Dilemma of Investing



  • So much for exponential gains! Have been investing in crypto for quite some time now, but with threats of a trading ban in South Korea hovering dangerously, and the tightening of regulations elsewhere, I’m honestly reconsidering my options.
    Heard that alternative financing is increasingly gaining traction all over the world and some of the more popular ones include Capital Match, Crowdo, Funding Societies etc. Any take on this anyone?


  • Funding Societies

    Its better to always diversify your portfolio rather than just investing in crypto and waiting for exponential gains.
    Please read up on alt finance. its gaining steam in south east asia. the forum is always responsive in case you have any questions regarding alternative finance or p2p lending.



  • I use FS. I don't have any plans yet to use Crowdo and Capital Match. P2P lending is a risky business. Mathematically, it would only take one default to jeopardise gains from 20-30 'good' loans. Diversification is a must, but setting it up properly takes time, patience, and a degree of trust on the loan originators.



  • Crypto, Miner Stocks, Paper Gold, Inverse S&P ETF and Gold Silver ETF are "Insurance" of the investment, they should not be considered as investment itself or worst mistake people will make is treating them as investment to achieve financial goals or freedom. And as 'Insurance' of the investment, it is best to keep only not more than 5% of your total investment portfolio.


  • Funding Societies

    @Loh interesting to see you put Gold Silver ETF's in the same genre as crypto. Historically, I haven't been privy to a Gold Silver volatility like what we are seeing in crypto now. They are rather stable. And one of the biggest concerns of crypto is its a bubble and there is a chance all your investment goes to zero. which I don't think is the case for Gold and Silver. Can you please elaborate on your thought process for the above. Thanks a lot. :)



  • @vamsi7 Yes. Crypt had changed over time that I should not classify in the same category with rest anymore. You are right that Crypto today is too volatile and it didn't follow the reverse trend of currency and economy growth that it seems to separate itself from both fundamental and technical aspect, making it not suitable as 'insurance' for our investment anymore. Crypto had been manipulated by few buyers and sellers to push up its worth beyond actual and demand, mimicking Tulip Mania. Comparing Silver and Gold ETF, Silver ETF will be slightly more volatile than Gold, as Silver is also a industrial metal used in many electronic goods. The increase of Silver price will push up many cost of electronic goods and countries, banks and everyone here will not like to see that, thus Silver price is expected to face more hammer than Gold to the lower value than actual at all time by too many parties. While Gold is basically just as value to back up a country's currency, the quantum it is hammered down is lesser and only by bullion banks to control their currency. With the expectation of USD weakening in 2018, Gold ETF and Gold Miner Stocks could be a better choice as the 'Insurance' to our investment.



  • @evenu yes, definitely. All forms of investment carry with it a certain degree of risk and it is up to the investor to see how best they would like to minimize that risk level. However, do you think that it can actually be a good form of investment (apart from traditional investments such as in stocks etc)?



  • @vamsi7 and yes, Crypto and as well as Inverse S&P ETF (esp 3x) may go down to zero value, while Gold and Silver ETF will never go down to zero.



  • @khoo-chuyi

    However, do you think that it can actually be a good form of investment

    This is a very subjective topic. Also, good form of investment can mean different for everyone.
    I personally think that crypto has a lot of potential to disrupt currency as we see it now, and am willing to bet on it. With me, It is more believing in the concept rather than just investing in it.

    But crypto can be good to make some quick bucks, but you need to know how to read the market, ups and downs and be ready to spend some energy and time on day trading.

    Or you can also consider just buying and HODL. :D



  • To know if one investment vehicle is good for you or not, you need to first very clear about your financial goals and timeline to achieve these goals, followed by setting the annual return % that you need with your available capital, then set the KPIs of the financial indexes of these investment vehicles (ie if REITs then may be Dividen must be >7.5%, PE must be <20..etc).

    P2P probably a good investment for you (taking aside the capital issue) if:

    1. You aim more than 10-12% annual return
    2. You can't wait more than 5 years to get your money back
    3. You don't mind that you cannot liquid the fund in 2-3 years after putting in
    4. You had studied the strategic method to invest in P2P (REITs, Stocks, Unit Trust all have different methods)
    5. From 4, you had set the KPIs for P2P Opportunities (eg Return, Duration, Finance Type, Business)


  • You aim more than 10-12% annual return

    I am skeptical that you can earn a 10-12% annual return yet in p2p. We need to have more loans so that there is no idle money sitting in the accounts. If there is money which is not being loaned out, your overall returns(%) goes below that of what is shown in the loan opportunities.

    That being said, I don't see any other investment vehicles providing more than 10-12% return with as much liquidity as p2p.



  • @jonhan There is where my point number 4 comes in.


  • Financial Bloggers

    @jonhan 7 months in, 7.3% return (excluding service fee). It's all about the reinvesting and diversifying.



  • @Loh @bursagoinglong

    You had studied the strategic method to invest in P2P (REITs, Stocks, Unit Trust all have different methods)

    But a strategy needs opportunities to work. If there is only one or two opportunities per week, I am heavily limited on amount of money I can invest. I think for smaller amounts like 2k-3k RM, you can achieve the return of 10%+, but if you want to invest like say 10k RM+, I don't think you can sustain that 10% + return.



  • @jonhan Yes, that I do not disagree. Crypto is indeed the in thing now and many people are jumping onto the bandwagon (however, this may not be for those who are amateurs). Furthermore, it can be seen that the price of crypto is very much at the mercy of regulations imposed by countries with large number of traders. Regulations have not caught up with the pace at which the underlying tech of crypto is growing.

    On the other hand, for P2P lending, from what I’ve read as well as heard, it is an investment which is safer as the P2P company itself would have personally sieved through the list of borrowers to see which are the ones which fit their guidelines. Based on this alone, the risk exposure for investors has already been minimised.

    For now, P2P lending seems to be the next in thing other than crypto and in my opinion, probably safer too given that there is already a regulatory framework in place. In this case, i would like to think that the concept of P2P lending safeguards the interest of investors better. Not sure if you actually share my sentiments on this



  • @khoo-chuyi The process you mentioned which is carried out by P2P Operator is " Due Diligence".



  • @jonhan Why having huge amount of fund to invest will not get the similar return? You can just invest more (more or less of course is quite subjective in different people) in one Opportunity offered, and if the Opportunities offered by one P2P Operator is limited that does not give us enough spreading or diversification, there we can have another 5 remaining P2P Operators to choose from. I currently have a total of 58 Opportunities or Deals are on-going, and with only little amount of fund in idle status, in various P2P Operator platforms.



  • I currently have a total of 58 Opportunities or Deals are on-going wow thats a lot.
    what are the five? so far I know FS, B2bfinpal, Fundaztic.

    with only little amount of fund in idle status - How do you manage this. Do you only deposit when there are loan opportunities available?
    Thanks in advance.



  • @jonhan

    1. P2P Operators: https://www.sc.com.my/digital/list_rmo/

    2. Just set the Auto Invest or Smart Invest mode, with the KPIs you set for the Opportunities available. It is not our job to decide if the borrowers are genuine or not (due diligence) , that is P2P Operators job that we are paying the fees. You set your KPIs which Opportunities to be auto-reinvest by Return%, Duration, and if any types of business you do not want to support. After that, let the money working for you and spend your time doing the things you like, choose to be investor rather trader.



  • I think should stop investing in bitcoin try to find out the china digital currency. This currency is in testing stage, maybe it will be release soon



  • It is unlikely China will allow any form of currency or trades that the China government cannot control, they do not practice free market as in US.



  • @Wongsaihoe which currency is that?

    Agreed. China is a walled garden.



  • @loh yes, i'm definitely with you on this. China is built on the fundamentals of communism and it is highly unlikely that they would be open to currency trading as this would undermine the government's control . There have been news of China's central bank developing its sovereign currency. However, this still very much appears to be in the pipeline, at least for now. Some countries do have similar plans as well



  • There are good chances china will develop its own digital currency.
    Even though they banned bitcoin exchanges, and shut down ICO's, the central bank, meanwhile, has set up a special institute to study digital currency, and Zhou Xiaochuan, its governor, told a press conference in March that the central bank encouraged the development of technologies such as digital currency and blockchain.



  • @jonhan they have a track record of employing such strategies. They ban outside companies like FB, Twitter when they start becoming big, and instead they focus on building their own companies to solve that gap. No reason why they would let foreign cryptos dominate in their market. I think we will see a china based digital currency sooner than later.



  • @loh Thanks for the above details.
    I am planning to start small and configure my auto investment to invest in minimum allowed in every loan. The way I see it, I can achieve max diversification possible in this way.
    Let me know if there are better strategies.
    Also, which kind of loans do you tend to avoid?



  • @khoo-chuyi In Unit Trust, I only pick Syariah complied as not much trust I hold (just for kids education plan), for Stocks, I avoid technology, gambling and alcohol business. For P2P, I don't set any restriction from the options given by the P2P Operator, for P2P, I am more particular on the length of loan (not more than 24 months) and return of at least 9% (before compounding).



  • @khoo-chuyi Auto invest doesn't guarantee you can invest into every loan. May be 1 in 3 loans that go up on the platform.

    @Loh interesting to see you avoid tech stocks. why is that? I believe tech companies have a bright future, as technology is ingrained into every aspect of our lives. All the legacy businesses will be taken over by technology companies soon.



  • @jonhan I avoid tech stocks because the performance trend of the tech stock moves too fast that I can catch:

    The trend (price going up and down) is faster than others because:

    1. The technology evolve very fast, eg Nokia, one should not surprise if Apple can just go bankrupt due to stiff competition from new upcoming tech companies, even Tesla can be beaten badly by small and new driverless car start-up in China.
    2. The cost of technology parts and products is always going down, in away good but another not because you have to sell the products at lower price, and easier entry for your competitors because their cost of products also cheaper now, they can drive Proton but you want to drive Bentley.
    3. Technology has no loyal customer base despite Apple can be slight different from others, but current price is too high compared to company worth.

    I read Warren Buffet also avoid tech stocks (except Apple stock he said not consider tech stock due to customer loyalty and value positioning).

    Lastly, because I am more on value investor rather trader, so I tend to avoid stocks that the price can move to fast and can;t hold for long eg Tech as well as SmallCap stocks.



  • @Loh I think avoiding tech stocks all together might not be a good solution for the above problem.

    Some companies have evolved into making very sticky products. Case in Point: amazon and apple.
    They build moats to prevent easy entry to competitors into their eco systems.
    When all is said and done, companies like tesla (or smaller startups which you mentioned) will beat GM, Volkswagen and other incumbents, as they can't innovate at the same speed as the tech companies.

    So, I think its more about trying to choose the right tech company to invest in long term, rather than avoiding them all together.
    Just my 2 cents. :)



  • @jonhan Ya not wrong to invest in Tech stock, just that one may need more time to study in details which stock and more regular monitoring. I wish I could have more time, but have to work as well.



  • @Loh yes. agreed. its becoming harder for people to keep monitoring their portfolio, especially given there are so many assets like cryptos, tech stocks, etc. have you tried robo advisors? they might be able to help with some of the monitoring issues.


 

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