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Peer-to-Peer or more commonly known as P2P lending started in the US and UK in 2005, and has since taken the world by storm. Back home in Singapore, P2P lending contributed to approximately USD 207 million in financing offered to businesses here in 2020. Investors on P2P lending platforms can participate in these financing and earn returns in the form of interests.
Take for example Funding Societies, a popular P2P investment platform amongst Singaporean investors. It is currently licensed in Singapore and has operations in 3 other SEA countries. Backed by Sequoia India, Softbank Ventures Asia, SGInnovate amongst many others, the platform has grown at a rapid pace since launching in Singapore 6 years ago. Here are some things to note when investing with Funding Societies:
- Low barrier to entry: Investors can invest as low as $20 per loan
- Short tenor: Investment tenors are quite short ranging from 1 to 12 months
- Returns on Investment for each Product Type: Interest rates usually range between
- 3% – 5% per annum for a Guaranteed Investment product;
- 6% – 8% per annum for a Property-backed investment product;
- 8% – 18% per annum for Invoice financing and Working capital related investments products
Risks and Returns of P2P lending in Singapore
Investors are able to invest by crowdfunding the business financing available on the platforms and potentially earn returns in the form of interests typically ranging in the mid to high single digits. The investment amount starts as low as $20 at Funding Societies, which investors can leverage on for their portfolio diversification. Depending on the loan product, payouts can be done monthly so investors get their investments and returns in a shorter time frame. Compounding returns, as well as a rather short learning curve, are also attractive incentives as well.
That said, repayments can be delayed or go completely unpaid. This is why it is imperative for the P2P lending platform to first do a preliminary round of due diligence and present the facts comprehensively to investors, before allowing investors to decide whether or not to proceed. There is also a risk of the P2P lending platform shutting down if it is not financially stable on its own. To mitigate this risk, P2P platforms regulated by MAS can engage an independent escrow agent to handle all investor funds separate from its business account, such that the escrow agent will hold the funds even if the platform goes under. Funding Societies does just that to provide peace of mind to investors. As such, there is a need to do your due diligence and ensure such investments match your risk appetite.
How can Diversification help to minimise risks in P2P lending?
One of the largest risks in investing in a P2P lending platform like Funding Societies is the risk of a SME defaulting. Portfolio diversification by means of investing into a good mix of notes and industries on the platform is one way to mitigate concentration and default risks and optimize your portfolio returns in the long run.
Taking the above scenario as an example, we see that Andy invested S$800 into a single deal and this single investment makes up 50% of his overall portfolio. Whereas in the other scenario, Emma invested S$50 uniformly across 100 deals, making a single investment just 1% of her overall portfolio. In the event that Deal A defaults, Emma’s potential loss will only be 1% of her overall portfolio whereas Andy might face a potential loss of half of his overall portfolio.
Although P2P lending is still a fairly young industry within Singapore, the demand is ever increasing. Given that 99% of businesses in Singapore are SMEs and that the returns on investments typically range in the mid to high single digits interest rate per annum, P2P lending in Singapore serves both the needs of SMEs and investors. With all that said, it is important for investors to do their own due diligence and measure the risks involved against their own risk appetite.
Terms and Conditions apply
Investors must sign up with the aforementioned promo code and make a total investment of at least S$200 by 30th Apr 2021 to be eligible for the $20 cashback. Cashback will be credited into the eligible investors’ accounts by the end of May 2021. Funding Societies’ investor T&Cs apply.
Funding Societies is the largest SME digital financing platform in Southeast Asia. It is available in Singapore, Indonesia, Malaysia and Thailand, and backed by Sequoia India, Softbank Ventures Asia Corp and SGInnovate amongst many others. It provides business financing to small and medium-sized enterprises (SMEs), which is crowdfunded by individual and institutional investors. Investors can invest from as low as S$20 with a tenor of no more than 12 months.
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.
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.
Actual returns may be lower than the expected rates of return, and historical rates of returns may not reflect future returns. The Product type interest rates indicated in the article are derived from historical rates of returns and are exclusive of service fees.
All information in this article is accurate as of 29th March 2021
The post Join 200k Investors in SEA to Invest with this Award Winning Investment Platform and Get $20 Cashback appeared first on MoneyDigest.sg.
Life isn’t easy, and that’s the truth for everyone. No matter how put together your peers may seem on social media or real life, we all go through our challenging moments that can make rising out of bed the most difficult task to do in the morning.
From rough patches in our careers to tensions in our relationships, there can be a sea of reasons why we feel like giving up. When things have been hopeless for such a long time, and the universe seems like it has an agenda against us, walking away can feel like the most natural thing to do.
However, there’s always a way to move forward and find light in the darkest of situations. Let’s dive right into what you can do when you feel like giving up.
#1: Rediscover your reason
As time goes on, it can be difficult to remember why you started something in the first place, whether it be a job, relationship, or business venture. You might have strayed so far from your original vision that you simply fell out of passion.
However, it’s possible to gain instant motivation. Sit down for a moment and think about your ‘why.’ For example, these questions might help:
- Why did you start your business?
- What’s the main reason for pursuing this relationship?
- Why did you fight for this job opportunity in the first place?
By thinking through your initial motivations, you will break through the clouds to find the clarity that will keep you going in life. Every quarter of the year or so, be sure to reflect on your ‘why’ to keep at what you’re doing.
#2: Embrace discomfort
No matter how much we all hope that life would be constantly fun and worry-free, we know that that’s not what it’s supposed to be. The sooner you can embrace discomfort as part of your life’s journey, the faster you can move past your obstacles and reframe them to your advantage.
If life ever gets too overwhelming at some point, take time out to breathe, focus, and reset. Life pushes you around to try to teach you a lesson. The sooner you seek to embrace the challenges it throws, the easier it is to keep moving along.
Check out our article on “five ways to lift pressure off your nervous system” if you’re undergoing vast amounts of stress and in need of some tender loving care.
#3: Engage in small acts of kindness
When you feel like giving up, doing small acts of kindness might be the last thing on your mind. However, it’s more than worth it to try.
The next time you’re out dining, smile at a stranger at the restaurant, or if you’re bold enough, strike up a conversation with your favourite hawker. If you’ve got more time on your hands, take a shot at volunteering and helping those who are in worse situations than you are.
Engaging in these little acts can help you gain perspective and make you feel a whole lot better. This quote by Barbara De Angelis rightly puts it, “Love and kindness are never wasted. They always make a difference. They bless the one who receives them, and they bless you, the giver.”
#4: Share your goals
If you’ve ever set goals for yourself, you might have felt far more comfortable keeping them to yourself. Honestly, there’s nothing wrong with that.
However, as we’ve mentioned in this article, you’ve got to embrace discomfort and open yourself up to vulnerability. You can start down that path by sharing your goals with people you trust and have them be your accountability partners.
They can help you stay true to your aims and show you that tough love to keep you on track, whichever point of life’s marathon you’re at.
#5: Reflect and have gratitude
It can be way too easy to dwell on your past or get overly obsessed with your future self. But it’s more than important to live in the present moment. Stop the motion of your life to observe the sky and the nature around you. Spend some time meditating if you must.
Observe all the little good things that are happening, and take the time to be grateful for what you have. Also, never forget to acknowledge any past progress you’ve made, no matter how small you may think it might be.
The simple act of being thankful can transform your outlook on a lousy ditch you’re in.
#6: Give yourself a treat
Last but not least, always treat yourself.
You are your own worst critic, so go easy and hit that bed an hour earlier than your usual snooze time. Or book an appointment to go to the spa, lay on the couch and binge that latest Netflix series, drink your favourite bubble milk tea, and do whatever makes you happy.
After all, life is short. You should spend time building on your goals but never neglect the fun side of life to re-energise you when the time calls for it.
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