Saving money is important to have a safety net against uncertainties and carry out personal projects. In 2022, according to a report from Eurostat, the savings rate of European households reached 15% of their disposable income, lower than the 20% seen during the pandemic but still above the historical rate.
With inflation rates surging, putting some money aside is becoming more challenging and savers are looking for ways to protect their savings from inflation. Having a diversified investment portfolio is one of them. Traditionally, people used to buy a house or rely on their financial advisor to invest their money in the financial markets or contract a life insurance. But with the development of the digital economy, several new options were born to put our money to work and help us being in control of our savings. Think about financing your peers or lending money directly in a company to support their growth.
For this last option you are at the right place! You can now boost your savings by supporting the European SMEs of your choice on October.
Start boosting your saving by supporting SMEs
With October, you get the opportunity to diversify your portfolio internationally by investing and you are in charge of your savings! But how does it work exactly?
October is the #1 SME lending platform in continental Europe, operating in France, Spain, Italy, the Netherlands and Germany. In a nutshell, we connect companies that need a loan to carry a growth project with lenders who want to support the local economy against an interest.
October analyses and selects companies for you. We offer a wide range of investment opportunities from all sectors with interest rates from 2% to 9,9%, depending on the estimated risk of the project. You choose the projects you like and invest from €20. And since October is totally free for lenders, you benefit from the totality of the interest.
Since our creation in 2014, 40,000 retail lenders have co-invested with our well-known institutional investors (such as the European Investment Fund) and the October management team in more than 2,700 projects. That represents a total amount of €765M injected directly in the economy. Our investors have already received €58M in interest.
How can you build a portfolio at October?
To onboard on October you have the possibility to register via web or our own mobile app. To keep our platform save for everyone we will do a KYC check on every new lender on our platform. After your registration you will be able to top up your account and you will receive the notifications to start lending on projects you like in a couple of clicks. Besides, you will be able to manage your own personal portfolio wherever you are with the mobile app.
After you have started investing in a project you will receive monthly repayments on your October account. In these repayment you will find capital and interest of that month.
After every repayment you are free to decide what you want to do with you repayment money. Will you withdraw or reinvest the money? By reinvesting your interest you will be able to make your money work twice. This is because you will then gain profits from your profits.
Diversify your portfolio
Lending on an investment platform goes with some risks. A project can suffer liquidity stress for example which causes a project to go into default. Having a diversified portfolio is crucial to minimize the impact of defaults on the overall rate of return. In other words, the more diverse your portfolio, the steadier your return.
Diversifying the portfolio is possible by taking the following steps at October:
First, by lending to several projects. Our goal is not to make you lend more money than what you have in mind. Our goal is to ensure that you spread the risk over many projects so a default will not significantly impact your profitability. The ideal portfolio should be made of at least 100 loans to get a stable and positive IRR. The IRR is the net annual return earned by the investor over a period of time and calculated on the basis of the incoming and outgoing cash flows.
Secondly, invest similar amount of money and select various range of ratings (from A+ to C-). These points are closely related to the previous one. Balancing the portfolio will help you to minimize the impact of a default on their IRR. The Credit Team qualifies the projects based on a scoring model developed by October. Risk and return are highly correlated: the higher the risk, the higher the return.
And last but not least: diversify across sectors and internationalize your portfolio. By spreading the investment over different industries and countries not related to each other will enable you to strengthen your portfolio. This way, if one sector goes down, the impact on their IRR will be lower than if you put all you eggs in the same basket. For the countries this is a way to manage risk in case of economic downturn, as each country is likely to react differently.
What are the next steps?
Are you interested in boosting your savings and helping SMEs in Europe at the same time? Then signing up at October is certainly something you should take into consideration. If you have any other question for us about the platform or anything else related to the platform, please do not hesitate to contact us via [email protected]. We will help you the best we can!
Excited about starting to lend at October? Then you can click on the button below and sign-up at October.
👉 Click here to start boosting your savings
We hope to see you soon on our platform!
Best regards,
The October Team