Investments

P2P Lending

Asked by Anonymous

Updated on 24 Apr 2019

Are P2P lending platforms too risky for a beginner investor ?

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Zann Chua
Zann Chua,
Level 6. Master
Answered on 19 Mar 2019

Hello!

P2P lending generally has a high risk but a high return. As a beginner investor, it is very important to know what excatly you are investing in. In the case of P2P lending it is important to know exactly who you are lending your money to. Choosing which platform to use is also important as each has its own benefits.

Every investment carries risk, just make sure you know what you are investing in.

All the best in your investment !

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Isaac Chan
Isaac Chan, Business at NUS
Top Contributor

Top Contributor (May)

Level 8. Wizard
Answered on 19 Mar 2019

I worked at Minterest, one of the P2P firms previously, and had shared about this on other posts.

Like the others mentioned, I don't think they are too risky, you just need to check with investments products you are lending to. There are basic term loans (your typical loan), to invoice financing or factoring. Term Loans are risker, while invoice financing is much less risky. Some loans also have some collateral tied to it, which means that if the borrower defaults, he will liquidate the asset and pay you back through this sum.

Basically, there is a wide range of investment products to be made, much less the different forms of businesses that you can invest in. Funding Societies also allow you to invest smaller sums of money, even as low as $50, so you can capitalise on that and feel your way through!

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Cassandra Tho
Cassandra Tho,
Top Contributor

Top Contributor (May)

Level 5. Genius
Answered on 24 Apr 2019

Hi there, Iā€™m Cass from CoAssets and would love to give my two cents :) All investments are risky regardless on whether you are a beginner or not. P2P Lending Platforms provides high returns, which of course comes with high risks. Always remember to do your due diligence (i.e. transparency of company, default rates) and only invest the amount you are ready to lose!

Every P2P platform has their own strengths and weaknesses, do some research to find the platforms that are best suited to your needs. For e.g. Do you prefer to diversify across many small loans, or concentrate them on several bigger loans. Other considerations include: the minimum investment amount you are comfortable with (CoAssets Pte Ltd has a minimum investment amount ranging from $100 to $5000)

Hope this helps, happy investing! :)

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HC Tang
HC Tang, Financial Enthusiast, Budgeting at The Society
Level 8. Wizard
Answered on 18 Mar 2019

I think you just need to manage your risk and beginner will be fine too.

1) P2P - High risk but higher return in shorter terms. I invest in Funding Society 2 years ago , no loan default and returns good

My review :

https://seedly.sg/reviews/p2p-lending/funding-societies?rid=12#reviews&utm_source=review_share&utm_medium=internal

P/S: Just need to choose the right platform carefully. Read the review at the above links and also read this summary by Seedly: https://blog.seedly.sg/p2p-comparison/

All the best and start investing šŸ˜€šŸ‘

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Alex Chua Cheng En
Alex Chua Cheng En, Pcme at Anderson Junior College
Level 3. Wonderkid
Answered on 17 Apr 2019

Adding on and reiterate some of the others' points:

Too risky is an overstatement if you just jump in, not even sure what you are doing. As a beginner investor, have you done enough research to reduce and manage your risk? R u comfortable with the risk? And the platform? What do you you do to prevent or reduce defaults? If there r defaults, what actions should you take after that?

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Yong Kah Hwee
Yong Kah Hwee,
Level 6. Master
Answered on 18 Mar 2019

As with all investments, please do your own diligence before investing your money in anything!

P2P lending yields high returns, but the risks are high. You may want to learn how to analyse companies first before investing in anything.

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Patrick Wee
Patrick Wee,
Level 2. Rookie
Answered on 18 Mar 2019

There isn't any "safe" investment, invest in the amount that you can afford to lose. In fact P2P has very high risk of default and one default you need many others loan to breakeven.

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