The Italian Leather Sofa

Each of us invests to reach a financial goal in the future; it can be a simple one like buying a car or a complex one like a pension. The first one is simple because the target is very specific, the price of the car, and usually the time we give us to reach the target is short. Building a portfolio that will generate enough income to guarantee us the same lifestyle we have now is more complex for different reasons. For my generation is a pension, for the young and hip is financial independence, still we are talking the same s**t. First you have to define what is the income part generated by the portfolio. When stocks are involved, the FIRE community is obsessed with dividends, I guess because it easy to differentiate: a dividend is income, price appreciation is portfolio appreciation. This is wrong for many reasons (I hope I will write a post on the topic in the future), all cash flows are part of the portfolio and income is the % of the portfolio you can spend each year while maint

Recently I read a lot of comments about the current yield offered on Mintos, so I thought it is the right time to give you my 2 cents on why you should expect yields to go down. I used Mintos as an example to introduce the topic but from now on I will talk about p2p in general. I would like to start with a short digression on how the industry was born. P2p lending platforms are not doing anything different that standard brick and mortar banks did before them. Banks use the money you deposit to lend to businesses/consumers; consumers get a loan at double digits rates (let’s say 15%) and the remuneration on your deposits is normally in line with the Central Bank rate +/- a little spread (now 0% in EUR). The spread, 15% - 0%, is retained by the bank because they hold the borrower default risk and to cover their cost base (rents for physical branches, salaries, private jets for CEOs, etc). After 2008, banks were scared by the financial crisis and stopped lending to anyone; at the