P2P Lending: 10 months in

It has been 10 months since I’ve invested RM1,000.00, with the intent of dipping my toes into the world of P2P lending. It has been a remarkable experience thus far.

palm holding folded money

I sincerely appreciate the remarkable traits which are part and parcel of P2P lending such as, stability and predictability. In contrast, the volatility and the uncertainty of the stock market may be a bit too intense at times, especially in the last couple of months. I realised that I needed a breather from the stock market; one that would do me some good.

However, the opposing characteristics of P2P lending and the stock market, could compliment your investment portfolio by providing some uncorrelated diversification in your investments. This uncorrelated diversification ensures that when one asset class is unfavourably affected, the other asset class would not suffer the same fate.

In addition, the potential investment yield, from P2P lending, is also a charming feature as most of the notes/loans offer interests rates of more than 10% per annum. Hence, this is a factor which is appealing to investors, other than traits such as, non-volatile and fixed income.

screenshot of funding societies malaysia account

My last deposit was made on 05.04.2018, in the amount of RM1,000.00 thus bringing the size of my P2P lending portfolio to RM3,000.00. Currently, my portfolio consists of 18 notes/loans, which provides good diversification and a yield of 11.50% in terms of annualised return. In monetary terms, that is RM148.84, in interest. It should be noted that most of the interest accrued are from the initial investment of RM1,000.00, and not RM3,000.00.

On the other hand, I’ve only paid RM26.68 in service fees.

The effect of compounded interest on my portfolio is also becoming more pronounced. That effect is achieved by reinvesting every cent of interest so that more interest could be earned, and later, reinvested again. Hence, theoretically, a P2P portfolio could achieve a compounded return of 18% per annum.  On top of that, frequent reinvestments mean that any default to a note/loan would only cause a minimal dent to my overall P2P lending portfolio. [See: Peer-to-peer (P2P) Lending: Maximising gain and reducing risks]

It should be noted that I’ve not experienced a single incident of default, touch wood. This, to me, indicates that the due diligence process undertaken by Funding Societies Malaysia is thorough and effective.

Conclusion

This year, I’ve set my sights on increasing the size of my P2P lending portfolio, and to diversify away from other asset classes.

If you are new to investing, or would like to add some diversity to your investment portfolio, you’d be delighted to know that there is a special promotion where Funding Societies Malaysia 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.

 HELPFUL LINKS

Click the link if you would like to know more about P2P financing with Funding Societies Malaysia.

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**This article is written in association with Funding Societies Malaysia.**

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