Create an Auto Invest portfolio on Twino and set it up correctly

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

Create an Auto Invest portfolio on Twino and set it up correctly

The P2P platform Twino offers its investors Auto Invest portfolios, which have the advantage that you can invest fully automatically in P2P loans on Twino. Auto Invest portfolios are offered by Twino by default. This means that you as an investor are not forced to make your personal settings.

On Twino you can create multiple Auto Invest portfolios. Sometimes one Auto Invest Portfolio will not be enough for you to implement your investment strategy.

In this article, we will show you how to create an Auto Invest portfolio and how to set it up correctly.

Create an Auto Invest portfolio

Note: The content of this article is for general information purposes only and does not constitute investment advice or recommendations. The information provided is based on our personal experience and financial knowledge. Every successful investor should do extensive research and make their own decisions based on their personal goals.

To create an Auto Invest portfolio, click on the "Invest" in the top menu and then on the "Auto-Invest" in the submenu.

Twino Auto Invest Portfolio

After that, Twino will show you an example Auto Invest portfolio. The settings for this portfolio are very broad. There are almost no restrictions and you would be able to invest in almost all offered loans. At first glance, the maximum investment amount per loan seems a bit too high.

Twino Auto Invest available loans

What we like most about Twino is that it shows you directly on the right side how many loans would have matched your settings in the last 30 days. This allows you to quickly see if you might need to adjust your settings.

Set up a Twino Auto Invest portfolio correctly

The default settings of the Auto Invest portfolio are fine if you want to invest your money as quickly as possible.

There are only two major limitations with the default settings. First, it will exclude loans that have experienced payment difficulties. And secondly, it does not invest in loans with foreign currency risk.

We would recommend you to customize the Auto Invest feature to your personal investment goals.

You can make the following settings:

  • Your investments: Amount you want to invest

  • Investment per loan: Maximum investment amount per loan

  • Interest rate: Minimum and maximum interest rate

  • Term: Minimum and maximum term of the loans

  • Countries: In which countries the loans were arranged

  • Loan types: Purpose of the loans (loan purpose)

  • Loan rating : BuyBack and Payment Guarantee, Ventures

  • Loan status: Current (scheduled), extended and delayed

  • Loans with currency impact: Loans with foreign currency risk

  • Reinvestments: Interest and principal payments are automatically reinvested

Auto Invest portfolio settings for conservative investors

As a conservative investor, you focus on P2P loans with predictable returns and high security. We show you which settings we think fit a conservative investment strategy.

Even though all loans on Twino come with buyback guarantees or payment guarantees, you should not rely on it completely.

Maximum loan amount per loan

You should lower the maximum loan amount to spread your investment as much as possible. This way you reduce the risk that could come from a single loan. Experience shows that €10 per loan is reasonable. If you intend to invest a large amount (more than €10,000), €20 would also be reasonable.

Interest rate

Twino unfortunately does not publish credit ratings. For P2P loans in general, the lower the interest rate, the better the rating. Therefore, you should focus on the lower range of interest rates. Currently, the interest rates are between 10% - 16% p. a. (January 2021). In order to invest mainly in loans with better ratings, you should focus on loans with 10% p.a.

Term

Interest rates on loans usually depend on the term of the loan. Investors charge higher interest rates for longer terms, as they have to wait longer for their money.

Twino focuses on short-term consumer loans, some of which have terms of only 2 to 3 weeks. They are also known as PayDay Loans.

Twino average interest rates

If you look at the brokered loans on Twino, you will notice that investors get the highest interest rates for loans with terms up to 3 months.

This contradicts the basic assumption that longer terms yield higher interest rates. How can this be explained? The background is that short-term loans (PayDay Loans) are only worthwhile for lenders if the interest rates are relatively high.

This means that you should only invest in loans with a maximum term of 3 months.

Countries

With regard to countries, we would advise conservative investors to invest only in European countries, which leaves Latvia and Poland.

Loan rating

Ventures are listed under credit rating. Strictly speaking, this is not a credit rating but a type of credit because it is invested in secured real estate loans. Conservative investors should select BuyBack and PG only.

Currency impact (currency risk)

You should keep the default setting that you do not want to invest in loans with currency impact (currency risk).

Loan status

You should invest only in loans with status "Current". These are loans where there have been no delays so far.

Summary for conservative investors

  • Maximum investment amount per loan €10 (possibly higher with higher total amounts)

  • Interest rate minimum and maximum 10%

  • Term minimum 0 months and maximum 3 months

  • Loans from Latvia and Poland

  • Exclude loan rating "ventures"

  • Exclude currency risk

  • Only loans with the status "current"

Auto Invest portfolio settings for risk-conscious investors (return focus)

As a risk-conscious investor, high returns are important to you and you know the risks. We have taken a look at which settings you can use to achieve maximum returns on Twino.

Maximum loan amount per loan

In order to successfully achieve high returns on P2P loans, it is crucial that individual loan defaults don't hit you hard. To minimize this risk, you should not invest more than €10 per loan.

Interest rate

Currently, interest rates on Twino range from 10% to 16% per year. For maximum return, you should focus on loans between 14% and 16% per year.

Term

As we have shown in the previous section, you will not get higher interest rates on Twino for longer terms. This can be explained by the focus on short-term loans. Therefore, you should limit the term of the loans to a maximum of 3 months.

Countries

If you don't get higher interest rates for longer terms and creditworthiness doesn't have a big impact on interest rates due to buyback and payment guarantees, how can you increase your return on Twino?

Twino overview of interest rates

In Auto Invest under the interest rate settings, you will find the link "View interest rates". After clicking on the link, Twino will show you the average interest rates per country.

You will quickly see that there are higher interest rates only for loans from Russia and Kazakhstan. Twino shows you an interest rate in the foreign currency (CE Rate, Currency Exchange Rate) and currency adjusted (rate). In currency-adjusted terms, you will get higher interest rates only for loans from Kazakhstan (2% risk premium).

If your goal is maximum return, you should invest only in loans from Kazakhstan (which is generally not recommendable).

Loan rating

You should invest only in loans with the rating BuyBack and Payment Guarantee.

Currency influence (currency risk)

In order to invest in loans from Kazakhstan, you must accept the currency risk.

Loan status

Delayed and extended loans have further return potential, especially if you can buy them at a discount on the secondary market. You should allow loans with the status Current, Extended and Delayed.

Summary for risk-conscious investors

  • Maximum investment amount per loan €10

  • Interest rate minimum 14% and maximum 16

  • Term minimum 0 months and maximum 3 months

  • Loans mainly from Kazakhstan

  • Select loan ratings BuyBack (T) and Payment Guarantee (PG)

  • Allow currency impact (currency risk)

  • Loans with status Current, Extended and Delayed

For risk-conscious investors, it might make sense to create two Auto Invest portfolios.

One portfolio invests exclusively in Kazakhstan and the other portfolio invests in the other countries. This way, you could control exactly how much money you want to invest in loans from Kazakhstan.

As you can see, the choices for risk-conscious investors are limited on Twino. More risk-conscious investors tend to find a wide selection of riskier loans on other P2P platforms, such as Mintos or PeerBerry.

Control Auto Invest Portfolio

After you have created your first Auto Invest portfolio, you should give the platform a little time to invest for you. Since the number of referred loans on the platform fluctuates, it can sometimes take longer or go very fast.

In any case, you should not constantly look at your portfolio. You must have a little patience.

Auto Invest portfolio does not invest

Often investors complain that the Auto Invest function does not work properly. Most of the time, the automatic investment function works perfectly, but the settings are too narrow.

When you create an Auto Invest portfolio, you will see on the right side how many loans matching your settings have been brokered in the last 30 days.

Twino Auto Invest no available cash

If Twino shows you that no loans have been referred, take another look at your settings, you may need to adjust your settings.

What do I do if no loans are available?

It can happen that at times the demand on Twino is higher than the supply.

In our opinion, this is a good sign because obviously the loans are of high quality.

If this is not followed by a sharp drop in interest rates, there is no reason to panic. Investing in P2P loans does not depend on a few days. We would advise you to be prudent because typically many investors react angrily and stop their investments. At least then there will be enough left for you.

How often should I check my Auto Invest portfolio?

It depends on the maturities of the loans in your Auto Invest portfolio. Let's assume that the loans in your Auto Invest portfolio have an average maturity of 1.5 months, then you should check your portfolio once a month.

A typical case is that the interest rates on the platforms shift up or down. If you have chosen the interest margin too narrow, your portfolio can no longer invest in loans for you. You can usually solve the problem by adjusting the minimum or maximum interest rates.