Investing in digital platforms like Iban Wallet – pros, cons and a recommendation

By now you should already have in mind that it is probably a good idea to diversify your investments, as it distributes the risk of one of them going the wrong way. It’s the old saying about not putting all your eggs in the same basket.

As a reader, there’s a good chance you have been increasingly seeing different opportunities by various online platforms and fintechs, whether in the P2P (or peer-to-peer) space, digital banking or financial marketplaces.

Some can offer very interesting returns, but as in everything, this must be taken with a grain of salt, as most cherry-pick their highest-performing products to date. Still, it is a very interesting moment for this kind of investment, and it deserves to be looked at.

Operating on somewhat different models, the main reasoning behind these platforms remains the same: using technology to connect investors with borrowers, it is possible to simplify financing, and at the same time obtain more substantial returns, as there is no institutional middle man taking a cut.

Pros

  • Higher interest rates;
  • Usually small initial capital requirements;
  • Simple interface and good user experience.

Cons

  • Many require you to pick specific loans in which to invest, making it your responsibility to evaluate the quality of investment;
  • Can be time-consuming to actively manage;
  • Varying platform trustworthiness.

A recommendation – Iban Wallet

Iban Wallet is a fintech that is basically a marketplace where you can access different sorts of investment products, with rates starting at a projected 2.5% and up to 6%.

While these rates are pretty nice compared to what you may find in the traditional banking offer, there are two factors that we believe make this investing option very interesting:

  1. High levels of diversification, in an automatic way

As we said in the beginning, diversification should be at every investor’s top of mind. So what happens when you invest in one of the products you can find at Iban Wallet?

 First, let’s take a look at an overview of their model:

Investors are connected to borrowers, and Iban Wallet’s platform acts as an intermediary, working with loan originators.

However, unlike P2P, at the moment you decide to invest, the loans are already issued. Besides your returns are not tied to the performance of a single loan. These loans are aggregated together, making it an easy way to diversify. And since you don’t need to do any active management, it also offers a very simple experience with the platform.

  1. (Almost) no minimum capital requirements

You can start investing in Iban Wallet products with as little as €1. The obvious advantage is that you can try out the platform for next to nothing and see for yourself how you like the experience.

With €1 you will only be available to access their basic starter product – the Iban Account – but it can give you a pretty good idea of the experience.

However, there is one thing that you won’t be able to notice, and that we saved for an extra factor to consider:

Extra) Daily results 

That’s right, daily! As the days go by and the investment performs, you will be able to see its results directly in your balance. 

That is why you would be missing this part of the experience with only €1 – since the interest rates are annual, and they present only the first two decimals, the accrued interest will take quite some time to be presented on your balance.

With enough invested funds, the achieved daily results will be available to you, and you can always request to withdraw your funds. Just bear in mind that, while the Iban Account product has no associated term, other products include a minimum time you need to be invested in, otherwise a small penalty will be charged to your accrued interest (initial capital remains unaffected).

Have you checked this for yourself? Tell us about your experience in the comments!

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