4 Things You Should Not Do When Investing in P2P Lending (Plus One Thing You Should Do!)

Many investors may find investment in Peer-to-Peer (P2P) lending attractive due to its potential benefits, such as higher returns and shorter tenors. The barrier to entry is also one of the lowest amongst all types of investments, from just $20.

Read about the 4 things to expect when you invest in P2P lending and also the 5 reasons to start investing in P2P lending.

First-time investors who are not yet familiar with the details of P2P lending may be hesitant to start this investment. We have compiled a list of 4 things you should look out for when investing with P2P platforms to help you avoid common mistakes made by first-time investors.

1. Investing only in loans with high returns

Investors may often be incentivised to participate in P2P investments due to the high returns they potentially provide. To receive greater returns, some investors may end up only picking loans with higher interest rates. However, interest rates are priced based on the credit risk and higher interest rates are an indication of higher risks. Interest rates should not be the only determining factor for investing in a loan. As an investor, you would be better off diversifying you investments across loans with varying interest rates.

2. Not diversifying your investments

In any type of investment, it’s crucial to diversify your portfolio so that you won’t end up putting all your eggs in one basket. When you concentrate your investments and don’t diversify them, your portfolio may go south quickly if there are non-performing loans.

Expanding on the first point, a balanced mix of high and low interest rates is a way to diversify your investments. Additionally, you can also invest across different SMEs, industries, products, loan tenors as well as investment amounts.

An easy way to diversify on Funding Societies’ platform is to set up Auto Invest. The Auto Invest bots can be customised based on your investment preferences. That said, you have the flexibility to opt out of loans in which you are not interested before the crowdfunding starts.

Secondly, you can diversify across different types of investment assets that align with your investment risk profile. This can include savings, insurances and the traditional investment vehicles such as bonds and stocks.

3. Withdrawing returns when you receive them

It may be tempting to withdraw your returns once you receive them. However, experienced P2P investors typically don’t do that to potentially benefit from the compounding effect from re-investments. You can re-invest your monthly repayments to potentially receive a higher compounded interest. Your returns (in the form of interests) also start to form part of your capital which you can utilise to re-invest in upcoming loans.

By leaving the repayments in your account, you are ensured that you have funds which can be readily invested when opportunities arise, even without pumping in fresh funds.

4. Not being familiar with P2P lending platforms & the details

While the concept of P2P lending is not difficult to understand, it is important to equip yourself with knowledge of the P2P lending platforms that you wish to invest with. Investing with a stable and responsible P2P lending platform will help you minimise unnecessary risks and inconveniences. Ensure (and expect!) that the platform is responsive, transparent in its processes and stable to carry out its operations and duties for investors.

A good platform to consider is Funding Societies, the largest P2P lending platform in Southeast Asia that holds the Capital Markets Service Licence issued by the Monetary Authority of Singapore (MAS). As of March 2019, it has crowdfunded more than $450 million in the region across more than 300,000 loans. This statistic also reflects the number of opportunities for investors.

Understanding the details of each investment will also allow you to make informed investment decisions. At Funding Societies, a loan fact sheet will be provided on every investment opportunity. It contains details of the loan, its repayment schedule, a summary of the company and guarantors, the company’s financials, and comments from Funding Societies’ very own credit team.

What’s the ONE thing you should do?

Seriously consider P2P lending as part of your investment portfolio! 😀

P2P loans are a form of alternative investments that hold many benefits, especially for new investors that would like to start small or with experienced investors looking to diversify their portfolio. An investment with Funding Societies starts from just $20.

By watching out for these 4 listed things that you should not do when investing on P2P lending, we hope that you’ll be able to have a smooth and successful P2P investment journey!

Ready to start your P2P investment journey? Sign up with Funding Societies today, or live chat with their Customer Experience team to understand this investment better.

Disclaimers

This article is contributed by Funding Societies and is adopted from this blog article.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

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4 things to expect when you invest in P2P lending

Peer-to-peer lending, or P2P lending, utilizes technology and big data to connect investors and small and medium-sized enterprises (SMEs) looking for business funding. To investors, it provides them with an opportunity to earn passive income by financing business loans for SMEs.

In Southeast Asia, P2P lending has witnessed significant growth in recent years, led predominantly by Singapore. To date, around 60 platforms are currently operating in the online lending and crowdfunding space, which have become an increasingly popular alternative investment option.

If you’re wondering how you can take part in investing with P2P lending, Funding Societies would be a great place to explore. As of January 2019, Funding Societies has onboarded more than 85,000 investors across Singapore, Indonesia and Malaysia and provided more than S$350 million worth of investment opportunities in crowdfunded loans.

Here are four things you can expect when investing in P2P lending through Funding Societies.

1 / Investments with short tenors

Funding Societies offers three investment products: Business Term Loan, Invoice Financing, and Property-Backed Secured Loan. Business Term Loan allows you to make investments by financing SME loans with tenors ranging from 1-12 months. In return, you will receive monthly repayments of principal and interests. You can maximize your returns by reinvesting your repayments to new loans.

Meanwhile, with Invoice Financing, SMEs would be able to cash out by pledging their invoices to Funding Societies. Invoice Financing has a shorter tenor, which generally lasts for only 30-120 days with a one-time repayment of principal and interest at the end of the tenor.

With Property-Backed Secured Loan, investments are secured by a property (residential, industrial, or commercial). Different from the other products, Property-backed Secured Loans offer security in the form of property as a collateral, and is a good option to add diversification to your investment portfolio.

2 / Potential returns up to 14% p.a.

As an investor, the returns you get from your P2P lending investments come in the form of interests paid by SMEs.

Given that P2P loans are generally more flexible in its tenor and SMEs that get financing from Funding Societies have shorter or imperfect operational track records, interest rates are determined accordingly based on risk, in the range of 8-18% p.a.. Higher risks typically come with higher returns, so investors should invest based on their appetite for risk.

3 / Regular updates from the platform

Expect to get regular updates from Funding Societies as an investor on the platform! With every important event or update, the platform sends alerts via email or in-app notifications so that investors are constantly kept up to date with us.

For instance, whenever there is an upcoming loan for crowdfunding, investors will receive an email notification. In the event of late repayment or if there’s an update for specific loans, Funding Societies will also communicate in the quickest and most transparent way. So make sure you switch on your app notifications for any important alerts!

If you need any further clarifications, Miyu, Funding Societies’ very own chatbot, and our customer experience (CX) team will be happy to answer all of your questions via live chat. Or call us at 62210958 to have a quick chat with our team.

4 / Well-designed User Interface (UI)

Invest with Funding Societies – User Interface

Funding Societies Mobile App – Dashboard

Investors should be able to review their portfolios easily. That’s why Funding Societies has improved its website and mobile app to provide details of your investment portfolio in a clear and concise manner.

As an investor, you can review your portfolio, change your auto-invest settings, crowdfund a loan, and even use the live chat feature — all in one mobile app! It’s so simple, convenient and efficient, which is why 80% of Funding Societies’ investors are investing on the go.

Got more questions? Ask Funding Societies on 24 January 2019!

Funding Societies is hosting an investor event on 24 January 2019 evening to share more details and insights of how P2P lending works on its platform. You’ll also be able to meet the team and get to ask them all the questions.

  • Date: 24 January 2019, Thursday
  • Time: 6.30pm – 9pm
  • Venue: Lowercase Cafe @ 1 McNally Street (Rochor MRT)

Sign up for the event here.

This article is adapted from this article which first appeared on Funding Societies’ blog.

Disclaimers:

This article is contributed by Funding Societies.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

 

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Easy Investing into Property backed Secured Crowdfunding

For the newbies, debt crowdfunding is a concept where borrowers (usually SMEs) approach a crowdfunding platform for loans funded by a pool of investors. Investors earn interest, paid by borrowers, as returns on their investment. Investments are open to individuals as well as corporates with a minimum amount going down as low as $50 for smaller loan amounts.

Funding Societies, licensed and leading crowdfunding platform in Southeast Asia, backed by SoftBank Ventures Korea and Sequoia Capital, has recently introduced Property backed Secured Loans to its pool of more than 50,000 investors, providing them with more diversification opportunities. This is the third product Funding Societies has introduced since Business Term Loans and Invoice Financing.

What are Property backed Secured Loans?

Property backed Secured Loans are loans taken by companies who have pledged a local property as a form of collateral against the loan. These are local properties owned by the companies and/or Directors of the companies, and can be Residential, Commercial or Industrial. The loan amount is capped at 70% of the property value determined by independent valuers.

As an investor, you can start investing from $1,000 in this secured crowdfunding product

Why should you be excited about this product?

It is secured by property as a collateral: Funding Societies (FS) takes the first charge on the property, i.e. In the event that the property needs to be liquidated to repay the loan, FS will have the first right to access the cash after it is auctioned. Given the 70% Loan to Property Value (LTV), there is enough buffer against fluctuations in market prices that result in properties being devalued.

It’s a short-term investment: The loans are typically up to 12 months’ tenor

Fair returns for a lower-risk product: You can get up to 8% p.a. returns in your investment

Additional Diversification:Existing crowdfunding investors now have a secured loan product to further diversify their portfolios. New investors who have not invested in crowdfunding can take this opportunity to start investing.

What happens if a borrower misses out on repayments

In the case of repayment by borrowers, FS will liaise with borrowers on behalf of investors for collections. If the loan reaches defaults (defined as 90 days past payment due date), Funding Societies will pursue legally to auction the collateralized property. Proceeds from the auction will be used to repay the investors and any excess will be returned to the owners of the property.

In the rare scenario where proceeds from the auction are insufficient to repay the loan, Personal Guarantors (usually Directors of the company) and the borrowing company will be liable for the outstanding due.

TL;DR (Too Long; Didn’t Read)

Given that there is collateral security in the form of a property, Property backed Secured Loans become more secured and typically lower risk compared to other crowdfunding investment products.

For those with a lower risk appetite but still want to potentially earn a return of up to 8%, the Property backed Secured Loans is a product for you to diversify your portfolio in.

Limited Time Promotion: Receive $20 Cashback!

From now till 15 June 2018, sign up as an investor and invest at least $1,000 to be eligible for the $20 cashback. That’s an upfront 2% cashback on your investment!

Here’s how to claim the cashback:

Step 1: Sign up for your new investor account on www.fundingsocieties.com.

Step 2: **IMPORTANT!** Enter MDMAY in the Promo Code section.

Step 3: Complete your registration and activate your account.

Step 4: Invest at least $1,000 before 15 June 2018. Investment can be in one loan or across multiple loans.

Eligible investors will be notified via email of their within one month from the end of the promotion.

This article was first published on Funding Societies’ blog.

Disclaimers:

This article is contributed by Funding Societies.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

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Bonus is in! Time to Diversify Your Investments with Peer-to-Peer Lending

With most companies’ financial year ending in December, some of you may have received your bonus in March and are wondering what to do with it. There is no written rule on how you should be utilizing your bonus. Some choose to repay their outstanding debts, while others prefer to splurge on luxury items as a way of rewarding themselves for a job well done in the past year. Building wealth can be a part of your strategy (see what experts say at CNBC and Forbes), and what better time to do it than when you have fresh funds in your bank account?

Wealth building comes in many forms, from saving to investing, be it actively or passively, amongst other strategies. Today, we introduce you to an alternative investment – Peer-to-Peer (P2P) Lending.

Although new to many, P2P lending has changed the financial landscape in Singapore over the past three years. P2P platforms like Funding Societies offer SMEs additional avenues for business financing and give investors more opportunities to diversify their portfolios. In other words, as you see your wealth grow progressively, you’re also helping local SMEs grow their businesses.

Here are 4 reasons to consider putting part of your bonus into P2P lending:

1. It caters to all salary and bonus ranges

P2P lending is accommodating in terms of one’s starting investment capital. You don’t need a huge fortune to begin investing, and you can invest more depending on your risk appetite. For instance, Funding Societies allows you to make an investment from as low as $50. Not to mention, you only need to put in a $1,000 deposit (can be withdrawn at no cost) before you are able to access investment opportunities. Accredited and institutional investors with higher capital and risk tolerance may also put in tens of thousands per investment.

2. Shorter tenures means that you get to see your returns quickly

If you are looking for short-to-mid term investments, P2P lending is a feasible option for you. Many traditional investment products require lengthy lock-in period. Generally, that is not the case with P2P lending as the loan tenures are usually shorter. The tenure for Business Term Loans typically ranges from 1 – 12 months and from 30 – 90 days for Invoice Financing. What’s more, you receive monthly repayments from your investments in Business Term Loans (one-time repayment for Invoice Financing), which you may choose to re-invest in new loans, creating a compounding effect.

3. Potentially high returns: Up to 14% per annum

Yes, you read it right. P2P lending has become a part of many investors’ wealth building strategy possibly due to its attractive potential returns. Interest rates offered by Funding Societies typically range from 8% to 14% p.a.

While the key risk with investing in P2P lending is the non-performing loans, Funding Societies manages its default rate at less than 1.5% (as of April 2018), comparable to those of major banks. This is done through extensive credit assessment of the SMEs’ loan applications to give you quality opportunities to make your investments.

4. It is super easy to participate

Investing can often be time-consuming due to the multiple tools and monitoring required. However, P2P lending is relatively simple to participate in:

  1. Just look out for upcoming deals
  2. Read the respective fact sheets
  3. Decide on an amount to invest in.

Funding Societies further simplifies this process with its Auto-Invest function, which helps investors pre-select investments based on their pre-set criteria. Investors will be notified of the pre-selection and can decide to opt-out or go ahead with the investment. This not only makes investment hassle-free for investors, it also helps them to diversify their P2P investment portfolio by participating in multiple loans.

Start your P2P investment journey today with Funding Societies
Now that you have a clearer picture of P2P lending, consider allocating a portion of your bonus into this form of alternative investment and start earning up to 14% returns. Funding Societies is here to help you begin your P2P investment journey.

Founded in 2015, Funding Societies is the leading P2P financing platform with a Capital Markets Services license issued by the Monetary Association of Singapore. With operations in Singapore, Indonesia and Malaysia, Funding Societies has onboarded more than 45,000 investors in a span of three short years. Now, it’s your turn to get hands on investing in P2P lending.

Sign up with Funding Societies now!

Disclaimers

This article is contributed by Funding Societies.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

 

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4 Ways to maximize returns in crowdfunding

Peer-to-Peer(P2P) Lending, or debt crowdfunding, has grown tremendously since the concept originated in 2005 with Zopa in UK. In 2016 alone, P2P lending has generated more than $300 billion worth of investment opportunities worldwide. The concept helps the underserved or underbanked individuals and businesses access alternate sources of funding from investors who lend and earn passive income in the form of interest.

Southeast Asia is an emerging P2P lending market with a huge financial gap faced by SMEs. In the last 3 years, P2P lending has financed thousands of small businesses to support their growth, while offering investors an alternative investment opportunity. In Southeast Asia, one of the leading platforms, Funding Societies has funded more than S$120 million across Singapore, Indonesia and Malaysia. At the same time, they have given more than 45,000 investors access to this alternate investment class with net annualised returns of up to 14% in short tenor loans.

This article aims to highlight 4 important considerations to maximize your returns in P2P lending with examples of initiatives taken by Funding Societies:

  1. Choose your platform wisely

When investing, you want to choose a platform with decent track record and achievements. These are things to look out for in a good platform:

a. The platform has good risk management practices

Review the platform’s risk management – including filtering out bad quality loans, pricing returns as per the risk, and managing non-repayment and defaults. While most platforms do not publish their proprietary methodologies, their processes should be robust enough to identify potentially bad loans. A good indicator is the platform’s default rates. Funding Societies has a default rate of 1.3% (as of 7 March 2018), one of the lowest in the region.

To illustrate, here is an example of the impact of a low default rate:

Assuming gross annual yield of 12%, platform fee of 2% and default rate of 3% (on the higher side) one can make 7% in returns.

This of course is not assured but depends on many factors including platform’s risk management as mentioned above.

In the inevitable event of a late payment or default, it is essential for the platform to have a process to manage collections or exercise legal action. You should enquire the platform on its processes to have a better understanding and clearer expectations.

b. Skin in the game

Find out if the platform has YOUR interests aligned with theirs, and what’s in it for them to ensure that investors’ money is handled properly and the investment opportunities/loans are of good quality.

Firstly, the platform should know how to handle your money. Funding Societies is the first P2P financing platform in Singapore to engage an independent escrow agent to handle investors’ funds, keeping its operating funds separate from investors’ funds. This gives investors peace of mind knowing that their money is safeguarded by the escrow agent and will not be utilized for anything besides their investments.

Secondly, is the platform as invested as you are? The management at Funding Societies has a ‘skin in the game’ by investing in every single loan, and will do their best to maximize the returns and manage any negative impacts.

c. It cares about YOUR Experience!

Debatable – but a good platform should be all-encompassing in its experience, right? This should start from the platform, mobile app (convenient for you), and customer experience. More importantly, it should be responsive and helpful when you need to speak to someone.

  1. Understand macroeconomic conditions

Knowing the pulse of the economy will help you when you select the loans to invest in. This includes updates for each sector and government initiatives to boost SMEs and specific sectors.

Coupled with the factsheets provided by P2P lending platforms that state the company’s operational and financial health, you will gain a wider perspective of the economy and SMEs you are funding.

  1. Diversify your investments within the platform

As the saying goes, “Don’t put all your eggs in one basket”, the same goes for investing in P2P lending. Diversifying across many loans has its advantages specifically in spreading the risk across many loans and helping to minimise the impact of non-performing loans.

Funding Societies endeavours to provide ample opportunities to diversify your investments:

  • I. Participate in multiple loans with small amount (at times as low as $50)
  • II. Consider spreading the weightage of your investments in terms of loan amounts
  • III. You have the option to choose the industries to invest in.
  • IV. Funding Societies currently provides Business Term Loans and Invoice Financing for investment. You can consider both products when investing.

Using the Auto-Invest feature simplifies your road to diversification. All you have to do is set your criteria based on product, industry, tenor, rate of returns and industry. When an investment opportunity matches your criteria, you will be allocated the investment based on the auto allocation algorithm.

  1. Re-invest for compounding effect

When investing in P2P lending, repayments are made on a monthly basis (30,60,90 days in case of invoice financing), and you can decide, based on your risk appetite, whether to reinvest the repaid funds and thereby compound the returns.

Southeast Asia’s leading crowdfunding platform, Funding Societies, currently operates in Singapore, Indonesia and Malaysia. With more than 45,000 investors and being the only P2P lending platform to win the MAS FinTech Award (SME category, 2016), Funding Societies has also attained global recognition, being recognised amongst the Top 250 FinTech companies globally by CB Insights and winning the Best in Customer Experience for Alternative Financial Services by Retail Banker International.

Want to start investing in P2P lending? Sign up with Funding Societies today!

Disclaimers:

This article is contributed by Funding Societies.

It should not be construed that Moneydigest is endorsing this article or any of the products and services provided by Funding Societies.

Nothing in this article should be construed as constitute or form a recommendation, financial advice, or an offer, invitation or solicitation from Funding Societies to buy or subscribe for any securities and/or investment products. The content and materials made available are for informational purposes only and should not be relied on without obtaining the necessary independent financial or other advice in connection therewith before making an investment or other decision as may be appropriate.

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