Investment Guide

What is MoneyZen?

MoneyZen is a financial portal, where people can grant loans to each other. The portal provides services to lenders (investors) as well as borrowers. Compared to banks, who are also lending money deposited by the people, the interest revenue earned by investors in our financial portal is much higher than in case of bank deposit.

Why choose MoneyZen?

MoneyZen is:
1. Simple, fast and flexible.
Money moves fast and operations are simple and handy, every user can choose suitable personal conditions.

2. Fully automatic
The portal makes investments automatically based on set conditions and gives investment advise. There is no need to log in or out to monitor and control your investments.

3. Reliable
Solvency of a borrower can be assessed with credit score. The members of management of the portal have proved themselves in the field of banking.

4. Advisory
We approach each investor personally and provide personal advice.

What is investing?

Investing is a purposeful increase of financial assets, but each investment is also related to a risk of losing capital. Therefore, the risks of every investment option should be considered carefully in order to make deliberate and well-considered decisions.

If you have no experience in investing, we recommend reading first the investment advice) provided by the Financial Supervision Authority and an overview of investment risks.

Who can invest in MoneyZen?

Any citizen or a permanent resident of the European Union or Switzerland who is at least 18 years of age, or a legal entity established in the respective register in a Member State of the European Union or Switzerland can invest in MoneyZen.

What should I know in order to start investing in MoneyZen?

Investing in the MoneyZen lending portal is simple and clear – besides experienced investors it is feasible also for active housewives or elderly people, for example.

If you are not experienced in investing please review Financial Supervision Authority guidance how to start investing and the overview of investment risks.

Can legal entities invest in MoneyZen?

Legal persons registered in Estonia, whose main activity is not lending, can invest in MoneyZen. Legal person can use the services of our portal provided the private person representing it is a registered user of the portal.

From what amount can I start investing?

As a private person, you can start investing with ten euros already, but we recommend starting with larger sums, such as 100 euros. For legal persons we also recommend starting with larger amounts because registration fee of a company is ten euros. If you have no former experience in investing, contact our advisors for advice and use more conservative investment strategies in the beginning.

In what situations the personal identification is required?

If total outgoing payments from virtual account exceed 15 000 euros per calendar month in case of private person and 25 000 euros in case on legal entity, verification of your identity (face-to-face or using infotechnological means) is required. The identity can be verified at MoneyZen's office. Please read more about identity verification here.

How is the invested money protected in MoneyZen?

The money, which you have transferred to the MoneyZen portal, belongs to you. You can transfer it back to your personal bank account whenever you wish. Using the money on a virtual account is regulated by general terms and conditions – MoneyZen will use your money only within the framework of agreed investment criteria.

Investment income belongs to you.
All repayments of investments belong to you according to general terms and conditions. In case of investments, you should take into account the fact that they will be collected as repayments of the borrowers during the loan period specified in the investment criteria.

Debtors will be handled until the end of court proceedings.
MoneyZen will make best efforts to administer your investments, implementing good practice developed in credit institutions. MoneyZen will deal actively with debtors until the initiation of court proceedings.

Compensation fund ZenFund may compensate for loss of initial capital.
If you do not recover your initial investment with court procedure, ZenFund of MoneyZen may compensate this loss.

How to invest in MoneyZen?

Investing in MoneyZen is simple and includes three steps

1. Register

Register as a user on the portal. We will grant you access to the internal environment of MoneyZen financial portal. For better investment advice we ask you to fill in a questionnaire concerning your former investment activities.

2. Transfer money to MoneyZen portal

Please use your personal reference number for the transfer on the payment order. Your reference number can be found in the menu item of settlements or your data.

3. Set investment criteria

After collection of money on the virtual account of the portal, you can set personal investment criteria in MoneyZen: loan type, credit score of loan applicant, loan period and recommended interest. Based on these conditions, MoneyZen will start making offers to loan applicants. An investor can create several investment portfolios with different investment criteria.

How to set investment criteria?

In the portal, you can create several investment portfolios with different investment conditions, to which MoneyZen will start searching suitable loan applications. You can set investment criteria according to the recommendations of MoneyZen (choice of investment strategy meeting the risk profile) or independently.

What is risk profile of an investor?

MoneyZen will determine your personal risk profile, enabling to assess your risk aversion or risk inclination related to investing and recommend investment strategies meeting your risk profile.

Which are the investment strategies of MoneyZen?

1. Conservative strategy

The objective of conservative strategy is primarily to protect the initial capital. Investment must increase, but it is diversified conservatively – with higher than average diversification. Loan portfolio includes loan contracts with lower than average credit risk (the borrowers with higher credit score), investment provides a low return on a stable basis. While implementing the conservative strategy of initial capital protection, the formation of loan portfolio is a slow process,. The result is the highest quality investment portfolio (risk and diversification). The return is the lowest among the strategies, but it is reliable.

2. Moderately conservative strategy

The objective of moderate conservative strategy is to protect the initial capital, but compared to previous strategy, the expected return is higher and the investor is ready to take a higher risk. Investment is diversified conservatively – with higher than average diversification. A loan portfolio includes loan contracts with lower-than-average credit risk (the borrowers with higher credit score), the investment portfolio provides a stable low return. While implementing the strategy, the formation of a loan portfolio is slower than average, but the quality of the portfolio (risk and diversification) is high. The return is lower than average, but the quality of the portfolio is very good.

3. Balanced strategy

The objective of balanced strategy is preservation and growth of capital. Capital grows with balanced risk diversification and loan portfolio including loan contracts with moderate credit risk. An average capital growth of MoneyZen can be expected. The quality of the portfolio is good, but the portfolio includes also loans of the borrowers with lower credit risk, which can affect the speed of capital growth. Portfolio will be formed at a moderate speed, faster than in case of conservative strategies, and slower than in case of more liberal strategies.

4. Moderately aggressive strategy

The objective of the moderately aggressive strategy is to achieve capital growth even with the risk of loss of the initial capital. This is a loan portfolio with lower-than-average diversification and higher credit risk. Capital growth is higher than average, but also the percentage of bad loans in the loan portfolio is higher than average affecting capital growth. Portfolio will be formed faster, but includes more loan contracts with high credit risk.

5. Aggressive strategy

The objective of aggressive strategy is the fastest capital growth. In order to achieve capital growth, part of the portfolio includes also loan contracts with higher credit risk. Portfolio will be formed most quickly, but capital growth is affected essentially by capital loss due to loan contracts with low credit risk.

You can always adapt investment strategy to your wishes.

How are loan offers made in MoneyZen?

After confirmation of investment criteria and collection of money on investment account, the portal will start immediately making loan offers to loan applicants. Loan offers are made automatically. You do not need to waste your time in the computer – in case of a suitable loan application MoneyZen will make the offer based on your set investment criteria. Your money will grow, while you can deal with the activities you like.

What is a credit score of a borrower?

Credit score is a parameter characterising creditworthiness of a borrower, the calculation of which is based on payment behaviour and financial data of the borrower. Credit score is used for assessing the ability of a private person to manage the fulfilment of payment obligations. Generally, a higher credit score shows ability of a private person to fulfil his/her obligations well. In case of persons with lower credit score, the fulfilment of obligations may be difficult.

MoneyZen divides loan applications into four groups based on the credit score:
Credit score 901–1000
Credit score 801-900
Credit score 701-800
Credit score 601-700
Credit score 501-600

Credit score 901–1000 shows that this is a loan applicant with the highest credit score, in whose case the risk of delay and insolvency is the lowest, while credit scores 500–700 show high risk.

How is the credit score calculated?

Traditionally, the calculation of credit score is based on income, expenses, the availability of other financial obligations and amount of monthly repayments. Profession, information related to the employer and duration of service, education, marital status and number of dependants are also taken into account – these are all circumstances influencing financial income and expenses.

Upon reviewing a loan application, MoneyZen applies the principles of responsible lending.

How to use credit score as an investment criterion?

Credit score is a parameter of investment criteria used to specify to which loan applications you are ready to make an offer. When you choose offers only to the loan applicants with the highest credit score, the investments of your portfolio have the lowest credit risk. However, all investors want to grant a loan to such loan applicants and some of them are ready to apply very low interest rates.

How does MoneyZen select loan applications for an investor?

After submission of a loan application in the MoneyZen financial portal, the credit score of the loan applicant will be determined. If the credit score of the applicant is lower than 500, the loan application will not be submitted to investors for loan offers. If the credit score is higher, the financial portal will find all offers of investors complying with the credit score of the applicant and loan period of the application, and will rank them based on the interest rate. A loan offer is composed based on most favourable conditions.

How does MoneyZen choose offers of investors for loan applications?

After submitting a loan application in the MoneyZen financial portal, the credit score of the loan applicant will be determined. If the credit score of the applicant is lower than 500, the loan application will not be submitted to investors for loan offers. If the credit score is higher, the financial portal will find all offers of investors complying with the credit score of the applicant and the loan period of the application, and will rank them based on interest rate. An offer is composed with most favourable conditions – offers with lower interest rate first.

How often can I change the investment criteria?

You can set investment criteria on investment accounts or portfolio accounts up to three times per day.

For how long is the loan offer valid for the applicant to accept it and conclude a loan agreement?

A loan applicant is entitled to accept a loan offer in three days from the date of the offer. During this period the sum of your loan offer shall be reserved.

What is the reservation of a loan offer?

When MoneyZen makes a loan offer at the account of your investment portfolio, your money will be reserved to the extent of the offer until the applicant accepts the loan offer. You cannot use the reserved money. Money can be reserved for up to three days, after which the loan offer will be cancelled and you can use the money for investment again.

How do you deal with debtors?

MoneyZen is aiming to be a high quality and convenient financial portal. Beside capital growth, you can enjoy your life and deal with activities that make you happy. However, some borrowers may face a situation that affects their solvency, and therefore repayments can be late. Debtors of MoneyZen are handled by employees of MoneyZen and professionals hired by MoneyZen for debt procedures.

How much revenue can be expected from investing in MoneyZen?

Your revenue will come from interests on granted loans, for that you set the investment criteria in your portfolios. The minimum interest rate you can set as an investment condition is 5%. Because MoneyZen loan has no collateral, some borrowers may not be able to fulfil their obligations causing loss, in which case you can lose interest revenue as well as a loan balance. Therefore, we recommend setting annual interest rates at 12–20%; the recommended interest rate for loan applicants with higher credit score (900-1000) is 12% and 20% for loan applicants with a lower credit score (500-700). The objective of MoneyZen is to ensure investment revenue or capital growth of at least 12% per year. However, MoneyZen cannot guarantee capital growth.

What risks are related to investing in MoneyZen?

Similarly to any other investment options, some risks exist also in case of investing in MoneyZen. These could be, for example, inability of some borrowers to pay back the loan (credit risk) or insolvency of MoneyZen OÜ administering the MoneyZen financial portal (operating risk). If you are investing for the first time, we recommend reading the overview of investment risks and factors influencing investment decisions, offered by the Financial Supervision Authority.

Realisation of a credit risk of a borrower means complete or partial write-off of the loan (i.e. loss of money) for the lender. No peer-to-peer loan portal in the world has been able to eliminate this risk, nor have the credit institutions. The lenders bears the credit risk of a borrower. We calculate the risk profile of every person investing in our portal and recommend relevant investment strategies.

In case of realisation of the operating risk of loan portal, the portal may be unable to continue operation. No portal can provide final guarantee even in the case of a very large fixed capital and profitable operation, but long-term operations of the company administering the portal, professional and experienced management, stable financial results and high solvency enable to conclude that operating risk is lower if compared to competitors.

What is an operating risk?

Operating risk is inefficient management of assets of the company, which can result in insolvency and inability of the company to continue its main activity (insustainability). In addition to company owners, the damage will be caused to customers and cooperation partners.

The management and shareholders of MoneyZen have long-term business and banking experience, which minimises the operating risk of the MoneyZen financial portal. The money of investors on MoneyZen settlement accounts belongs to investors pursuant to the general terms and conditions of the financial portal. If MoneyZen becomes insolvent, money of investors will not be included in the bankruptcy estate.

What is the credit risk?

Credit risk is the possibility that an obligation will not be paid back. In case of the realisation of credit risk, the lender will suffer damage in full or partial extent of the loan.

In order to assess the credit risk of a borrower, we use the method applied in banks but with several improvements. This does not mean that our approach is impeccable, but we are constantly striving to use the best possible methods in order to bring credit risk of borrowers to the minimum level.

In order to assess the credit risk, a credit score is assigned to each loan applicant, which is a parameter indicating the creditworthiness of the borrower. This is calculated based on the payment behaviour and financial data of the borrower. Credit score is used for assessing the ability of a private person to manage the fulfilment of payment obligations. Generally, a higher credit score shows ability of a private person to fulfil his/her obligations well. In case of persons with lower credit score, the fulfilment of obligations may be difficult.

How to minimise the risk level of my investment portfolio?

Diversify your money between many borrowers. By investing your money into several borrowers with a suitable risk level in small sums, you minimise the effect of the credit risk related to one borrower on your investment portfolio.

Do not grant loans to loan applicants with low credit score. Applicants with low credit score are more likely to be late with their payments as compared to loan applicants with higher credit score.

Keep high quality of your portfolio by investing into loan applications with high credit score. In this case, MoneyZen will make offers to loan applicants with excellent credit score; however, you should not expect a very high interest rate because almost all investors want to grant loans to reliable borrowers with excellent solvency.

How does MoneyZen handle borrowers with debts?

MoneyZen is aiming to ensure minimum number of debtors, but we cannot exclude them at all. The MoneyZen financial portal has developed a comprehensive debt proceeding scheme, which is applied in case of all late payments. Debt proceeding includes communication with the debtor – before term of payment, we inform the borrower of the approaching term and send the reminder in case of payment delay. MoneyZen uses reminder messages, e-mails and letters; other obligatory proceedings include phone contact or meeting with the debtor, publishing the data of the debtor in the register of payment failures and court procedure as the last measure. Similar debt management procedures are used in credit institutions and ther financing companies.

Recommendations to the investor for minimising risks

1. Read general terms and conditions of the portal and investment criteria before confirming the investment. Study the conditions of peer-to-peer loan portals in order to understand your rights, risks and possibilities for minimising your risks.

Regardless of your risk profile, MoneyZen recommends to choose rather more conservative investment strategy.

Diversify your investment between several loan contracts, e.g. by 10 euros, in order to avoid single high effect on the operation of the loan portfolio. The same principle is followed also by the banks, whose objective is to grant loans to many borrowers in various fields of activity.

2. Choose loan applicants with higher credit score. This minimises the possibility of losing money due to insolvency of the borrower. The earned interest is lower, but your loan portfolio has higher quality.

3. Choose shorter loan periods because the possibility of change in payment behaviour of the borrower is more probable in the long term than in the short term.

4. In order to assess operating risk of peer-to-peer loan portals, ascertain the background of executive management and owners of the portal; considering the financial results of the company administrating the portal is also recommended. If the portals have not established minimum annual fee to investments, it is possible to diversify risks and invest your money through several peer-to-peer loan portals.

5. Invest only some of your free money into peer-to-peer loan portals. Peer-to-peer loans is a very new initiative. The first peer-to-peer loan portal (Zopa) started operating in 2005 in the United Kingdom. This field is developing continuously and, therefore, it is not recommended to use all your free money for investing in loan portals.

Which service fees are applied in MoneyZen?

Registration of a private person as an investor, money transfers to MoneyZen settlement account, setting of investment criteria, submission of loan offers, transmission of reports and administration of debtors is free of charge. Money transfers from the portal are charged.

Registration of a company is charged.

Which fees are charged from a borrower?

Fees charged from a borrower are provided in the Price List of MoneyZen.

Alusta investeerimist