2020 has so far started with a hit (and a bad one). As an investor, it is never my strategy to lose money but that moment has indeed come. Of course, it’s all part of the journey and with it comes to a lot of lessons. Both Kuetzal and Envestio have vanished and although Keutzal was still a testing game with little money lost (€400), I have put a lot of trust on Envestio and that trust resulted in me losing around 22.5% of my P2P portfolio. So during this turbulent moment what’s next for me and for the P2P market?
Panic has hit the market, and this panic results in platforms closing down. We learned that platforms offering buyback guarantee are high risk as they run like banks and require an inflow of money to be able to pay for the buybacks. Platforms like Wisefund and Monethera have temporarily disabled the buyback guaranteed to not run into the same issue. In the end, Envestio mismanaged the whole situation. They released fake projects at the very end to be able to ‘control’ the situation but it went downhill so fast.
I’ll be treating P2B (Peer-to-Business) platforms as a high-risk investment. I still have a substantial amount in Crowdestor and I hope nothing like Envestio happens to them. They do seem to handle things better and they do not offer any buyback guarantee. I’ll definitely stand on the sidelines and I’m not planning to add any money within the next 6 months and I plan to withdraw whatever capital becomes available. I have turned off all my auto-invest strategies on all platforms and have been withdrawing all my returns.
I don’t want to exit the P2P investment for good, however, I will put more focus on safer and lower interest rate platforms in P2P like Grupeer, Bondora, Peerberry, and Mintos.
I have a good amount invested in cryptocurrencies which seem the be gaining some steam lately. I want to branch out to dividend-paying stocks and ETFs. I’m also in the process of owning my first rental property so I am currently focusing on having the cash to finish it up.
Always invest what you afford to lose! Although I do not afford to lose €6k in a month, it didn’t put me back from paying the bills, put food on the table or it didn’t hit my savings. My financial situation is still solid and that’s what you have to learn. Always have 6-9 months of savings, pay your debts and then start investing. It always sucks when money is lost, however, I can focus on upcoming months and find smarter ways to recover the losses.