Bondora Portfolio Pro

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Reza Machdi-Ghazvini,CAIA
Last updated on 03 September 2021

Bondora Portfolio Pro

If you want to implement your personal investment strategy on Bondora, you need to invest via the investment product Bondora Portfolio Pro. Unlike Bondora Go & Grow and Bondora Portfolio Manager, you can invest specifically in certain loans only. The Portfolio Pro is similar to the Auto Invest feature of other P2P platforms. If you have not selected a reserve with Portfolio Pro, Portfolio Pro will fully automatically invest in new P2P loans for you without any restrictions until the investment amount is fully invested.

After Bondora Go & Grow, Bondora Portfolio Pro is the most popular investment product on Bondora. How to set up Portfolio Pro and set it up correctly, we will show you in this post.

Set up and activate Bondora Portfolio Pro

To set up Portfolio Pro, you first need to customize your view.

Bondora Portfolio Pro change view

To do this, click on your name in the top-right corner and then on the "Change View" link and select Bondora Portfolio Pro. After that you can select Portfolio Pro from the menu on the left.

In the next step, you can apply several settings.

Bondora Portfolio Pro settings

The minimum investment amount per credit is €5 and it is invested in all countries, ratings and credit periods. You can view more settings by clicking on the "Add Filter" link.

Set up Bondora Portfolio Pro correctly

Note: The content of this article is for general information purposes only and does not constitute investment advice or recommendation. The information provided is based on our experience and financial knowledge. Every successful investor should inform himself extensively and make his own decisions, which are tailored to the personal goals.

With the default settings, you would invest in just about any loan that is offered. There are no restrictions on countries and ratings.

You could simply apply the settings (filters) at Portfolio Pro, but then you should ask yourself why you don't use Bondora's Portfolio Manager right away. It only makes sense to invest via Portfolio Pro if you want to implement your personal investment strategy.

You can make the following settings:

  • Country: from which countries the loans should come from

  • Bondora rating: ratings of the loans

  • Loan duration: terms of the loans

  • Maximum investment per borrower: how much you lend to a borrower at maximum

  • Interest rate: minimum and maximum interest rate

  • Portfolio limit: upper limit up to which you will invest again

  • Maximum bid size: maximum investment amount per loan (tranche)

  • Reserve: amount of money to be kept in the account and not to be reinvested

Maximum investment per borrower and maximum bid size

In particular, the two settings "Maximum investment per borrower" and "Maximum bid size" are a bit confusing. Bondora divides the loans per borrower into pieces (tranches).

For example, if you enter €50 as the maximum investment per borrower and €10 as the maximum bid size, it can happen that Bondora lends €50 to the borrower, divided into 5 loans (pieces). On the other hand, you can also lend a borrower only €30 (3 x €10), although you always want to lend €50 per loan.

If you want to invest only €10 per loan (and borrower), for example, you should simply set both settings to €10.

Set up Bondora Portfolio Pro correctly for conservative investors

On Bondora, P2P loans are not brokered with buyback guarantees. This means for investors that their delayed loans are not simply bought back from them after 30 - 60 days. Delayed loans remain in the portfolio and investors must expect that a portion of their loans will be delayed and may even default.

Typically, investors with a high need for security then quickly panic. This makes it all the more important that you set Portfolio Pro to meet your needs as an investor.

Country

For conservative investors, it makes sense to invest only loans from Estonia and Finland. Compared to other European countries, Spanish consumer loans have higher default rates and delays occur more often.

Bondora rating

On Bondora, a total of 8 ratings are offered from AA to HR. Bondora unfortunately does not publish default rates on each rating (or we did not find them).

But you can assume that the default rates from the middle rating "C" (and below) increase strongly. In some cases it could happen that from the worst rating HR almost every second loan defaults.

It is therefore recommended as a conservative investor to invest only in loans with ratings that are above average or average. On Bondora, these are the loans with the ratings AA, A, B and C. Particularly conservative investors can also exclude the rating C.

Term

For conservative investors, it is usually important to get their invested capital quickly. Long maturities are then a hindrance, even if there is a secondary market on Bondora where you can quickly sell your loans as you have to find a buyer first. You may therefore only want to invest in loans with a maximum term of 12 months.

But make sure that the number of available loans is not too low. If only a few loans remain, you should increase the term to 18 or 24 months.

Maximum investment per borrower

A maximum investment amount of €10 - €20 has proven to be effective when investing in P2P loans. It is important that you spread your investments in P2P loans as much as possible. Since you cannot rely on any buyback guarantees on Bondora, it is even more important that you do not allocate high amounts per loan.

Summary for conservative investors

  • Only Estonia and Finland

  • Maximum term of 12 months, possibly 18 or 24 months

  • Only loans with Bondora ratings AA, A, B and C

  • Maximum investment per borrower €10 - €20

Start investing on Bondora now

Set up Bondora Portfolio Pro correctly for risk-conscious investors

Country

You can invest in loans from all countries. As already mentioned in the conservative strategy, you have to expect frequent problems with loans from Spain.

As a result, loans from Spain do not have an attractive risk-return ratio, so you may want to exclude loans from Spain.

Term

With longer maturities, you as an investor tend to receive higher interest rates. Since you are foregoing your money for longer, you can demand higher risk premiums. You should choose a minimum term of 12 or 18 months and not limit the terms upwards. In case you need to get your money quickly, you can sell the loans on the secondary market.

Remember, you can sell your loans on the secondary market only if there is a buyer.

Bondora rating

Unfortunately, many investors make mistake when it comes to ratings. Many investors assume that more risk necessarily means more return. In some cases, it is claimed (or hoped) that the higher defaults on ratings are justified by the higher interest rates. Unfortunately, this is a fundamentally wrong assumption.

It can be easily understood by making an example. Let's assume two loans with a maturity of 12 months, both have a rating of HR and every 2nd loan defaults. If you invest €50 in each of the two loans, the non-defaulted loan would have to pay you interest of 100% for you to get back to your total investment.

Have you ever seen interest rates of 100% for a consumer loan?

Therefore, it makes more sense not to invest at all in the loans with the worst ratings, which are the loans with the ratings "F" and "HR" on Bondora. Instead, you should rather invest in loans whose ratings are close to  average. At Bondora, these would be the ratings B, C, D and E.

Maximum investment per borrower

As a risk-conscious investor, you should never invest more than €10 per loan. You have to expect that the loans in your portfolio will be delayed more often, also defaults will occur more often. Therefore, it is not advisable to invest much higher amounts per loan.

Summary for risk-conscious investors

  • All countries, possibly excluding Spain

  • Maturities of minimum 12 or 18 months, unlimited upwards

  • Loans with ratings B, C, D and E

  • Maximum investment per borrower €10

Start investing on Bondora now

Checking Bondora Portfolio Pro

After you have set Portfolio Pro, you should check your invested loans after 2 to 3 days. In no case should you check every hour whether loans have been invested in.

Successful P2P investors have understood that P2P lendings is about generating sustainable returns. P2P lending is not a quick way to get rich overnight.

If nothing has happened after 2 to 3 days, you may want to think about adjusting your settings.

Bondora Portfolio Pro does not invest

Some investors complain that their Portfolio Pro does not invest. This quickly raises the suspicion that something is not working properly.

The most common reason for not investing is that no loans were offered that match your settings. In this case, either patience will help or you need to adjust your settings a bit.

However, you should not completely overthrow your investment strategy just to invest the capital as quickly as possible.

An alternative could be that you simply invest your money on another P2P platform and accept that the market on Bondora currently only offers a certain number of loans that meet your criteria.