A New Year With New Plans
First of all a happy new year! My portfolio update for December has been a bit delayed as I managed to get my booster vaccination earlier than anticipated and therefore I had to prioritize the planning and preparation of my next travels as a digital nomad. It’s great I got this all sorted when I was back in the Netherlands for Christmas anyway, so by now I’m already at my next destination: Porto.
In this update I’m not only reflecting on December, but on 2021 as a whole as well. I also discuss some important developments happening in certain countries and how this affects my investments and I discuss the latest news in the P2P lending industry.
Political And Economic Unrest Affecting My Investments
One of the reasons I started my nomad life is to be able to spend more time when traveling to other countries, so I can learn and see more than just the touristic highlights. My curiosity also makes me more open to invest in countries that most people have never been to, but this also comes with certain risks. For example, lately we have seen some political and economical unrest in Kazakhstan, a devaluation of the Turkish lira, and meanwhile the tensions between Russia and Ukraine are rising as well. So before moving onto my individual investments I’d like to address this topic at a more general level for each country, but first a note on currency risks.
When you invest in another currency, there is always an additional risk because the value of the currency can go down. At the same time, having your entire capital in one currency is also risky, which is why I have part of my stock portfolio invested in in stocks listed in US dollars and Brittish pounds, and why I also keep a part of my capital in cryptocurrencies. When it comes to investing in P2P loans I only invest in loans listed in euros, to avoid currency losses and because loans are no long term investment, but have a fixed term. However, this doesn’t mean that there are no currency risks at all. If a loan originator issues loans in a local currency, but offers these loans to investors in euros, they take on the currency risk. In a healthy situation they either hedge these risks, use a large enough markup to have some margin for fluctuations and they build up a large enough buffer to deal with short term currency losses. However, in case of an extreme currency devaluation even the most solid business model can be ripped apart and if a loan originator goes belly up you can still lose your entire investment because of this currency risk.
My Current Take On Each Country
Let’s have a look at each country individually and how I’ve adapted my strategy to the recent developments.
- Belarus: Although located so close to the fintech hub in the Baltics, Belarus is pretty isolated from the rest of Europe and some even refer to it as the “last European dictatorship”. When a foreign plane was forced to land in Minsk to arrest an opposition activist in May last year, the EU imposed a flight ban and other restrictions on the country, leading to more tension and a further isolation of the former Soviet state. Although I enjoyed my visit to Belarus a few years ago, when they losened their visa restrictions, I’m no longer comfortable investing there after last year’s developments. Besides that, the Belarussian ruble has lost significant value in the last few years. I had some Belarussian loans on Mintos, but I removed the country entirely from my autoinvest settings a while ago.
- Turkey: The Turkish lira has been losing in value for more than a decade, but in the last few months the devaluation accelerated rapidly while inflation hit record hights, becasue the Turkish Central Bank kept lowering interest rates. I’m only exposed to Turkish loans on Mintos but I should have seen some trouble coming if I’m totally honest. Wowwo has their car loans listed in euros, but is losing on the exchange rate because their clients pay them back in Turkish lira. On December 17th Mintos announced the immediate suspension of Wowwo calling it a “cautionary measure” but it seems Wowwo has stopped any paybacks to investors. Although Wowwo doesn’t seem to be in real trouble (yet) and the lira hasn’t really fallen any further, I won’t be investing in Turkish loans anymore because of the unstable political and economical situation.
- Kazakhstan: This is not a country that is often in the news, but has recently hit the headlines almost on a daily basis. Rising energy prices are not unique to Kazakhstan, but the government’s removal of a price cap caused an overnight doubling of the price of liquid petrolium gas (LPG), the country’s main motor fuel. Public protests and riots lead to political unrest and the country more or less closed down for business. There were power outages, the internet was largely shut down and international payment processing stopped functioning.
There has been a lot of speculation around the motifs, especially around Bitcoin as Kazakhstan is the second-largest Bitcoin mining hub after the US. The outage did cause a drop in the worldwide hashrate of Bitcoin, slowing the network down temporarily, but it barely had any lasting effect on the price of Bitcoin. This very extreme situation of a government shutting down the entire internet even shows that it’s impossible to shut down the Bitcoin network.
Mintos, PeerBerry and RoboCash all responded with a temporary suspension of all loan originators from Kazakhstan while they were monitoring the situation. Although the local currency, the Kazakhstani tenge, doesn’t seem to be largely affected, payment delays are expected because of the shutdown of the payment systems. I will be patiently waiting what happens. I didn’t panic or try to sell my loans at a loss on the secondary market. This is part of the risk of investing in these kind of countries.
PeerBerry has stated that the Aventus Group will use its cash reserves to pay back investors if needed and RoboCash has also confirmed that the RoboCash Group will take responsibility to cover payments.
By now the situation seems to have stabalized and the payment systems are back up which has been confirmed by multiple loan originators. Mintos and PeerBerry have have lifted the suspensions, but since I’m still exposed to existing loans I have removed Kazakhstan entirely from all the autoinvest settings of the platforms with loans there, at least for now.
- Ukraine: Political tensions between Russia and Ukraine have always existed since the Soviet Union fell apart. However, the tension has risen since the Russian annexation of the Crimea and the incident involving the shooting of a commercial airplane in Ukrainian airspace. At the same time Russia doesn’t seem to be happy to see former Soviet states looking more to the west and see the Russian influence shrink, especially when it comes to their bordering countries, like Ukraine. The latest developments are an increased fear of Russia actually invading Ukraine as they seem to have built up troops at the border.
If the fear is justified is pure speculation, but I want to be prepared for the worst. I spent a few days in Kiev a few years ago and would love to come back to see more of the country, so I honestly hope nothing will escalate. But as a precaution I have removed Ukraine from my autoinvest settings on all platforms for now.
- Russia: Although I believe a well diversified investment portfolio should include some exposure to one of the largest countries in the world, I decided to pull the plug on Russia completely for now. Except for Turkey, all of the issues mentioned above do involve Russia in some way. Even if Russia doesn’t invade Ukraine, the involvement and influence they try to have on other countries could always lead to retaliating sanctions against the country. The Russian ruble has already fallen time after time over the last decade which is already a risk in itself but a potential cut-off from the international payments system (SWIFT) would make matters worse.
So these are just my thoughts at the moment and maybe in the future I will change my mind again about these countries. On a more positive note I also want to acknowledge that I like doing this kind of research as it’s a way to learn more about these countries. Now have a look at my portfolio in numbers.
My Passive Income in December
My total passive income in December was €844,69, a bit up again from November. The amount can be divided into interest from P2P loans (€354,80), dividends (€425,44) and interest on lending out some of my crypto (€64,45).
Over the entire year 2021 I received a total passive income of €7.349,03. This is an average €612,42 per month, which is the same number as the 12 months trailing average for December. This is a significant increase from the trailing average of €398,75 in January of 2021 and brings me to 41% of my goal of €1500 in monthly income.
P2P Lending Portfolio
In December I received €354,80 in interest from my P2P investments and my portfolio reached a total of €45.076,59 by the end of 2021, a big increase from the €30.666,40 at the beginning of the year. The difference can be attributed to €10.901 in deposits and €3.509,19 in interest over the year.
On Mintos I received €150,60 in interest in December, bringing the total interest over 2021 to €1.345,13.
On EstateGuru I received €98,80 in interest in December which brought the total for 2021 to €1.032,20.
I was also very happy to see that EstateGuru has significantly improved their autoinvest dashboard with a lot more settings. They also reduced the minimum loan amount for making full use of all settings from €250 to €50. I never understood why they only had very limited autoinvest options so I’ve always kept investing manually. This means that I login on an almost daily basis to check for new loans which is time consuming and not really passive. I haven’t had enough time yet to decided whether I will switch to autoinvest or not, so hopefully I can share more about that in my next update.
In December I received €31,22 in interest on Bondora which concluded the year with a total interest of €282,32.
On IUVO Group I earned €30,51 in interest in December and a total of €412,18 over 2021.
IUVO Group also reported their most successful year so far with a 115% growth in net deposits in 2021, compared to 2020. The total number of investors reached 29.000 and the total volume of loans listed grew to over €103 million. The platform also announced that they will add new loan originators in 2022.
In December I receiverd €17,07 and over the entire year I received €179,83 in interest on Viainvest.
On RoboCash I received €2,96 in interest in December, which brings the total for 2021 to €3,13 for the latest addition to my P2P portolio. After the initial test phase of the RoboCash platform with €100 I increased my investment with €1.000 to €1.100. I actually wanted to withdraw some funds first, to test the withdrawal pocess, but I made a mastake by accidentally turning on the autoinvest again. So now I’ll have to wait maybe another few weeks before I can do this. My plan is to increase my capital to €1500 after that.
P2P bonus offers
Do you want to invest in the P2P platforms that I discussed above? Make sure to check which platforms currently offer a bonus for new signups. You’re not only doing yourself a favor but by using my links you are also supporting my blog so I can continue to create more valuable content.
Stocks & ETFs
In December I received €425,44 in dividends from my investments in stocks and ETFs which brings the total amount of dividends received in 2021 to €3.773,36
|Johnson & Johnson||€7,93|
|Royal Dutch Shell||€7,21|
|First Majestic Silver Corp.||€0,43|
|Wheaton Precious Metals||€33,91|
|VanEck Junior Gold Miners (ETF)||€92,25|
|ETFMG Prime Junior Silver Miners (ETF)||€8,34|
|VanEck Vectors Global Real Estate UCITS (ETF)||€43,35|
|Vanguard FTSE All World (ETF)||€9,76|
In November I started lending out a small part of my Crypto portolio on the platforms Celsius, Youhodler and BlockFi which pay interest on the account balances. I first tested out each platform with smaller amounts, but big enough to avail of the bonus offers that Celsius and BlockFi offer. Below you can see the returns in December, which include a signup bonus of $50 from Celsius and $10 from BlockFi.
I hope you find this update valuable. In January I will spend some time on making more changes to the autoinvest settings of some of the P2P platforms and off course I will talk about in my next update.