also find projects like renovating a power plant or building a cryptocurrency mining farm. As a result, the yields offered by Envestio are much higher than other platforms, usually around 20%. Most of the projects on the platform are also backed by a buyback guarantee for the principal of each loan (meaning you will get back the money you invested in case a project defaults).
Opening an Account
The first step is to actually open an account and to deposit funds. The whole process was very easy, and it only took me 5 minutes to actually open the account. There is also a verification process of your ID, but it's only necessary when you want to withdraw money.
To deposit money, they will provide you an IBAN & reference number that you can use to fund your account. I used TransferWise for that, and it only took 1 day to have the funds on your account:
As for all platforms that I test now, I also tried to withdraw money just to see if that works. I had no problems doing so (after they verified my account, I just had to upload my passport scan), and the money was back in my account in 2 days.
Investing in Projects
Let's now see how to actually browse the available projects and invest in them. Here is a sample of the projects that were available when I wrote this review:
As you can see, there are projects in many fields, like real estate and business development, but as I mentioned before you will also find a lot of other projects like cryptocurrency mining.
For each project, you will some key numbers about the loan, like the type of project, term, interest rate, and additional information:
For my first investments, I selected a few investments that had both a high yield and a repurchase guarantee, in order to keep my money safe in case of defaults.
There are also some other cool features on Envestio, like the statistics module:
This allows you to really see the state of your portfolio on one single screen, with the current distribution of the portfolio, and the historical portfolio value & returns.
At the time I published this review, there was no auto-invest function available, but they told me they plan to release this function in the future.
Returns (Updated May 2019)
From the time I first invested on the platform, I let 2 months pass to see the first returns coming from the platform. So far, all returns were exactly as expected:
Update May 2019: It's now been over 9 months that I started to invest on the platform, so let's have a look at my current portfolio (I didn't add any money since I first wrote the review as I wanted to try other platforms to diversify):
I earned 54.61 Euros since I opened the account, and no loans defaulted so far. It's still early to calculate exact returns, but so far I estimate my annual yield for the platform at somewhere around 16%, which is completely in line with what was announced by Envestio. So I am still very satisfied with the performances of the platform so far. The only issue I would maybe have is the absence of an auto-invest function, meaning you need to manually invest in loans when they become available (and they get funded really fast).
Should You Invest on Envestio?
So far, I can say that I am very satisfied with my investment on Envestio. For sure, as they have mostly high-yielding & innovative projects, it also means that there is a higher level of risk associated with the platform. Even if the principal (what you invested) should be safe because of the buyback guarantee, in case a loan defaults you would still have lost all the time without earning interests.
Therefore, what I recommend is to invest on Envestio as a small part of your overall investment portfolio, in order to benefit from the high yields on the platform that will raise your overall portfolio yield. I will definitely keep on investing on the platform as part of my own portfolio, and I will keep you updated about the results.