Bondora Portfolio Pro
Last updated on 16 May 2021 by Reza
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If you want to implement your own investment strategy on Bondora*, you have to invest in the investment product Bondora Portfolio Pro. Unlike Bondora Go & Grow and Bondora Portfolio Manager, you can invest very specifically only in certain loans. The Portfolio Pro is similar to the Auto Invest feature of other P2P platforms. If you have not set 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.
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 set a target return, which is basically very similar to the Portfolio Manager. The default return target is "Balanced".
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 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 own experience and financial knowledge. Every successful investor should inform himself extensively and make his own decisions, which are to be cut on 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 own investment strategy.
You can make the following settings:
- Country: From which countries the loans should come from
- Bondora rating: In which ratings are invested in
- Loan term: Which terms the loans should have
- 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 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 (borrower), for example, it makes sense to simply set both settings to 10 €.
Set Bondora Portfolio Pro correctly for conservative investors
On Bondora*, P2P loans are not brokered with repurchase 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.
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.
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 at the latest from the middle rating "C", the default rates increase strongly. In some cases it is to be expected 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 or on average. On Bondora these are the loans with the ratings AA, A, B and C. Particularly conservative investors can also still exclude the rating.
For conservative investors it is usually very important to get their invested capital very quickly. Too long maturities are then a hindrance, even if there is a secondary market on Bondora where you can quickly sell your shares, but then you must first find a buyer who will buy the loans from you. 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 too 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 very important that you spread your investments in P2P loans as much as possible. Since you cannot rely on any repurchase guarantees on Bondora, it is even more important that you do not allocate too 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
Set Bondora Portfolio Pro right for risk-conscious investors
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.
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 very 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.
Unfortunately, very many investors make a big thinking 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 completely wrong assumption.
You can make this clear to yourself very easily. Let\'s assume two loans with a maturity of 12 months and both have a rating of HR. Accordingly, 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% in order for you to get back to your deposit.
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 hover around the average. At Bondora, these would be the B, C, D and E ratings.
Maximum investment per borrower
As a risk-averse 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 €
Check Bondora Portfolio Pro
After you have set Portfolio Pro, you should check after 2 to 3 days in which loans have been invested. In no case should you check every hour whether loans have been invested in.
Successful P2P investors have understood that P2P loans are about generating sustainable returns. P2P loans are not a quick way to get rich overnight.
If after 2 to 3 days nothing has happened, 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 suitable loans were offered that corresponded to the settings. In this case, either patience will help or you will have to loosen your settings a bit.
However, it does not make sense to 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.