Asked on 22 Feb 2020
What are the pros and cons of using Funding Societies? Is it a worthwhile investment? What kinds of investors would benefit the most from their services?
You have to create an account, get yourself verified.
Once done, you will see available investment from time to time.
Deposit an amount that you are comfortable with.
P2P lending is a high risk investment.
You may choose to read every single factsheet for each opportunity then choose to invest.
Or generally I think most people like me just set an auto invest rule.
There is also a guarantee return investment option. Where it is guaranteed by funding societies, lower risk but lower returns as well. (About 4%)
I will to the main question.
Worthwhile? This is defined by you based on risk level, your playing level (capital willing to invest) and the knowledge of the p2p business model.
So is it worth while to you?
Every investors can benefit from the platform as long as they have done their due diligence and are comfortable with the risk involved in p2p lending.
I will just give some advice on optimising p2p.
Autoinvest. This will guarantee yourself securing the loans. You can also set your comfort level and your amount per loans.
This will decide your loans portfolio and project your annual returns
I will recommend setting a limit to each borrower. Then be discipline to follow your rule. Most recommend putting not more than 2% of your capital per loans so that u can cushion the defaults.
E.g capital $1000. Avg annual interest :10%
Interest earn $100. If u put $20 per loan, u can forgo that possible 5 defaults. If u put $100 per loan, u can forgo 1 possible defaults.
To answer your last question, what kind of investors will benefit from the above service?
The most discipline one.
discipline to understand the p2p model
discipline in your risk methodology at p2p lending investment
discipline to understand and decide your loans
discipline to enquiring doubts on the loans
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