Top Platforms for Compound Interest and Reinvestment Strategy
When you're deciding which investment you're going to pursue, you must know the most important asset you have is time. Investments that yield interest over a long period of time and compound are the investments that make the most amount of money. The actual percentage yield you make in one given year is irrelevant, in respect, to the yield you receive over the years, provided that your principal is being reinvested with your earnings.
In a nutshell, you want your money to be re-invested every year and earn the interest, that interest on interest makes.
Many peer-to-peer lending platforms understand the force behind compounding interest and strive to give their investors the necessary conditions which allow them to constantly reinvest their earnings to yield greater profits. In this guide we will be taking a look at such platforms that are able to provide great returns that compound often.
PeerBerry
PeerBerry is a Latvian peer-to-peer lending platform that focuses on consumer loans. PeerBerry uses a loan originator aggregator model to manage their lender/ borrower ecosystem. PeerBerry is often dubbed as the fastest growing peer-to-peer lending platform, due to large influx of investors they received subsequently after launching. Investing on Peerberry requires a 10 EUR minimum and yearly rewards range from 9 - 12 percent.
PeerBerry has an active investor based and in their marketplace they offer a wide variety of loans from a wide variety of countries. PeerBerry was founded by one of Europe's most successful lending groups, Aventus. Aventus initially offered loans on Mintos' platform, shortly after experiencing Mintos' success, Aventus created PeerBerry. Aventus is also PeerBerry's largest source for loans in their marketplace.
PeerBerry offers a variety of extra features that other platforms do not. Most notably, their dual buyback guarantee protocol that ensures investors principal is seldom at risk. This feature of theirs provides investors with guarantees that if something were to go wrong, PeerBerry, would step in and assist them all the way until the funds are recovered. The first buyback guarantee ensures that after 15 days of late repayment that the loan originator who issued the loan buys the loan back from the investor. If the problem at hand is the loan originator themself runs out of money then all the loan originators step in to help that loan originator service their loans.
There are a lot of different types of buyback guarantees and other ways of protecting capital. You can read more about that in our investment guide on buy back guaranteesPeerBerry also has a fully functioning auto investing tool which, can ensure investors that they will receive the return they wish, for the risks they are willing to take. Most loans on PeerBerry are further secured by some form of collateral so there is always something to sell in case of a default. Investors have never lost capital on their investments and PeerBerry takes extra steps to be transparent and provide their investors that PeerBerry is confident and is operating in good faith. Due to the nature of PeerBerry's investment services, investors, will find their portfolios compounding three to seven times a year.
Swaper
Swaper is an auto-investing solution for investors who are less interested in reading and researching what they are investing into. Swaper guarantees investors that they can optimize their auto-investing tool or manually invest, but either way, they will make 14%. To invest in Swaper requires 10 EUR minimum deposit.
Swaper was founded by loan originator Wandoo Finance. Since then, the ownership has moved around and today it is in the legal ownership of Marina Tjulinova. All loans on Swaper's marketplace are issued by Wandoo Finance. However, all buyback guarantees are actually issued by Swaper, and not Wandoo Finance. This distinction is important because it means that Swaper as an entity is responsible for your investments rather than the loan originator who originated your loan. All of the loans found on Swaper's marketplace are short term consumer loans that range from 50 to 1000 EUR and must be repaid within 30 days.
All investors who have portfolios larger than 5000 EUR are granted an additional 2 percent return on their principal which totals 16% IRR on Swaper's platform. Swaper also has no fees on their platform for investing, depositing and withdrawing. There is, however, a 2 percent fee to use the secondary market on Swaper. Swaper loans are incredibly short term and end within 30 days. Investments on Swaper will compound roughly 10 - 12 times a year.
ReInvest24
Reinvest24 is a new age fintech solution that seeks to bridge the gap between property equity and micro finance. Reinvest24 gives investors temporary equity of properties in exchange for loans. These investors then get to benefit from rental dividends which are monthly payments and capital gains. The capital gains can only be realized at the end of the loan cycle.
While some loans span 4 months, other loans can reach up to two years. During this time, the value of the actual property can fluctuate both upwards and downwards. Investing in Reinvest24 requires a 100 EUR minimum entry deposit and yearly returns range from 14 - 16 percent.
Reinvest24's marketplace is some what lacking of projects, their team has emphasized that they need more investors to add more projects. Reinvest24 has both a primary market and secondary market on their platform. In the first marketplace, investors will find bullet loans, development loans and rental loans. Reinvest24 is a special case on this list because the platform provides two forms of earnings. These two forms of earnings can both compound making Reinvest24 a very interesting platform to invest with. Payouts are also on time and in large amounts so that investors can take advantage of also purchasing loans on the secondary market at a marked down cost.
In general, loan cycles on Reinvest24 are longer than platforms that issue personal or consumer based loans. The actual compounding of yearly return, regardless, of capital gains really happens once or twice per year and three times, if lucky. However, if we do include the addition of capital gains, investors may see their investments compound up to four times in one year. However, we should caution that it is not a given that the property equity will increase, and it is also possible that this equity will substantially decrease.
RoboCash
RoboCash is a fully automated service founded in Latvia. RoboCash is owned and managed by RoboGroup a profitable loan company that operates all around the world and owns subsidiaries around the globe. RoboGroup owns almost a dozen loan originators and funnels these loans originators into RoboCash as fully automated service that allows investors to enjoy the same profits RoboCash does.
RoboCash offers many innovative features that make them one of the top performing peer-to-peer lending platforms. Their easy-to-use platform as well as fully automated investment service is fully protected by their RoboCash buyback guarantee. RoboCash Group, the entity responsible for RoboCash ensures that RoboCash has ample legal and financial support to continue thriving. Another advantage RoboCash has is their approach to reinvesting.
Robocash's platforms offers four features post investment:
- Balance
- "Return funds to the balance after the loans are closed."
- Reinvest Full Amount
- "Reinvest the principal amount and interest earned."
- Reinvest Principal Amount
- "Reinvest the principal and earn your passive income transferring interest to the balance."
- Payout
- "Withdraw the funds (invested money and interest) after the loans are closed. As soon as the amount reaches 50 EUR, it will be automatically transferred to your back account."
If you are interested in learning more about auto-investing tools and strategies you may defer to our blog on auto-investing.
To invest on RoboCash there is a 10 EUR minimum investment entry and yearly returns range from 12 - 13 percent. RoboCash is a very short term consumer loan based platform, and borrowers are only issued loans that range from 7 - 30 days. In such, investors will find that their investments will compound very frequently, potentially dozens of times.
Mintos
Mintos is one of the largest peer-to-peer lending platforms in the world. Mintos has funded over 5 billion EUR in loans which is far more than any other platform in Europe can say. Mintos was founded in Riga, Latvia in 2015. Mintos' platform also uses a loan originator aggregator model in order to manage their lending borrowing ecosystem.
Mintos are creative in their use of different instruments that make investing a pleasurable experience with them. To further expand, Mintos provides multiple auto-investing packages for their investors to utilize. Mintos has a very active secondary market and Mintos itself, offers just about every type of loan, so investors can feel that their portfolios are completely diversified.
Mintos also offers a buyback guarantee that has worked more often than not, it implies that if a loan goes 14 days without repayment then the loan originator will reimburse the investor his principal and accrued interest. Mintos' buyback guarantees is one of the few reasons we saw peer-to-peer lending hit mainstream media. Mintos offers multiple different investment strategies, depending on the type of loans you optimize for. Mintos' portfolios will compound anywhere from once to several times a year.
Simple Interest v. Compound Interest
There are many forms of interest out there and many different investment strategies to consider. We have found that a very powerful tool in understanding your investment projection is understanding the difference between simple interest and compounding interest. Especially in peer-to-peer lending when you have the option to compound your investments so frequently.
Simple interest
When lenders issue loans to borrowers they do it with a promise of interest. This interest, is the actual cost of the loan issued. Or in other words, when someone borrows money, they are promising that in the future they will pay a fixed amount of interest for the cash up front. This is known as simple interest.
Compounding interest
Compounding interest is the taking a step back and looking at the investment cycle over the years and observing how many times the interest that was made was reinvested. It is that money, that after being reinvested numerous times, yields exponential returns.
Words from the Wise
Albert Einstein famously said that compound interest was "the eighth wonder in the world." He further adds in his assessment on this natural force, "he who understands it, earns it and he who does not, pays it." The great peer-to-peer lending platforms understand the potency of "interest on interest".
Many of the greatest minds, Such as Benjamin Franklin, Warren Buffet, Benjamin Graham and Albert Einsten have said that compound interest is a force to quite literally be reckoned with.
Reinvest24 is the only property based platform in this guide
Most of the platforms in this guide, with the exception of Reinvest24 specialize in consumer loans. The reason the majority of these platforms are listed in this guide is because short term consumer loans are often small loans that are paid back in a short period of time. Due to the short time span of these loans it gives investors the opportunity to enjoy their investments compounding more often. If you're interested in reading more about consumer loans, you can read about them in our guide on consumer loans.
Market Type
Consumer Loans
Average Returns
9 - 12%
Minimum Investment
EUR 10
Signup Bonus
0.5%
Registered users
70,000
Total funds invested
EUR 1.8 Billion
Default rate
7%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer, Bank Card, TransferWise
Withdrawal methods
Bank Transfer, Bank Card, TransferWise
PeerBerry is an excellent P2P platform to its 100 percent successful fund recovery track record. They offer slightly below market interest rates in exchange for a guarantee users will never lose their funds.
Market Type
Mortgage Loans
Average Returns
12 - 17%
Minimum Investment
EUR 100
Signup Bonus
EUR 10
Registered users
25,000
Total funds invested
EUR 40 Million
Default rate
0%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer, Bank Card, TransferWise
Withdrawal methods
Bank Transfer, Bank Card, TransferWise
Reinvest24 is an equity backed real estate rental P2P lender. Though they are a much smaller P2P lending platform in comparison to the top P2P lenders. They deserve a high place on the list because of their attention to detail and successful execution of business goals.
Market Type
Consumer Loans
Average Returns
14 - 16%
Minimum Investment
EUR 10
Signup Bonus
None
Registered users
6000
Total funds invested
EUR 400 Million
Default rate
Undisclosed
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer
Withdrawal methods
Bank Transfer
Swaper only offers auto investing in unsecured consumer loans in Poland and Spain. Swaper is a subsidiary of Wandoo Finance Group, a loan originator that also services the loans on Swaper's platform. Swaper advertises a 14% IRR and premium investors who have invested over 5000 EUR receive an IRR of 16%.
Market Type
Consumer Loans
Average Returns
12 - 13%
Minimum Investment
EUR 10
Signup Bonus
EUR 5
Registered users
30,000
Total funds invested
EUR 554 Million
Default rate
2%
Regulating entity
Self-Regulated/EU Compliant
Buyback guarantee
Secondary market
Payment methods
Bank Transfer
Withdrawal methods
Bank Transfer
Read about Robocash a Peer-to-Peer lending platform that is completed automated. Robocash offers a 12% IRR and loan requests from borrowers around the world. Robocash is a great platform for a passive investor.
Market Type
Consumer Loans
Average Returns
9 - 12%
Minimum Investment
EUR 10
Signup Bonus
1%
Registered users
500,000
Total funds invested
EUR 8.9 Billion
Default rate
16%
Regulating entity
Financial & Capital Market Comission (Latvia)
Buyback guarantee
Secondary market
Payment methods
PayPal, Bank Transfer, Credit Card, TransferWise
Withdrawal methods
Wire transfer, Credit Card
Mintos is P2P loan originator aggregator whom after years of slow growth exploded and became the number one P2P lending platform in Europe. Find out why in this review. Is Mintos an investment worth considering?
Verdict
We really like PeerBerry's approach to buy-back guarantees for retail investors. The loans that are offered on its platform are attractively profitable and impressively secured. Their parent company, Aventus, has a strong track record and their financial statements would indicate that they are indeed in a strong position.
In terms of yielding compound interest, we believe that PeerBerry is at the forefront of industry in this regard. Although there is no secondary market, loans are paid back on time, payment is consistent, and communication between the investor and PeerBerry is only to be commended.