How much did I earn from Peer-to-Peer investments in 2019?

Below is an overview of the platforms and account values of the peer-to-peer lending platform that I am invested in at the time of posting this article. 

Please note that the links in this table are affiliate links and if you sign up to the platform I get a bonus and you may too (depends on the platform). Let me know if you do sign up so I can thank you personally.

PEER-2-PEER Lending PlatformsTotal Account Value at end of 2019Interest Earned in 2019
Mintos (This is an affiliate link)€5,647€507.09
Grupeer *Possible Scam as of April 2020€2,980€400.37
Envestio (turned out to be a scam in 2020, *this platform turned out to be a scam, read more here€472€26.21
Flender (This is an affiliate link)€657€42.99

I made one withdrawal during 2019. Why? I got a little nervous when the Afforti Finance issue occurred because it affected two platforms that I was invested in. In fairness to Mintos, they were the best at keeping investors up to date with regular emails and a transparent overview of what has happening. As a result, I feel Mintos is more trustworthy but everyone is always advised to do their own due diligence and not to invest what you cannot afford to lose. 

Total Current Value of Peer-to-Peer Accounts


Total Earned from Peer-to-Peer Investments 2019


Average Rate of Return on Investment

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How does this compare with 2018?​

At the end of 2018 I had €11,280 invested in peer-to-peer platforms and I had earned a gross profit of €457.40 before tax. So that almost three times more earned in 2019 (gross!). The reason for this is mainly due to the types of loans I invested in and their term. This means, while many investments were bought in 2018, a large portion of them matured in 2019.

Now the Taxman Wants His Slice of the Pie

The taxman helps himself to a rather large slice of the pie too depending on your own personal income level and what rate of tax you are currently paying. There are no special treatments of earnings from peer-to-peer investments. As far as Revenue are concerned, it is treated just like other income. I wrote this post last year on how to go about declaring and paying tax on peer-to-peer investment income.

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Tax Rate (Inc. USC)
Profit After Tax

Bitching about Tax Treatment of Peer-to-Peer Income

You hear other people describe why many investors are annoyed by this treatment. The main reason is that the investor takes all of the risk and the state gets paid when that risk pays off. There is no special tax treatment of peer-to-peer income that mitigates that risk. 

So, if you are invested in Peer-to-Peer platforms and you make a loss (as lots of people have done in the past). As an individual investor, you cannot right that loss off. For example, it looks like I just lost €500 with Envestio. I cannot write that off as a loss for 2020. The money is just gone and it eats into the profit I might make this year. 

When you look at the tax treatment of some other investment vehicles, like rental property for example, you can write off losses on both rental income and Capital Gains Tax. Because of that, some people are less enthusiastic about peer-to-peer lending as an investment. 

Can I Reduce My Tax Bill on Peer-to-Peer Investments?

As an individual, you can’t. Like I said, Revenue just sees this as income and applies your normal tax rate. However, Michael Houghtan of the Irish FIRE Podcast , mentioned one way in his podcast that I want to look into. Investing in Peer-to-Peer via a company rather than as an individual. He talked about it in one episode but he didn’t go into much detail. What he did say was that the accounting process for the company becomes much more complicated. As an individual, you can log into Revenue;s website and declare the extra incomes like I did for the first time last year. As a company though, the process apparently is more complicated as Michael tells us more strict accounting and income declaring rules apply. For him, this means a larger bill from his accountant and more time chasing down documents across a variety of platforms. But the payoff may be worth it when you consider that companies pay far less tax on income compared to individuals. This is something I want to look into more over 2020.

Given the Tax Bill, Do I Think Peer-to-Peer Is Worth It?

Still not sure, but there are a few factors to consider here. I started investing in peer-to-peer platforms in 2018 and at that time I knew that I wanted to learn more about Peer-to-Peer as an investment option. The best way to learn is to do. So I decided to give a few of them a try.

At that time, I also knew that I wanted to save for a deposit on an investment property, because property is my preferred route to FIRE. I was saving for a deposit and I knew it would take me a long time. This begs the question – what would that money be doing anyway?

Shrinking. That’s a slap in the face for anyone leaving large sums of money on deposit with a bank. It is just sitting there slowly getting smaller as inflation and the cost of living goes up and interest rates go down. So, why not let it earn me a bit of money? Even if I get taxed a lot on it, I still get more income that I would from the interest rate which would be subject to DIRT anyway.

Liquidity & Risk – The Catch

Now I am almost ready to approach banks about getting a small second mortgage (well, in my delusional head anyway). So, how liquid are my peer-to-peer investments if I suddenly need to get my hands on the cash to add to my deposit? The answer is – I don’t know. I just tried to sell a few investments on the Viventor secondary markets. SO far I have sold one.  Some of the platforms I am using don’t even have secondary markets. So there is some proportion of my peer-to-peer investments that I cannot quickly liquidate and use for a deposit.  

And what about the risks? Well there’s the shitstorm of Envestio of course, so fraud is a major risk in these poorly regulated countries. But I also mentioned Afforti Finance earlier. You hear some people say that Peer-to-Peer hasn’t been tested by a recession. Although this isn’t technically true, there are a good number of UK-based P2P platforms that were around before. The fact remains that money on deposit in an Irish bank is guaranteed up to €100,000 if everything goes “tits up”. If the same happens to the peer-to-peer platforms, well, you can kiss that cash goodbye.

What's my plan for my peer-to-peer investments for 2020?

I have already started to divest some of the capital I have in Peer-to-Peer out of the accounts and into the credit union. This is because I want to have a deposit ready buying an investment property in 2020. Will I leave any money in Peer-to-peer? Yes but this will all depends on a few unknown factors:

  1. the price tag on my second property.
  2. the amount the bank will loan me. 
  3. how much risk I want to take after Envestio
  4. which platforms I feel like I can trust (need to do more due diligence here) 

Either way, there is a certain amount of cash tied up in peer-to-peer for now. I could liquidate the rest and put it towards the property. 

Remember, I am not a financial adviser so do your own research and get professional advice if you are unsure about your own tax liabilities.

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