Now you are the bank

Every adult is probably familiar with this scenario: the conversation turns to friends and their latest acquisition, the topic of real estate or cars comes up, and then at the latest the word credit also falls in the same sentence.

Banks have been making a mint  for centuries by granting loans and the interest on loans (and have thus catapulted the world into one crisis after another). In Germany, it is deemed wicked to ask friends and acquaintances to pay an appropriate interest rate for borrowing money and to demand the disclosure of their finances in order to assess a default risk – strangely enough, because banks do nothing else.

Mintos is one of many P2P (person to person) platforms which gives private investors the opportunity to earn money by investing in other people’s debt (loans) and thus earn interest on them without any emotional strings attached. On the platform it is possible to invest in consumer credit granted to other private individuals and to increase one’s own capital at the corresponding interest rate. This depends on the personal liquidity of the individual concerned, which is calculated and communicated by an intermediary financial institution located in the country in question. You can select individual people and examine their personal circumstances on the basis of the information stored, or the website also allows you to automate the investment and let an algorithm take over.

This is where we come to one of the greatest strengths of the Mintos platform. The automation function has a lot of adjustment possibilities, every criterion for investment can be limited right down to the smallest detail, thus minimizing the risk accordingly without increasing the amount of time you are required to invest. Mintos is constantly trying to get new intermediaries from other countries on board, which is why it is already possible for investors to invest loans from Germany in the most remote forest villages in Belarus. Of course, it is up to each user to decide whether this investment makes sense. On the secondary market, the rights to already invested loans can be sold to other investors if an individual’s risk of default becomes too high in retrospect. Of course, normal market forces are involved in the purchase of these rights, which is why supply and demand determine the price.

It goes without saying that the granting of loans is associated with a high level of risk, which is why you should never invest all of your own capital in this portfolio class. But as a complementary yield driver, I have rarely experienced such a reliable platform.

Marcel Müller

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