There was a time when crowdlending was one of the largest parts of my investment portfolio.

Between 2018 and 2020, I invested across multiple crowdlending platforms and enjoyed watching interest payments arrive month after month. Compared to dividend stocks, the cash flow felt immediate. Compared to real estate, the barrier to entry was almost non-existent.

At the time, crowdlending looked like the future of passive income.

Then reality arrived.

Several platforms disappeared. Some projects failed. Some operators turned out to be far less trustworthy than investors had believed. What had seemed like a relatively straightforward investment suddenly revealed risks that many investors, including myself, had underestimated.

By end of 2020, I had exited the sector entirely.

Today, I am back.

But this time my approach is very different.

Why Crowdlending Was So Attractive

The appeal is easy to understand.

Instead of buying shares in a company, investors provide capital directly to borrowers or projects and receive interest payments in return.

For many investors, the attraction is the regular cash flow.

You can often see interest being credited monthly, creating the feeling that your capital is actively working for you rather than simply sitting in a portfolio waiting for capital gains.

For someone interested in building multiple income streams, that is naturally appealing.

The Problem With the First Crowdlending Boom

The industry grew rapidly.

Perhaps too rapidly.

New platforms appeared everywhere. Promised returns became increasingly attractive. Marketing became increasingly aggressive.

Many investors, myself included, focused heavily on the advertised returns while paying less attention to platform risk.

That turned out to be a mistake.

A loan can perform perfectly and still become a poor investment if the platform itself fails.

Many investors learned that lesson the hard way.

Fortunately, I managed to exit the sector in 2021 without any significant losses. After accounting for interest earned over the years, I actually walked away with a small overall profit.

However, that outcome should not be mistaken for proof that the risks were small.

Several platforms disappeared, some projects failed, and many investors suffered losses that were far greater than mine.

What the experience taught me was that the biggest risk was often not the borrower.

It was the platform standing between investors and borrowers.

That lesson is one of the main reasons why my current allocation to crowdlending is far smaller than it was during the previous cycle.

Why I Chose To Return

Despite those experiences, I never concluded that crowdlending itself was fundamentally flawed.

What changed was my understanding of the risks.

While many platforms disappeared, some survived.

One of the most notable examples was Mintos.

After several difficult years for the industry, Mintos remained operational, adapted to changing regulations and continued developing its platform.

That does not make it risk-free.

No investment is.

But survival through a difficult period matters.

It demonstrates resilience that many competitors failed to show.

Why I Am Investing Differently This Time

The biggest change is position size.

Years ago, crowdlending represented a meaningful part of my portfolio.

Today it is a small allocation.

My core investments remain dividend stocks, ETFs and cryptocurrency.

Crowdlending sits firmly in the satellite section of my portfolio.

Not because I expect poor returns.

But because I recognise the risks.

If one of my crowdlending investments performs poorly, it will not impact my long-term financial plans.

That is exactly how alternative investments should be treated.

Why Not Just Buy REITs?

This is a fair question.

If I want real estate exposure, I could simply buy publicly traded REITs.

In fact, REITs remain an excellent option for many investors and I also own REITs.

They offer liquidity, transparency and diversification.

However, REITs are still stocks.

Their prices move with stock market sentiment, interest rate expectations and broader market conditions.

Crowdfunded real estate projects provide exposure to the underlying assets in a different way.

That does not make them superior.

It simply makes them different.

For me, the goal is diversification across income sources rather than replacing traditional investments.

The Risks Investors Must Understand

Before investing a single euro into crowdlending, investors should understand the major risks.

Platform risk.

Borrower risk.

Liquidity risk.

Regulatory risk.

Economic risk.

These risks are real and should never be ignored.

The high advertised returns exist for a reason.

They are compensation for accepting risks that are significantly higher than those associated with broad stock market index funds.

Anyone investing in crowdlending should be comfortable with the possibility of losses.

My Current Approach

Today, I focus on learning, diversification and moderate expectations.

I own a small number of Mintos Shares.

I have started looking at real estate opportunities on the platform.

I may gradually add exposure to selected loans as well.

The objective is not to maximise returns.

The objective is to create another potential income stream while keeping risk at a level I can comfortably accept.

My Thoughts

Crowdlending taught me an important lesson.

High returns are never free.

Every attractive yield comes attached to a specific risk.

The challenge for investors is not finding investments with the highest returns.

The challenge is understanding exactly what risks they are being paid to take.

That is why crowdlending is back in my portfolio.

Not as a major position.

Not as a replacement for stocks.

But as a small, carefully sized allocation that adds diversification and another potential source of income.

Sometimes the best investment lessons come from the investments that did not go according to plan.

Interested in Crowdlending?

If you are interested in learning more about crowdlending, real estate investments, bonds, ETFs and other alternative income-producing assets, Mintos is one of the platforms I currently use myself.

I was active in crowdlending during the industry's boom years, exited in 2020 after several platform failures, and have recently returned with a much smaller allocation and a stronger focus on risk management.

If you decide to open an account using my referral link, both you and I may receive a bonus if the applicable investment requirements are met. The exact bonus and conditions can vary over time, so always check the current terms before investing.

My Mintos Referral Link:

https://www.mintos.com/en/l/ref/5I2CY9

As always, do your own research and never invest money you cannot afford to lose.