It has now been 13 months in since I’ve started investing in P2P Lending through Funding Societies Malaysia. Many have their apprehensions and concerns about P2P Lending when it was first introduced in Malaysia. These apprehensions and concerns manifest themselves because P2P is an asset class which is foreign to us, Malaysians.
Fortunately for me, I have, over the course of a year, been reading much about P2P lending. The knowledge which I’ve gained about P2P lending is put into words on this website, where I’ve laid out its pros and cons, its risks and rewards, and tips and tricks. If you are curious about P2P lending, but clueless as to what it is, a good chunk of this website is dedicated to P2P lending.
So, how have I done so far?
Well, quite astounding actually. Over the course of 13 months, I’ve profited RM271.81, in interest (excluding service fees). That’s an annualised return of 11.84% per annum, which is simply much higher than the average Malaysian fixed deposit interest rate, of about 3-4%, offered by financial institutions.
I’ve also paid RM46.42 as reasonable fee to Funding Societies Malaysia for their services which include, among many others, maintaining the P2P platform, conducting due diligence, arranging investment opportunities, keeping tabs on repayments from borrowers and keeping a record of each investor’s investment.
Investing is not without its risk; this is also true with P2P lending. In my experience, although there were a few intermittent late repayments from borrowers, I am glad to know that none of which translates into a default. To put simply, a default is when a borrower fails to make repayments. Late repayments, on the other hand, are not considered a default. However, late repayments attract late payment interest which is slightly higher than the agreed interest rate. For more information, please read P2P Lending: What happens when a default occurs?.
Funding Societies Malaysia has the lowest default rate in South East Asia – less than 2%. This suggests that they’re observing an effective due diligence process prior to approving a note/loan for crowdfunding. Hence, a vigilant due diligence process ensures that only quality notes/loans are approved for crowdfunding.
Another good practice to be had, in ensuring that you’re well protected from any default, is to diversify across many notes/loans from various industries. Diversification provides an adequate buffer against the risk of losing a substantial portion of my investment because risks are spread out thinly over 27 different loans/notes. Generally, I invest between RM200.00 to RM100.00 in each loan/note. If you’re unsure as to how much to invest in an individual loan/note, please read P2P Lending: How much to invest in a note/loan?
If you are new to P2P lending, or would like to add some diversity to your investment portfolio to include P2P lending, you’d be delighted to know that Funding Societies Malaysia has a referral program where they will top up an additional RM50.00, for free, into your account, once you have deposited and invested a minimum of RM1,000.00.
To participate in this promotion, please register an account via this LINK (be careful not refresh the link before completing the registration as it will affect the promotion code), or alternatively, use the promotion code: j1mzpcw5 when registering through Funding Societies Malaysia.
Click the link if you would like to know more about P2P financing with Funding Societies Malaysia.
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