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?

Question

Jacky Yap · Accepted Answer

hello!

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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:

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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.

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

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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 <2% overall so is actually not that bad.

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For me, ive been on Funding society for almost 1 year now, no defaults so far. Returns should be around 7-9% after deducting the fees by funding societies.

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Overall experience is not bad, would personally recommend it for investors with medium to high risk profile. :)

Gabriel Tham · Answer

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

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

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You can check out some reviews here:

https://seedly.sg/reviews/p2p-lending

Luke Ho · Answer

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.

Alex Chua · Answer

Everyone is once a newbie. People learnt from mistakes then started getting better. If not, worse. 
I would not give you answer to your question but would like to ask you to ask yourself question:
How much are you willing to pay and prepare to lose in P2P Lending? 
Why do you choose to look at or even want to try p2p lending? 
How much have u researched on p2p lending?
Is it regulated? 
Are you comfortable with the platform?
Is there any measures the platform do to avoid default? 
What do they do in an event of default? 
Most importantly, what do you do in an event of default and after that? Are you prepared for the risk and even reduce those risk?

For your last question,  think that is unlikely and it is mostly highly unlikely

Zann Chua · Answer

Hello!

I personally do not think that it is advisable for newbies with no ecperience to try P2P lending. P2P lending carries very high risks, so if you do not have experience, it is likely that you may end up making large mistakes when it comes to choosing the company to loan your money to. This will result in a high chance of you losing very large amounts of money.

I personally think that people with lesser or no experience who want to try investing should invest in areas that are of lower risks, such as investing in the Singapore Savings Bonds.

RT1976 · Answer

Speaking from experience, I would sugget saying away from P2P for now.

If it was a booming economy, i feel that it may be worth exploring. In view of the bad market, who knows long covid will last? And if covid lasts for an extended period, you need to ask yourself whether those companies will be able to pay.

Aaron Leow · Answer

No. I would avoid it. Go for Roboadvisers instead.

Amber Poh · Answer

I am researching the market. But i think it is quite tough right now.

With GDP droping and so many people saying that the worst is yet to come, I am not really sure if businesses can survive this market - let alone repay the loans.

I'm sure a lot of the more experienced investors may say otherwise, but maybe its good to give this a miss for now. I will probable hold cash or invest in the stable stuff - like savings or insurance plans :-)

Funding Societies Singapore · Answer

**Hi there, sorry for our delayed response as this question just came to our notice. Our response time on live chat and email is usually prompt!**

**Firstly, thank you for your interest in a platform like Funding Societies. While we can’t comment on whether or not our offerings are right for you, we would like to share with you that our investments start from as low as S$20. Interest rates and tenor range from 2-18% and 1-12 months respectively, depending on the product.**

**Our overall platform default rate can be found on our statistics page **[++**https://fundingsocieties.com/progress**++](https://fundingsocieties.com/progress)** and our Singapore default rate can be found here **[++**https://fundingsocieties.com/progress/singapore**++](https://fundingsocieties.com/progress/singapore)**.**

**For low risk investors we have the Guaranteed Returns Investment and Guaranteed Property-backed Investment products where both principal and interest are guaranteed by our sister company Funding Societies Capital. To date, repayments for these 2 products have always been prompt. Although these are low yield products, they are also less risky.**

**The Property-backed Secured Investment product is also relatively low risk. It has a property that the issuer pledged as collateral with us having 1st charge on it. In the event of a default, we would have the 1st rights to the sales proceeds when the property gets liquidated to recover the funds for our investors as well. To date, we’ve yet to have any defaults under this product.**

**Our term loan and invoice financing products have higher interest rates but tend to be riskier.**

**We hope that the information is helpful in your investing journey. Please feel free to start a live chat with us at **[++**https://fundingsocieties.com**++](https://fundingsocieties.com)** or email at **[++**invest@fundingsocieties.com**++](mailto:invest@fundingsocieties.com)** if you have any further queries.**