Asked by Anonymous

Is it advisable for newbies with no investment experience to try P2P Lending (e.g Funding Societies)? Anyone using the platform can share their experience (returns, default rates)? Able to recover your capital if there is default?

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    • Gabriel Tham
      Gabriel Tham

      Top Contributor (Jan)

      421 Answers, 749 Upvotes
      Answered on 17 Jun 2018

      As always one must account for the risk involved. In this case of P2P, can you accept that you may lose all your capital?

      When a default occurs, there is a chance you might not get back your capital at all.

      You can check out some reviews here:

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    • Luke Ho
      Luke Ho
      160 Answers, 265 Upvotes
      Answered on 18 Jun 2018

      Horrible idea if you're a newbie. From my experience as an investment specialist offering multiple investment platforms, most peoples declared risk profile is very different from their actual risk profile.

      Losing or winning money in your first investment in a drastic manner could prompt your expectations in that manner. You might take on too much risk at the expense of your loved ones or too little risk at the expense of inflation.

      I usually start my first timers off with a classic, balanced fund with dividends. They can see their money grow and updates are forcibly sent to their doorstep. Once theyre sick of making small money, they can start to explore other options one step at a time.

      It also allows me to take responsibility and prep you on my advice, rather than read it online somewhere and have no one to blame but yourself.

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    Jacky Yap
    Jacky Yap
    8 Answers, 41 Upvotes
    18 Jun 2018


    Yes i think it is ok. p2p lending is run by experienced team who will screen all the loans before they take them in and open the loans to public investors. im not in the p2p business but i think this is the process:

    1) loan application by SME from P2P

    2) P2P platform screens, does audit of the SME's business and determines risk and suitability + loan quantum

    3) If business is sound, P2P approves the loan, if it is a bad business, P2P platform wont approve

    4) Once loan approved, P2P platform publishes the loan and avails it for investment by public investor

    5) public investor can take a look at the summary of the SME, the risk assessment and decides if he wants to invest in the SME's loan.

    So you can choose which business loan you want to back. And you can choose the amount.

    It is also in P2P platform's interest to ensure that the default rate is very low so that investors will continue to invest, because a bad apple will really break investor's confidence in the P2P platform. Funding society's default rate is

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