Investing in loans has established itself as a perfect diversification alternative for small investors, emulating the stability of fixed income with high yields, with Mintos being the benchmark platform in the sector.
Mintos was founded in 2015 with the goal of bringing retail investors closer to new forms of alternative investment, ultimately aiming to become a comprehensive financial and investment platform.
It is the first company to regularize its investment framework for corporate and individual loans through a regulated financial instrument known as Notes. These come with their own ISIN, just like other formal investments (stocks, ETFs, and bonds), and the platform plans to continue expanding into other assets such as ETF investing.
💶✨ Mintos Business Model
The way the platform operates is simple; there are two types of clients:
- Loan Originators: Non-bank lending entities, such as personal credit providers, seeking capital because they cannot access formal markets due to their credit rating or low asset volume.
- Investors: Those of us who decide to fund the loan projects to earn a portion of the interest.
The platform features a Primary Market, where you buy and sell loans directly from the originator, and a Secondary Market, where you can trade these assets with other investors to resell a loan at a premium or liquidate your position at a discount.
📝 Investment Strategies
On Mintos, you can build your strategy manually or use automated strategies:
- Mintos Core Strategies: Pre-configured by Mintos into Conservative, Diversified, and High Yield.
- Custom Automated Strategies: Configure specific originators and loan types to invest automatically.
- Manual Investing: Decide the amount and the specific loan one by one.
Diversification is key to achieving high interest while reducing default risk. Although many loans have a Buyback Obligation, unforeseen issues with an originator can always occur.
You can check the details of each loan in its fact sheet, which includes a risk rating (established by Mintos' periodic audits), the effective APR of the borrower, payment dates, and how interest is accrued.
🔒 Platform Security
Unlike others in the sector, this platform has been operating since 2015 and leads the market with over 40% of the volume managed in Europe. It offers a 60-day Buyback Obligation by the originator as an additional security factor in case of delays or defaults.
Additionally, it is the first regulated entity with an approved license from the Latvian regulator (equivalent to the SEC or FCA), holding an investment firm and electronic money license under European legislation via the MiFID II directive. This increases investor protection with a deposit guarantee fund of up to €20,000 for cash held on the platform.
Furthermore, they recently transformed loan participations into a regulated financial instrument called Notes. This provides an extra layer of security, as they are registered as securities with their own ISIN, issued by Nasdaq.
✔️⭕ Pros and Cons
✅ Attractive Returns (8-12% annually) with recurring income.
✅ Automated Reinvestment Strategies. Simply choose a Mintos strategy or design your own to receive passive income.
✅ Visual and Simple Interface. Easy to use even with basic financial knowledge.
✅ No Fees. Fees are not borne by the investor but by the loan originators.
✅ Higher Guarantees than other crowdlending intermediaries (guarantee fund and licenses).
❌ Risk Management (Default). Ensure you invest in loans with a buyback obligation and originators with good ratings.
❌ New Products. They plan to introduce ETFs and automated strategies in the future, which will further increase its potential as an investment platform.
❌ Foreign Asset Taxation. You must manage everything in your tax return manually, as data is not automatically shared with local tax authorities since funds are deposited abroad.
📈 My Experience with Mintos
The concept of investing in loans and receiving passive income has always fascinated me. I discovered Mintos in 2018 and have been an investor ever since (and a shareholder since 2020, thanks to a Crowdcube funding round).
After all these years, my results are gaining traction, with growing interest income and a default rate that remains quite low despite the challenges of COVID—currently with 2% in recovery (pending payment from originators).
Returns have decreased from the 12-13% of a few years ago to more solid levels around 10%, with interest earnings now exceeding €15/month.
Start Investing
If you find this interesting and it fits your investment strategy, you can register and try the platform at the following link:
