We all want to have savings so that we don't have to look for them in jars under the apple tree or in socks under the mattress when the sky falls or the quarantine starts. But how can you save if you only manage to put aside a hundred or so per month? This money needs to be employed, Viktorija Vanagė, the founder and head of PROFITUS, a crowdfunding investment platform with real estate pledges, is convinced.

According to the data of the Bank of Lithuania (LB), over the past 10 years, the financial assets of Lithuanian households (cash and deposits, equity instruments, shares of investment funds, pension systems, etc.) have more than doubled - from 24.9 billion up to 50.4 billion euros. There is definitely money in the market, you just need to make the right decisions so that it grows and not decreases.

Viktorija Vanagė says that it is easy to employ money today. There are many alternatives where to invest, and bank deposits have become quite unattractive due to extremely low-interest rates and inflation. On the other hand, you really don't need as much knowledge as when investing in shares, bonds or funds, and the most important thing is that one hundred euros are enough to start investing and earn from it.

"NT has always been an attractive investment, but investing in buying it is difficult and requires significant funds. Meanwhile, on crowdfunding platforms, where a large number of people provide financing to a business developing a real estate project, you can invest simply, in small amounts, and interest can be withdrawn quite quickly - they are paid out in installments during the project's implementation period, usually monthly or quarterly.

The expert invites those who want to invest through crowdfunding platforms to take a look at this alternative direction of investment. It is still new in Lithuania, although it has been around for more than a decade, so there is no shortage of information about it on the Internet - both in Lithuanian and in other languages. And then you just have to follow a sequence of 5 simple steps and start your career as an investor.

1. How to choose a reliable crowdfunding platform?

Choose only a licensed platform. In Lithuania, the activities of the platforms are supervised and regulated by the Bank of Lithuania. This will guarantee that its activities are monitored, it must comply with the strict procedures established by the central bank and the requirements of the Law on Crowdfunding and other legal acts, ensure a demanding selection of projects and guarantee the safety of investments by all available means.

The list of licensed and legally operating platforms can be found here - https://www.lb.lt/lt/sutelktinio-finansavimo-platformos.
All platforms are required to publish certain statistics, for example, about projects whose owners default on their obligations to investors, so it is worth visiting the websites of the platforms and familiarizing themselves with the information provided there. LB also obliges to provide this information and publishes it on its website every six months (https://www.lb.lt/lt/apzvalgos-ir-leidiniai/category.39/series.3914). There you can find a lot of interesting statistics about the capabilities and performance of each platform.

2. How to calculate the optimal amount of investment?

When investing in crowdfunding platforms, the size of the amount is limited to a very small amount - you can start with 100 EUR. Even after investing that much, and by investing the interest received over a longer period of time or by increasing the amount, you can accumulate a really considerable capital, because the invested amount will constantly grow.

This is what most personal financial advisors advise: don't think that only large sums are worth saving or investing - you need to start with small steps and continue systematically. Then you can expect a really good result, and the available money will not depreciate, as if you put it in a savings account.

Of course, the more you invest, the more you earn. However, when investing a larger amount, to increase the security of your investment, it is worth spreading it over several different projects - diversification.

3. How to diversify the investment portfolio?

No matter how secure a system is, there is always a chance of failure - no matter how small. When dividing a larger investment amount, different projects should be chosen so that when the risk increases, you do not lose all the invested money.

The most important thing, as they say, is not to keep all your eggs in one basket: invest in different projects, in different cities, choose different developers, and combine higher risk with higher interest and lower risk with lower profitability.
It is also necessary to look very carefully at the means of guaranteeing the projects.

4. How to choose the best projects?

Investing in real estate is quite reliable because investors are offered guarantees - mortgaged financed real estate - and the platform

we carefully check the companies intending to borrow on the platform and the documents they submit.

And when choosing a project, you need to pay attention to the following aspects: the rating of the project, the detail of its description, the value and liquidity of the mortgaged property, and the LTV indicator.

The risk of projects is assessed based on the law, the internal evaluation algorithm of the project, and the project owner, the result of which allows assigning a risk rating to the project (from AAA, to BBB-). The internal algorithm is calculated based on information from various official sources and with the help of professional internal analysts.

I also advise everyone to carefully read the project description: is there enough information? Is the project concept detailed and attractive to potential buyers? If all relevant documents, project visualizations, implementation plans, and durations are submitted, the project should be successfully implemented.

The LTV (loan-to-value) indicator of the project is the ratio of the loan to the value of the property. It shows what percentage of the mortgaged real estate is the loan. So if the borrower seeks to mobilize 70 thousand euros, so the real estate pledged by him to the investors must be at least 100 thousand, in which case the LTV will be 70%. The lower the LTV percentage, the better, as it means more real estate is pledged to investors.

I recommend investing in those projects whose real estate will be mortgaged to you with a primary mortgage. What does this mean? The project property can be pledged as a guarantee with a primary or secondary mortgage. The main difference is that a first mortgage guarantees you, as an investor, the right to claim the property first if the project fails. And if you get a second mortgage on the property, you'll be next in line to get your investment back after the investors (or creditors) who got the first mortgage. Therefore, there is a risk that the amount of money received from the real estate or its sale will not be enough to repay the investments.

5. What do you need to know and prepare before you start?

Before starting to invest, first of all, you need to decide what your goal is: can you tolerate higher risk, but expect to earn more, or do you want to accumulate profits more slowly, but want lower-risk investments?

Most platforms provide beginner investors with questionnaires on their websites, which they need to fill out in order to understand their expectations and options and make the right decisions.

Well, for the registration itself, you only need an e-mail. postal address and first and last name. In order to be able to start investing, client identification and more detailed data will be required: personal document or PaySera account.
All platforms follow data protection legislation, so your data will be safe. We also cooperate with partners who ensure the security of transactions and information.

So where do you start?

Everything is simple: look into the field of crowdfunding, find out what crowdfunding platforms operate in Lithuania, and collect available information about them. That will be enough for a start.

After choosing a platform, register on it - then you will see all the information about completed and currently active projects.

Analyze the projects and choose the most attractive ones. Then decide what amounts and in which projects you will invest and go!
Good luck!