What has changed since starting to invest through a crowdfunding platform?
Kostas, who has been investing in the Röntgen platform for almost three years and who had previously only been involved in deposits, notes that this solution immediately increased his family's annual savings by 50% and created a kind of excitement to find as much available money as possible to invest.
Kostas (surname withheld at his request), who lives in Vilnius with his family, does not stand out too much from his peers - he earns between €2,000 and €3,000 a month after taxes from his salaried job and extra activities, of which he has been trying to set aside at least €500 for the family savings for the last decade. The non-financial worker has only had previous experience with deposits.
While until the middle of last year, deposits were associated with zero or low interest rates, Kostas had a different experience when he started working and saving around 2006. 3-4% annual interest on deposits via convenient e-banking without any knowledge or involvement seemed solid enough even then, but during the 2008-2009 crisis and rumours of the devaluation of the litas, it rose to 8-10%, which allowed the Vilnius resident, who trusted Lithuania's banking system, to earn a good income.
"10 years ago and before, deposits were a great choice: the major Lithuanian banks were already owned by reliable Western investors, and a huge advantage was the possibility to cancel the deposit agreement at any time and immediately recover the cash. Even 3-4% interest rates seemed great, given that deposits did not require any knowledge or involvement. I was saving heavily for a large and important purchase at the time, and the rise to almost 10% during the Great Recession was very useful, although the backdrop of the bankruptcy of Parex in Latvia and the tensions in the Lithuanian banking system were worrying. Of course, later, as Western economies were revived, deposit interest rates fell and even reached zero, but the initial experience formed a clear investment expectation for me – minimal involvement and conservative, yet tangible returns that at least match the inflation," says Kostas.
Since about 2011, after acquiring an important purchase, the Vilnius resident saved less, and returned to regular saving after starting a family around 2016-17. By that time, the Western world had already entered a long period of zero deposit interest rates.
"Back then, various investment products were being more actively advertised and sold – primarily investment life insurance. I met with consultants a few times, but was immediately put off by opaque administrative fees and excessive salesperson activity. At the same time, there was more talk about Bitcoin and other crypto investments, but I always considered them speculative and unsuitable for my conservative approach. I never had time to delve into bonds or stocks. Therefore, I invested, or rather, saved, very simply – at least 500 euros per month into a deposit with zero interest. I no longer had expectations of earning, as the deposit simply served as a convenient savings account," says the Vilnius resident.
How He Discovered Crowdfunding
When Kostas started saving again, between 2017-2020, he began hearing more about other popular products – peer-to-peer lending and crowdfunding for real estate. He tried to look into them, but the initial impression didn’t convince him.
"As I recall, peer-to-peer lending platforms were very actively advertised at that time. Double-digit interest rates were tempting, the Lithuanian Bank’s regulation increased trust, and the platforms seemed convenient, but I was immediately turned off by the fact that loans were being given to anonymous individuals with not always clear investment protection mechanisms. Even if, for example, an individual borrower could pledge real estate, there could always be nuances with minor children and other issues. Therefore, I dismissed the peer-to-peer lending option in my mind, but this led to a side effect – I also ignored real estate crowdfunding, where the lending is to a business rather than an individual. I now understand that these two products are different, but about five years ago, they were either intentionally or unintentionally conflated in the public space, which caused me to ignore both," he explains.
He was also not interested in investing in rental apartments. More precisely, Kostas did not have the full amount needed for the apartment, and the "business" of taking a loan for investment property, which had become popular before the pandemic, did not attract him and seemed risky – both due to the excessive "fashion" and the belief that the then-zero Euribor rates would eventually return to positive territory.
It wasn’t until early 2021 that Kostas finally tried real estate crowdfunding, specifically the Röntgen platform – this was encouraged by close friends who understood real estate and finance and tolerated only a small amount of risk.
"My friends showed me their Röntgen portfolios and investment amounts, explained the process, real estate pledges for investors’ benefit, interest payments, and more. Their recommendations led me to try the platform with relatively small amounts in the first months, but I quickly transferred the majority of the family savings to it: about 40-50 thousand euros, and I also started investing the money saved each month into Röntgen. This habit continues to this day, now into the third year," says Kostas.
Impact and Excitement
Since Kostas began investing with a capital of several tens of thousands, the impact on his family’s savings was significant: if Kostas saved at least 6,000 euros annually, the additional 3,000 from the then 6-7% interest rates increased the annually accumulated sum by 50%.
Moreover, Kostas typically reinvests all earnings, creating what is known as the compound interest effect – a relatively faster-growing portion of earnings compared to his own capital.
"I don’t have special strategies; I trust the general conservative selection philosophy of Röntgen, appreciate the real estate pledges that far exceed the loan amount. I am more interested in projects from well-known developers, in attractive locations, and projects that are already underway or even completed, although my portfolio also includes a few plots still being prepared for development. Essentially, I trust the platform itself, which has never disappointed me – if a project is published, it means it has already passed a strict internal Röntgen selection. On the other hand, investing has inevitably led me to be more interested myself – reading project descriptions, following market participants' analysis, news articles, and more. In a way, Röntgen allowed me to return to the 'golden' deposit times – of course, without the state guarantees up to 100,000 euros, but with real estate pledges regardless of the invested amount and satisfactory returns," says Kostas.
In addition to significantly faster-growing savings, he noticed another effect – a kind of excitement in seeking and finding funds to invest. Among the most obvious examples, Kostas mentions the "next year’s vacation fund" – since these funds are needed only after 6-12 months, it is worth allocating some of them to invest in shorter-term projects. Unexpected, random, gifted, and other "unusual" income he also gladly invests first rather than spending.
"Since investing over nearly 3 years has brought very tangible results, and I’m not a big consumer in life, I willingly invest free or 'unexpected' funds first – they will return, bring additional earnings, and most importantly, might be needed more in the future," comments Kostas, emphasizing that passive income and faster-growing capital allow him to feel more secure in life and work, and perhaps consider a second home in the future.
"I can understand those who are doubtful and hesitant, as I was for a long time. For such people, I have only one piece of advice – if you don’t dare to start on your own, find friends, colleagues, or relatives who have already discovered crowdfunding and ask them to share their experiences. If not for that, I would likely still keep my capital in deposits. By the way, deposits have become tangible again this year, and I continue to keep part of the family savings in them for convenient liquidity. However, having discovered Röntgen, I no longer plan to return a significant portion of my active capital to deposits," says the investor.