[Discuss] People who currently invest in/have invested in P2P financing, what are your top tips?


  • Financial Bloggers

    People who currently invest in/have invested in P2P financing, what are your top tips?

    Answer Wiki:

    • Put your money in as many eggs as possible. Try to spread them out into as many investments as you can instead of investing all of them in one investment opportunity. - JLHC
    • Configure Auto invest to achieve diversification and reinvestment - jonhan
    • Autoinvest the earning or balance available in the P2P account - Loh
    • Not too long, 24-month max - Loh
    • Aim higher return than what you normally get from less riskier investment, such as above 10% annually - Loh
    • Not too much in one opportunity, spread out with manageable possible loss if that opportunity failed - Loh
    • We hope Funding Societies is fundamentally strong, but also try to invest some in another P2P Operator (P2P Investment is too lucrative to be ignored, but need to have reliable P2P Operator to work as well), among 6 Operators, only 2 are good, one is Funding Societies. - Loh
    • Invest in shorter term shorter minimum amount - Rajni
    • Make p2p financing a passive income for you but do not make it the only passive income for you - Bendahara


  • Put your money in as many eggs as possible. Try to spread them out into as many investments as you can instead of investing all of them in one investment opportunity.

    You may want to consider using the Auto Investment feature offered by Finding Societies (not sure if the others offer this) to automatically invest a small amount in every single investment opportunity to spread out risk.


  • Financial Bloggers


  • Contributor

    Diversification and reinvestment.

    Configure Auto invest to achieve both of the above. Diversify across industries, and p2p platforms.
    Play the long game, and let your interest earn interest and so on.
    Be aware of market conditions and determine for yourselves which industries are risky and stay away from those.



    1. Autoinvest the earning or balance available in the P2P account
    2. Not too long, 24-month max
    3. Aim higher return than what you normally get from less riskier investment, such as above 10% annually
    4. Not too much in one opportunity, spread out with manageable possible loss if that opportunity failed
    5. We hope Funding Society is fundamentally strong, but also try to invest some in another P2P Operator (P2P Investment is too lucrative to be ignored, but need to have reliable P2P Operator to work as well), among 6 Operators, only 2 are good, one is Funding Society.


  • @loh Care to share the other P2P company that you can recommend?



  • @jlhc Fundaztic



  • @loh Thanks. Will take a look at them.



  • @Loh I tried calling Fundaztic but couldn't get through. What's your experience using Fundaztic?



  • @kellyC

    So far so good with their service and performance, only have one argument with their CEO Kristine Ng as I was complaining of their cash voucher promotion offered which caused me some inconvenience.



  • Fundaztic offers notes which are relatively [1] longer in tenure (min. 12mths but mostly 24mths & above) & [2] lower in terms of interest return. Nonetheless, if I'm not mistaken they charge lower service fees (management fee) as compared to FS. They also have FPX which gives convenience to investors with minimal bank charges.

    For me personally, I still prefer FS because of its shorter financing & higher return. But FS needs to buck up in terms of deposit system which, according to them is in the pipeline.


  • Contributor

    @josephyiong
    Thanks for the details.
    what are the interest rates like? also, do you have any idea about the default rate on their platform?



  • @josephyiong FS does a better job in Due Diligence, but in a way because of this, FS also losses out number of Opportunities compared to Fundaztic. FS still score better than Fundaztic as Due Diligence + Return are what we investors emphasis most in P2P investment.



  • I have both FS and FZ. diversify in these 2 platforms. what do you think ?



  • @loh hmmm.. It is still hard to judge I feel. Both platforms are still quite new in M'sia as P2P crowdfunding is aged less than a year here. So we all can monitor their performance as time passes. For me personally I still support FS more than Fundaztic.



  • @prince_mk Yes, I do the same thg but fund size in Fundaztic is relatively smaller due to longer tenure & lower interest there. But it really depends on your personal preference though.



  • I invest in both. More here than there. Fundaztic companies are smaller. The tenor is longer (up to 36 months). All loans by design are less than RM200,000. Also, they are helmed by ex-bankers; so, Fundaztic is more fin than tech ... or, so they say. And, finally, they rely heavily on Credit Bureau Malaysia ratings. (They don't issue a Factsheet like FS.)



  • try to attend the briefing organised by the CEO FZ. very informative.


  • Contributor

    @prince_mk where can i find such events? FZ page doesnt seem to have an events link



  • @jonhan Hi Jonhan. U may try to email them. Sometimes on Saturday, they will have talk somewhere at Glenmarie. or u also may add them in facebook and ask them for the date too. quite informative the talk.


  • Contributor

    thanks. are you going to any of their future talks? @prince_mk



  • I prefer investing in shorter term, shorter min amount loans. Mostly Invoice financing loans suit my pedigree. I think they are safer than Business term as they are backed by invoices, and they tend to be of shorter tenor. If a loan has a tenor of say 24 months, even though they are performing well now, anything can happen to the company in those 24 months.

    But unfortunately, both FS and fundaztic don't have a lot of IF loans yet, Any one know of any company which does a lot of shorter term loans?

    Also, On a side note, can any one help verify if default rate for IF loans is indeed less than that of business term? I can't seem to find this breakdown in the companies' statistics page.



  • @rajni123 said in People who currently invest in/have invested in P2P financing, what are your top tips?:

    I prefer investing in shorter term, shorter min amount loans. Mostly Invoice financing loans suit my pedigree. I think they are safer than Business term as they are backed by invoices, and they tend to be of shorter tenor. If a loan has a tenor of say 24 months, even though they are performing well now, anything can happen to the company in those 24 months.

    Great analysis, but invoice financing is also usually lower in interest rates.

    I prefer to have a longer 24-36 months high yield borrower so that I don't have to manage the money coming in afterwards. But FS already has a good mix of borrowers from IF and normal term loan.

    Of course with monetary policy tightening, maybe it's no longer so attractive in the near future to put into P2P financing for it's rewards/risks ratio



  • @edward-foong-pooi-sing

    Have been looking into this forum on stealth mode. But on this question, I believe P2P operators have the space to adjust their interest rate accordingly, even when BNM is raising interest rate.

    So most often, investing into shorter tenure (less than a year) would help to minimize the risk of losing out to the rising interest rate environment.


  • Contributor

    @rajni123
    Agreed with your thought process.

    @Necrox BNM raising the interest rate, is this confirmed. Last I heard, it was still under discussion.
    But it is interesting to see how rising interest rates might effect the p2p industry. More SME's might go to the p2p platforms for loans instead of the banks, which is a good news for us all.



  • With BNM raising the Interest Rates, I hope FS and other P2P Operators can also increase their interest rate and pass over more profit to we investors.



  • I don't agree with raising the interest rates as unsecured loan in FS is already quite high up to effective rate of 24% per annum. It's very high and not good for businesses. Not many business have gross profit margin of over 20% . Higher interest rates will also lead to higher defaults.


  • Contributor

    @Edward-Foong-Pooi-Sing thats a great point. p2p already charges a bit high that what banks charge the SME's
    Me personally would prefer to have more diversification (more loans) than have higher interest rate

    If p2p firms continue their with their current interest rates, it might mean that they will be more appealing to borrowers and they will flock to them instead of banks



  • @edward-foong-pooi-sing

    When the interest rate increases, it affects across the board. Not just P2P, even bank's mortgage, corporate loan, and FDs will all increase. So the era of cheap money is going to over now. Whether borrowers like it or not, the rates will be higher across all financing options.

    I remembered at one time Malaysia's interest rate was at 10+% for mortgage loan.

    The point is that people will still need for financing regardless how high the interest rate is going to be. When that happens, the people who can afford to apply financing will be very low.

    But that's the purpose of raising interest rate, to control over heated economy / raising inflation.



  • @edward-foong-pooi-sing

    Of course with monetary policy tightening, maybe it's no longer so attractive in the near future to put into P2P financing for it's rewards/risks ratio

    Do you think the p2p industry might see a downturn with monetary policy tightening? May I please know why do you think so?



  • I don't think the current 0.25% OPR increase will affect P2P by much, if at all but if there are further increases down the road by up to 1% or more (in total), that will definitely affect P2P as well as businesses.



  • @JLHC true. 0.25% isn't very significant.
    But this is also an important to discuss with FS CEO at his AMA. Curious to see what the experts think about this policy tightening.



  • FS & FZ seems to have different positioning. To me, FS is like an Elite, target on Middle Range, FZ is more towards microfinancing, totally different target market. Another active market player B2B seems to focus more on IF in the past and just started their WC financing. Glad to see all players target for different market as it will give the investor variety choice to choose the notes according to their own risk preference.



  • @JJ7102 you are right. Each player has their own niche. But looks like they are starting to intersect though.
    Whats the usual deal size in fundaztic? is it smaller than FS? what is the frequency of notes like?



  • @rajni123 based on my own research source from their web, the deal size is range from RM25K to RM100K. Relatively smaller than FS. What do you mean by the frequency of notes? the frequency of no. of offer per month? If that is the question, I don't have answer, as I just started my research in beginning of Feb 2018. Just for your information, in the month of Feb 2018, they have 12 investment notes for investor to invest.



  • @JJ7102 yes. the number of offers per month. thanks for the information.
    deal size and number of loans seems decent enough. any idea on the default rates? do they give out that information? couldn't find it in their website.

    number of loans seems higher than FS though. might be good for diversification. We can just switch on the auto allocation and be a passive investor. :)



  • @rajni123 I couldn't get their default rate as well. Their statistics did not indicate this. Perhaps still young and yet to have one, as they just launched in July 2017.


  • Contributor

    @JJ7102 @Rajni123 most of the p2p companies in malaysia are still young and have no defaults. But this is the case with almost all good p2p companies. they start out with 0 defaults but as soon as their loan book increases, their defaul goes up. some companies get greedy and increase their loan book size by giving loans to not-so credit worthy companies, but such companies don't tend to survive long.



  • @rajni123 said in People who currently invest in/have invested in P2P financing, what are your top tips?:

    any idea on the default rates? do they give out that information? couldn't find it in their website.

    They haven't had a default, or delayed payment, to date, apparently. This is what they told their investors earlier this year: "It has been 6 months since Fundaztic went live and we are proud to announce that there have been no defaults so far. In fact, all repayments have been prompt. ... Although it is good news ... all investments have risk and investors should expect defaults to happen eventually."


  • Contributor

    But I have to say, having no delayed payments sounds too good to be true at the scale at which they are operating. If it is indeed true, I will definitely consider FZ as another p2p platform in my portfolio.


  • Funding Societies

    Editing this post to make a wiki, with all the relevant answers to the original question. Please find the wiki attached to the title post on top.


  • Contributor

    I would add:
    Diversify your P2P portfolio across different countries AND different currencies (e.g some in EUR, some in INR, some in SGD...)



  • @antoniomc27 yeah a lot of this forum members seem to be investing across countries.
    https://www.crowdfundtalks.com/topic/104/cross-country-investing-with-funding-societies/


  • Contributor

    Most of the people had already raise what to look out for in p2p financing.

    I will like to chip in a few more.

    Make p2p financing a passive income for you but do not make it the only passive income for you. (I put as passive even through there are some work of valuation to be done but these are insignificant when compared to active income.)

    Do not be upset or angry that you had missed out one deal. There are always other deals waiting for you.

    Don't just rely on the statistics that is provided in the p2p platform. Do your own consolidation. Especially if you have more than 1 platform.

    Review your porfolio regularly

    Do not be fearful when you invest. Sure that will be defaults and the chances of you meeting them will be there. Take good note that unless the borrower default in the first payment, it is not likely that you will lose everything. Even in the form of defaults, there are many recovery through restructuring or some will pay up once they start to turn around. The term default is relative. Default loans aren't always the end based on my experience as a loan banker.

    Do manage the size of each loan. If you are losing sleep over 1 loan, you should review the sizes of each loan in your portfolio



  • @rajni123

    Hi everyone,

    below how i would define default rate and i encourage everyone to give your same comments at hello@singaporefintech.org

    define default rate as total amount defaulted over total amount of completed loans (i.e. fully repaid). This would give investors a good idea how much losses could potentially occurred over total fully repaid loan



  • @rajni123 Maybe you can try for B2B Finpal? They offer invoice financing and short term working capital, the max tenure is just 6 months.



  • @loh Hi, may u share which are these 6 operators? Which is the other good one besides Funding Society tat u mentioned? "among 6 Operators, only 2 are good, one is Funding Society."


  • Funding Societies


  • Emergent

    I compare the loan’s effective rate and borrowers default rate (if published). If loan rate minus default rate is below my hurdle rate, I won’t bother investing. Rather put the money elsewhere like equities or unit trust.



  • @jomni For low value PDs, it is a very good approximation. However Quickash also published PDs that are 23.8% or higher! So I use the inverse PD, eff rate should be greater than 1/(1-PD) plus your hurdle rate(not necessarily true as explained later below). For e.g. if PD is 50% (i.e 1 in two loans will fail) and my hurdle rate is 10%, the loans better have an effective rate of 110% p.a!!!. E.g. I invest in 2 loans (PD=50%) with $1000 each and expect 1 to fail, I will expected to get back for expected 1 non-default of $2100(with the other one defaulted) which is only 5% return on the $2000 invested. To cut the story short, hurdle rate is also depending on PD and the above example is only on balloon payments. With amortisation payments and/or longer tenure, it really gets more complicated. My caveat emptor is to learn first how PD works(especially on long tenure loans like Fundaztic) and add some buffer (due to long tenure uncertainty and platform “potential underestimation of PD”), recalculate and invest based on your own results and also “gut feel” of the industry/company/platform due diligence/etc.



  • What's a structured way to strategize?



Looks like your connection to Crowdfund Talks | A Community for P2P Lending & Alternative Investments was lost, please wait while we try to reconnect.