I have been presenting some ideas of my investment strategy with companies or alternative investment platforms. It is never too much to mention that these are my strategies and that they are not investment recommendations. In this article I will update my investment (read the first article) and leave some notes that may be interesting for those who want to know more detail in this tool.
Evolution of the average interest rate
I recently strengthened the investment in Raize. By the way, I usually point out that whoever wants to start some investment should start by experimenting, gaining experience and if their opinions and assessment are positive, it could increase their involvement. This is what I’ve been doing with Raize. I started with a low amount and increased the investment.
At some point I made a substantial increase in my portfolio (not in value but I doubled the investment). I have the criterion of investing at a maximum of € 30- € 40 per company, the reinvestment took some time, something that awakens me some comments that I will leave below. This reinforcement of the investment has taken time to be effective, however interesting the platform is, it is necessary that more and more companies use this tool to seek financing.
Accounts made, had an average interest rate of 7.5% (annual rate) and this rate fell to 7.2%, yet at a reasonable rate compared to the rates practiced on the market in other products. It should be noted, however, that these investments are risky as diversification is needed … and willing to lose money on some of the loans (hence I want to invest at most € 30- € 40 per company).
A few months ago I had mentioned that I had never had a loan in default. I had two companies delay payment. I just knew it by accident. Raize did not inform me or inform me of the credit recovery efforts (it is a fact that the FAQs refer to the recovery strategy and the various steps).
The two companies each weighed less than 1% of my portfolio, and increased investment, further reducing that weight. However, in the last few days I have checked the loans in arrears and concludes that the two companies (C-banking) had already paid back and now had two more arrears. I guess that will be with time. Some return to pay, others fail to pay, in a cycle that will repeat itself. Is life.
I am very happy with my experience with Raize and the results have been interesting. It is true that I am in this for the long term, that I use an aggressive diversification strategy (which conditions reinvestment) and that I make use of the automatic investment (which guarantees that I have a part of the new loans that arise, otherwise, when the loans appear to be already taken). I leave some comments:
- The disposals market makes sense because it allows us to invest right away. There are few loan sales, but if you find it quick, it will happen very quickly. When you buy a loan you do not have to wait for the company to accept it and the money is transferred to that company. Save some good weeks back there;
- Some companies have anticipated payments, which is possible and healthy;
- The automatic investment strategy may lead you to buy loans with a lower interest rate, which seems to me to be the trend in the near future. However, note that the higher the rate the higher the risk of the investment (remember that the companies that were late had all rates above 9%);
- I hope that Raize will remain rigorous in the risk assessment of companies. This is my biggest fear (although I have no reason to be suspicious of any loosening of risk analysis). It seems to me that with the increase of investors on this platform, if it is not accompanied by the increase of companies asking for financing, it will be more difficult to invest and with reasonable interest rates. Here the risk of Raize accepting all loans, being less rigorous and lowering interest rates may arise. In short, the problem of scale to which I will be attentive.
As they say in the presentation, this is an interesting way to finance the economy. It’s a different way. And it is a possibility to have more interesting levels of return, bypassing the financial system. It is important to never forget the need to know the platform, the form of financing and the risks that may arise. If you want to invest in this platform visit the Raize website, sign up and start your course.