Invest in P2P – How you can make +13% p.a. with P2P lending

In 2017 I invested my first € 100 into P2P loans. Today my portfolio is worth € 20.000 with an annual average return of 13.13%.

This article is for everyone who aims to improve their personal economy and is looking for alternative investment opportunities to stocks and funds that generate high returns of more than 10% annually.


In this article, I will explain how to invest in P2P loans and create a sustainable passive income stream.

All the information in this post is based upon my own experiences with P2P investing. There is no guarantee that you will reach the exact same results. P2P investing is considered as a high-risk investment. Never invest more money that you can afford to lose.

Why I chose P2P loans?

My goal was to find an investment opportunity, that is easy to understand, convenient, time efficient and would earn more than the current returns from savings accounts.

Further criteria I considered:

  • Higher returns as the current inflation rate
  • No correlation with the stock market
  • Short capital commitment
  • No platform fees that would cut my returns

P2P investments allow me to generate passive income online without wasting my time on tracking or reporting.

As soon as you understand the concept of P2P lending you don’t need any special know-how or market insights in order to earn returns from P2P investments.

All you need to know to begin earning money with P2P you will find in this article.

Pros and Cons with P2P lending

  • Higher return compared to saving accounts
  • You can decide how long you want to tie-up your investment
  • Auto Invest will help to diversify your portfolio without any time investment
  • All loan application on P2P platforms are thoroughly reviewed
  • Wide diversification opportunities
  • Small correlation to the stock market
  • Higher risk
  • Your investment is not always secured
  • Information about loan originators is often hard to find
  • it’s hard to predict the borrower’s willingness to pay debt abroad
  • It is not easy to evaluate the trust of a P2P platform
  • Many P2P lending platforms are not yet available in all languages

How does P2P investing work?

Peer-to-Peer (P2P) investing (or P2P lending) allows investors to invest their money on platforms that lend their money to borrowers. The borrowers pay back the loan (P2P loan) with an additional interest that will be credited to the investor’s account.

This is a very simplified definition of P2P investing. Every P2P platform has a slightly different setup. Overall the P2P platform helps to connect investors that want to invest their money with people that want to lend money. The loans are funded through the crowd of investors compared to the traditional setup where banks provide the financing.

That’s a valid question. As mentioned earlier, each P2P platform has a slightly different setup.

Some platforms offer borrowers such as companies to list their projects on the platform directly.

Other platforms do not allow borrowers such as consumers to list their loans directly but use loan originators (loan companies) as intermediaries between the platform and the borrower.

Different P2P platforms offer various types of loans. Some are specialized in personal loans, others list short term loansmortgages or business loans.

The P2P platform is a great source of funding. Even banks need to lend money in order to finance loans.

Banks usually lend money from large banks such as the European Central Bank.

P2P platforms offer a much faster way to fund projects and consumer loans as compared to banks.

In case you want to invest in P2P platforms that are focused on lending money to companies, the platform does the credit check. Usually, loans listed on those platforms are secured by a mortgage or the personal guarantee of the business owner.

In case you want to invest in consumer loans, the borrowers’ credit score is being reviewed by the loan originator. The loan company will look at the borrower’s finances and his ability to pay back the loan.

Many investors are concerned about what their money is being used to.

The only concern you should have is how much you will get back in return.

If you invest in stocks, funds or save your money on saving accounts, the chance that you know what your money is being used for is very little.

With P2P loans you actually know what types of investments you are funding. Depending on the platform, you can choose on your own whether you want to investlong-term into mortgages, support business ideas or fund short-term loans.

Open a European Bank Account for free

In order to invest in European P2P platforms, you will need a bank account which is based in Europe. To open a European bank account from overseas you can use service called Transferwise. Upon sign up, you will open a EUR account which will be based in Germany. You don’t have to be a European resident. You can use this account to transfer money to the P2P platform. I would recommend transferring Euros to your account with the P2P platform as the currency conversion on the platform itself is not always supported or too expensive.

Use this link to open a free Transferwise account and save the fee for the first transfer.

Best P2P platforms that help me generate returns of +10% p.a

Here are four P2P platforms, that help me generate average annual returns of more than 13%.

To be completely transparent, I am active on all platforms for more than one year now. I started with a low investment amount between € 100 and € 250 to test the platform and became familiar with its settings. As my trust in the platform increased I stocked up my investment. Currently, I am still increasing my portfolio every now and then.

My Mintos Rating

Mintos was the first P2P platform I transferred money to. Mintos is the biggest P2P player in Europe with headquarters in Latvia. It’s also the fastest growing P2P company with the widest options to diversify your investment.

If you are thinking about starting investing in P2P loans, this would be my go-to place.

It’s by far the most user-friendly platform with auto invest, buyback guarantee and cashback. Read my Mintos review here.

My current investment on Mintos is € 10.320 with an average annual return of 10.76%.

Sign up now and get 1% cashback on your average account balance within the first 90 days.
My Peerberry Rating

PeerBerry is another P2P platform from Latvia. It is primarily focused on investments into short-term loans for 30 days. This means I can withdraw my investment within 30 days in case I need the money. I use this platform for this exact reason. Additionally, I get a bit higher return on my investment compared to Mintos. Read my PeerBerry review here.

My current investment on Peerberry is € 3.072 with an average annual return of 12.35%.

My Envestio Rating

Envestio is a P2P platform from Estonia that connects businesses who are looking to fund their projects with investors. The P2P loans listed on Envestio offer returns up to 21% per year. Most of the investments are secured by a mortgage or personal guarantee of the business owner. Read my comprehensive review about Envestio here.

My current investment on Envestio is € 615 with an average annual return of 19.54%.

Sign up now and get € 5 cashback as well as 0.5% of your monthly invested amount for the duration of 9 months.
My EstateGuru Rating

Estateguru is also an Estonian P2P platform. Their focus lies on the funding of real estate projects. This platform is ideal for investors who are interested in the investment into the real estate market, however, lack the capital or don’t want to take the risk and take a mortgage to buy a property.

Estateguru allows you to benefit from the growth in the real estate industry without taking too much risk.

My current investment on Estateguru is € 1.047 with an average annual return of 9.87%. Read my review about Estateguru with a detailed guide on how you can reach similar results here.

Sign up now and get 0,5% cashback on your portfolio amount within 30 days after your first investment.

New P2P lending platforms in my portfolio

No Crowdestor Rating yet

Review coming soon

Crowdestor is an Estonian P2P lending platform that lists loans from the real estate segment, similar to EstateGuru and Envestio. You can also invest in business projects, transport and startup projects. This P2P lending platform is operating successfully for a few years now and I have decided to add it to my P2P portfolio to support my platform diversification strategy. 

Crowdestor is the only platform with a buyback fund, that should in the unlikely event of a default loan cover some of the losses. As soon as I gain some experience with the platform I will write my comprehensive review about Crowdestor - so stay tuned. 

No Robocash Rating yet

Review coming soon

Robocash is a Croatian P2P platform that lists unsecured consumer loans with a buyback guarantee that kicks in as soon as the borrower is late with its payments for more than 30 days. It is very similar to the P2P lending platform Peerberry. Most of my investments on Robocash are short-term loans for 30 days. My current investment on Robocash is €500. A comprehensive Robocash review will come as soon as I gain more experience with this P2P lending platform. 

Invest in P2P loans  – Step by Step

In the following paragraphs, I will briefly explain how to invest in P2P loans.


1. Sign up

First,  you need to sign up to the platform of your choice. You will need to provide your email and verify it through the link you receive into your inbox upon registration. In the next step, you will provide your name and address. Some companies require you to provide a copy of your ID, so they can verify your identity.


2. Transfer funds to your P2P platform

The next step is to transfer funds to your account on the P2P platform. This is a painless procedure that takes no more than a few minutes. In the dashboard of the platform look for the option to deposit money to your account.

I always used bank transfer which takes usually one to two business days. There are however more options to transfer money such as using services like Transferwise and Trustly.

Make sure that the reference on your bank transfer includes the correct data, so the P2P platform can allocate your transfer to your user account.


3. Activate Auto Invest

Many P2P platforms, such as Mintos, Peerberry and Estateguru have the option to set up Auto Invest.

Auto Invest allows you to tell the P2P platform in what type of loans you want to invest. It gives you also the option to reinvest your returns and benefit from the compound interest effect.

This tool eliminates the time you would need to invest manually as it does the investing automatically according to your settings. Furthermore, it’s the perfect way to diversify your investments.


4. Earn profits

After you have signed up, transferred funds and activated your Auto Invest tool, you can lean back and let the money work for you.

The amount of returns you earn is dependent on the amount of money you are willing to invest as well as the risk you are willing to take.

P2P lending terms you should know

As with every investment I make, I educate myself about the topic to get an idea where I put my money into. Here is a list of popular terms that will help you understand the content in the P2P investment niche.

The investment account is your user’s account that you created when signing up for the P2P platform. When signing in into your account you can view statistics about your investments. It also serves as an account to deposit your funds and receive loan and interest payments.

Auto Invest is a tool, provided by most of the P2P platforms, that allows you to automate your investments. This time-saving application enables you to set up your preferences when it comes to P2P investments. You can set up the loan amounts, loan period, loan originator or the country where you want to fund loans.

The minimum investment amount is the minimum amount of money you need to invest in one loan. This amount varies depending on the P2P platform.

Envestio = € 1

Mintos = € 10

Peerberry = € 10

Estateguru = € 50

Diversification is the process of allocating your investment in a way that lowers the risk of a loss. In the P2P lending niche, this term defines the diversification options that you can use when investing on a particular platform.

When you invest in P2P you can diversify your funds based on country, loan originator, currency, loan amount, loan period, type of loan, buyback guarantee etc.

Buyback guarantee is a promise from the loan originator (or the P2P platform) to buy back your investment in case the borrower is late with the loan payments for more than 60 days.

Investing in loans with buyback guarantee can be used as an additional strategy to lower the risk of your investment. All the P2P platforms I use with the exception of Estateguru offer the option to invest in loans with a buyback guarantee.

My portfolio on those P2P platforms consists only from loans secured by the buyback guarantee. As until now the buyback guarantee always worked and I have not had any default loans.

Loan originators are the middleman between the P2P platform and the borrower (consumer). Before a loan originator can apply to list their loans on a platform, they need to fulfill certain financial criteria.

The P2P platform always does its due diligence before accepting a loan originator. Platforms such as Mintos even rate their loan originators from A to C which can be used as some kind of key indicator when deciding in what loans to invest.

Interest rate represents the expected annual returns that you will receive for your investment. The interest rate can also be used as a benchmark on the risk connected to the investment. Loans with higher interests are considered to be higher risk.

If you invest in loans with a buyback guarantee, this theory proves to not be valid.

As from my experience, the interest rate for loans with buyback guarantee is more connected to the ratio between the supply of loans and the number of investors. If there are more investors willing to invest and fewer loans, the interest decreases.

The loan-to-value (LTV) ratio is representing the ratio of a loan to the value of an asset purchased. Let’s say you want to borrow € 100.000 to purchase a house worth € 150.000.

LTV is 66% (100.000/150.000). This metric is used when taking mortgages for real estate investments. It helps to give you an idea of how much of the value of the object is financed by a loan. The higher the ratio the higher the risk.

Most of the investments you will make on the primary market. The secondary market gives you the option to resell your investment into P2P loans in case you want to withdraw the money from the platform before the loan period expires and the loan will be paid back.

The secondary market allows you to put your investment on sale for a lower or higher price as you have purchased it. Mintos is the only P2P platform I use that offers this function. Personally, I have not had the need to use it yet.

The risk with P2P investments

There are certain risks connected with investing in P2P loans that you should be aware of. It is not a risk-free investment and there is always a chance that you could lose your money.

In order to increase the security of your investment you need to be aware of the following risks:


The risk with the loan originator

Few P2P platforms collaborate with loan originators which are loan companies that give out loans to consumers. Those loans are funded through the crowd of investors on the P2P platform. In order for the loan originator to list their loans on the platform, the company needs to fulfill certain financial criteria. The platform usually looks at the financial income reports from the past year as well as their cashflow and skin in the game ratio.


Skin in the Game

Skin in the game represents the percentage of the total loan amount that is funded with loan originator’s money. Usually, the loan company funds 5% - 15% of all loans. The rest is funded with the investor’s money.

This ensures that the loan company has the interest to get the money back from borrowers that refuse to pay their payments.

In order to make the P2P lending concept work, the loan originator needs to make sure to give out loans only to people that can afford to pay it back.

In order to decrease the risk with loan originators, I diversify my investment across more than 35 loan originators.


Debtor risk

Last but not least we face the risk that the debtors (borrowers) will not be able to pay back their loan. You cannot really predict this risk. A good indicator is the statistic and review of individual loan originators on P2P platforms. On some P2P platforms, you can view whenever the loan originator had some default loans.

In order to minimize the borrowers’ risk I do the following:

  • Analyze the statistic of the loan originator and exclude loan types that defaulted in the past in my Auto Invest
  • Invest only in loans with Buyback guarantee (if available)
  • Invest the minimum investment amount into one project (loan) to diversify my portfolio

Market risk

With each investment you make you will need to face the market risk, that you will not be able to influence. This can be the political situation in a specific country or a global financial recession. My best advice here is to be up to date with the latest news and evaluate whether new regulations influence your investment.

This will help you to make a better decision and withdraw your investment from a certain market if you feel that the risk of defaults is increasing.

I minimize the risk with diversifying my investment in various markets. This means that I invest in loans in Estonia, Poland, Latvia, Czech Republic, USA, Ukraine etc. P2P platforms such as Mintos allow you to invest in loans from more than 25 countries.


Platform risk

There are hundreds of P2P platforms out there nowadays. To choose the right one, that does not close down within the next few months is not as easy. Diversifying your investment across several platforms makes sense.

The platforms I use state that in the unlikely event that one platform would go into bankruptcy, the investor will continue to receive the payments from the borrowers. This will however not be handled through the platform anymore but an independent third party (law-firm).

To minimize the platform risk I invest in various P2P platforms. In my opinion, there is not much upside in diversifying your investment to more than four or five P2P platforms. In that case, I would rather diversify across different asset classes which don’t correlate with P2P investments.


I highly encourage you to read my in-depth article about Is Peer-to-Peer landing safe? You will find ton of valuable information that will help you to assess the risk and learn about securities connected to P2P lending.

P2P lending - FAQ

I would put peer-to-peer investments somewhere between saving accounts and funds in terms of risk. It comes down to how you approach P2P investments and how you diversify your portfolio.

Since I started investing in P2P loans I have not had one default loan and the value of my investments is always increasing. I cannot say the same about cryptocurrencies or stocks which are very volatile.

P2P lending enables to connect investors that are willing to lend money to borrowers via P2P platforms. The loans are financed by a crowd as opposed to traditional loans issued by banks. The interest from those loans is the investor’s return.

This depends on your diversification strategy and platform of your choice. Some platforms can earn you up to 20% for your investment, others earn less than 10%. It all comes down to your preference and risk profile. The more risk you are willing to take, the higher the potential return.

In most cases, the platform does not deduct taxes for your returns. In Europe the income from P2P platforms is defined as income from capital investments and underlies the laws of the country where you reside (tax residency). These laws are different in every country. Consult an accountant or tax consultant to get information about how you should report your income from P2P investments.

If you made it up to this point you are well prepared to start investing in P2P loans. Be aware that this post is not investment advice. You are solely responsible for your actions. There is no guarantee that you can replicate the exact same results. This article represents my own experiences with P2P lending. If you decide to use it, it’s at your own risk.

If you have any questions regarding P2P lending don't hesitate to share them in the comments below.



  1. Melissa Giroux June 27, 2019 at 2:09 pm

    Excellent review!

    1. Jakub June 27, 2019 at 2:19 pm

      Thank you Melissa :) hope it will help you to achieve your financial goals

  2. Angie July 1, 2019 at 5:07 pm

    Thanks much for the detailed explanation! I signed up to invest some money on P2P platforms a few months ago – so far all good :)

    1. Jakub July 6, 2019 at 2:36 am

      That’s amazing Angie. Glad it could help you out :)

  3. Wolf Bogaert August 16, 2019 at 2:09 pm

    Great stuff as always buddy! Thank you for sharing!

    1. Jakub August 16, 2019 at 6:04 pm

      Thanks, you are welcome ;)

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