SeedlyTV: P2P Lending Showdown

In collaboration with Seedly, Minterest along with three other P2P lending founders from Capital Match, CoAssets, and Funding Societies were gathered all in one room to give more context on the industry and how consumers can consider investing in the SME loans space.

The viewers were able to ask questions while the speakers answer them LIVE during the video session. They sat down to answer burning questions like “How does it work? Is it safe?! Why don’t the P2P companies raise funding from venture capital or angel investors to put into the P2P loans?”

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In a nutshell, these are the topics that were covered during the LIVE streaming:

  1. What is P2P lending about and how does it work

  2. Pros and Cons of P2P lending

  3. Risks involved in investing via P2P lending

  4. How safe is P2P?

  5. LIVE Q&A

Below are some snippets from the P2P Lending Showdown that was held on 27 June 2019.

Here we have our co-founder, Ronnie introducing Minterest!

He also shared about our Minterest story and how we have come this far. 😊

You may be also wondering what sets Minterest apart from the other P2P lending platforms. One of the questions that he answered during the LIVE streaming was “There are so many platforms to choose from. What is the main feature that sets you apart from your competitors?”

Many thanks to Seedly for organising this information session on P2P lending, and to all viewers who have asked insightful questions.

If you have missed the show, fret not, as you can still watch the full LIVE video session here.

Don’t forget to follow us on social media to keep up to date with the latest news and see what we’re doing.

p2p lending p2p lending p2p lending Instagram

NOTE: SeedlyTV is a series which will be covering topics in personal finance via LIVE video and Q&A on the Seedly platform.

What Is Crowdfunding?

Crowdfunding combines the best of crowdsourcing and microfinancing, bringing together various individuals who commit money to projects and companies they want to support. It’s a young and quickly growing market and it’s transforming how people behave with their money. It’s also transforming the ways businesses raise capital.

Massolution’s Global Crowdfunding Report expects crowdfunding to become a $300 billion industry by 2025, but in many ways, crowdfunding is just getting started. The same consulting firms expect the industry to grow at a compound annual rate of 100 percent over the near term.

So what is crowdfunding? There are a few primary categories.

Reward-Based Crowdfunding

Crowdfunding is synonymous with rewards-based sites like Kickstarter and Indiegogo. With reward-based crowdfunding, people can pledge money to a new creative art project, a novel technology product in development, or to a music artist producing a new album.

The smartwatch Pebble made the tech industry take notice when it received over $2.6 million in only three days of active crowdfunding on the popular crowdfunding site, Kickstarter.

Peer-to-Peer Lending

Ever loan money to a friend or a kid? New crowdfunding platforms like Lending Club enable borrowers to get access to funds outside of traditional banking channels. People willing to take a little risk to lend money to other individuals can create whole loan portfolios at the click of a button.

Lending Club, which is the 800-pound peer-to-peer lending gorilla, is literally lending billions of dollars every year. Prosper is a top player in this arena, too.

Donation-Based Crowdfunding

Dr. Muhammad Yunus won the Nobel Prize in 2006 for his work in microfinance. Rather than relying on charity to support the working poor, Yunus’ Grameen Bank gives small loans to local entrepreneurs to help fund things like short-term inventory.

Combine microfinance with online crowdfunding and you get sites like Kiva.org, which has been funding small business owners in emerging markets for over a decade, and GoFundMe.

Equity Crowdfunding

The smallest slice of the crowdfunding pie, equity crowdfunding nonetheless offers the most potential to change the way individuals invest their money. Equity crowdfunding enables real investments in private companies.

The equity crowdfunding space AngelList is building what many call the Android of venture capital while other firms like CircleUp and OurCrowd are more like online venture capitalists that provide investors with access to invest in startups with as little as $1000. FundersClub is another big name in equity crowdfunding. Full disclosure—I’m a partner at OurCrowd.

Real Estate Crowdfunding

Entrepreneurs have identified an opportunity for crowdfunding real estate. Each real estate crowdfunding platform seems to take a different approach. Some are crowdfunding loans to buy properties or provide mortgages to buyers of real estate.

Mosaic crowdfunds solar energy projects. Other top players in this area include Fundrise, Realty Mogul, and Crowdstreet.

Human Capital Crowdfunding 

Interested in investing in top athletes? Crowdfunding makes that possible. Earlier this year, Fantex made waves when it announced that it would be IPO-ing investments that track the brand value of top sports stars. Need money for college without piling on debt? Would you trade a percentage of your lifetime earnings for paid tuition today? Built by former Googlers, Upstart lets you crowdfund your education.

There’s no doubt crowdfunding will see many different faces as entrepreneurs and individuals who support them experiment with the future of business finance. We’re just at the beginning.

 

This article was contributed by the balance small business.

Learn the 5 Golden Rules of Master Investors

Over the years, master investors like Warren Buffett and Peter Lynch have served as role models and inspiration to people to invest wisely.

And i can’t help but notice a few winning habits which are similar to different legendary investors out there.

If you wish to emulate their success when it comes to investing, it pays attention to practise these 5 Golden Rules:

  1. Do Due Diligence

Peter Lynch once said that “One should not invest in something that he/she does not fully understand.”

Before pulling-out money from your pocket, you should do your homework on the company you are investing in. Take for example – Old Chang Kee.

As a curry puff lover, I frequently patronize Old Chang Kee stalls in the shopping mall. However, when i check out their financial results, they do not paint a good picture as profits are ‘eaten’ up by the increasing rental costs.

  1. Invest in Quality Companies

Why would someone not choose to put his money in good companies (aka. bad companies)? This is due to various reasons like predicting what the market will do next or thinking that the beaten down stock has hit a trough and rebound soon (e.g. my favourite stock – noble group).

As per the Arborinvestmentplanner, quality companies demonstrate characteristics like

  • Good management
  • Strong balance sheet
  • An enterprise lifecycle on the upswing
  • An economic moat
  • Sound dividend policy
  • Stable earnings and
  • Efficient operations.

Most importantly, you should hold good quality companies over the long run; which brings us to the next point.

  1. Invest for the Long Run

Question: Guess the probability of you making losses if you held STI over the past 20 years?

Answer: 0%. Yes! You will not lose money, in fact, history has shown that STI Index returns a total of 8% (inclusive of dividends) compounded annually over the long run.

That is why master investors like to dig deep into their thesis and will hold them for the long haul. It prevents them from guessing where the market is heading in the short run and allows them to think in the long run.

weighing machine

This is also how the disciple of Benjamin Graham, Warren Buffett always seem to pick undervalued bargain stocks when everyone else is running away in fear.

Indeed, one should not depend on market timing wherein investors invest somewhere near the bottom of the market cycles and then get out when it is near the top. Money flows up and down that it is why what should one consider is investing long-term instead.

  1. Own Unique System

Every Master Investor has developed and tested his own personal system for selecting, buying and selling investments. Be it Warren Buffett, George Soros or even Jesse Livermore (legendary trader), they have become millionaires/billionaires after investing successfully using their own system.

Buffett aims to buy a dollar of value at a bargain price with margin of safety. His criteria for investing can be summed up as: Quality business at the Right Price.

On the other hand, George Soros aims to profit from a change in Mr. Market’s mood. He bases his investment decisions on a hypothesis about the coming course of events – Just like how he broke the Bank of England with his $1 Billion bet against British Pound.

How about you? Do you want to create your own winning system on how to choose, buy and sell stocks?

Click on the link here and download a FREE 10-step guide to create your own winning system.

  1. Learn from mistakes

learn from investing mistakes

Last but not least, as an investor, you will be facing mistakes all the time. Selling a winning stock too early, Buying because your friend says its the next big thing and much more.

Even the Oracle of Omaha, Warren Buffett makes mistakes. Big ones in fact, due to his behemoth empire under Berkshire Hathaway. Here is an excerpt from the Guardian – Billionaire investor Warren Buffett has admitted that “thumb-sucking” over selling his Tesco stake cost $444m (£287.6m), one of the biggest losses in his investment company’s history.

Hence, it is wise to document down your mistakes and learn from them. Just make sure you emerge better than before.

 

This article was written by James Yeo.

6 Mistakes You Commit In Your 20s That Affect Your Credit Score

The decisions you will take in your 20s can have a significant impact on your personal finance at a later stage. Read on to know about the mistakes that can be avoided in this age bracket to have a healthy Credit Score.

The twenties is an ideal age to decide the course of your financial goals. This is the best time to pick up investments that yield good results at a later stage or buy a Health Insurance cover at a lesser premium. Hence, the decisions you will take in your 20s could have a significant impact on your personal finance and this includes your Credit Score too. A healthy credit score can help you bag the best deal in terms of loans or other financial transactions whereas a low score may affect your loan possibilities. So for people in this age bracket need to be aware of the credit score worthiness and the mistakes they can avoid to keep their credit score healthy.

No Debt = Good Credit Score

A common misconception among most first-time or young professionals is that no loans or debt can get them a good credit score. This line of thought often leads them to make cash purchases and keeps them away from Credit Cards. For credit rating companies like CIBIL, no loans/debt actually equals a bad credit score. Since the credit score of a person is rated based on their historical ability to pay off a loan, the absence of any credit history stops companies from determining whether you have the capacity to pay off a loan.

Applying For Too Many Credit Cards

While having no debt may not get you a good credit score, applying for too many credit cards can also have a detrimental effect. Whenever you apply for a credit card, the company sends an inquiry to CIBIL asking for your credit history. When CIBIL notices that there have been multiple requests within a short span of time, they’ll identify you as a person who has a lower ability to make payments and hence requires multiple lines of credit. So, do not fall prey to the lucrative offers from credit card companies and avoid applying for multiple cards.

Closing Your Credit cards After Repayments

Millennials often use credit cards for big purchases like buying home electronics or automobiles. After they pay it off, they make the mistake of closing the cards, which can affect the credit history. A healthy credit score will typically have a long-term credit history. Closing the card relinquishes that record and lowers the average credit score despite timely repayments and clearing off the debt. So, it is better to retain the card even after paying off the debt.

Being A Guarantor For Someone’s Loan

We often make emotional decisions when we’re young. Being a guarantor for a friend or relative is one of them. When you sign up as a guarantor, you become responsible for repaying the loan in case they default. If you’re unable to pay off the loan, your credit score is bound to be severely affected.

Living Off Your Credit Card

In your early and mid-20s, when you’ve just started to get that taste of independent life, you’re likely to be a spendthrift. Your purchases are often based on your credit card limit and you tend to forget about the repayment clause before the due date. In case you fail to make the payments, your credit score will drop. But even if you do pay up on time, it’s still likely to indicate that your lifestyle is debt-heavy and can affect your credit score. You can control your unnecessary expenses and prioritise your spending based on your needs.

Late Payments

Missing EMI payments or credit card payments will not only attract late fees and interests but also adversely affect your credit score.

For youngsters in their 20s, it is important to enjoy life along with making financially sound decisions that can help them throughout their life.

 

This article was written by Adhil Shetty.

Saved S$100,000? 5 Investment Options to Make Your Money Grow in Singapore

If you are reading this article, the chances are that you have already saved up S$100K or are very close to the number, so congrats! At the same time, it has to be considered that in an expensive country like ours, S$100K may not stretch too far on its own. What with rising GST also on the anvil, things are bound to get tougher.

To put things into perspective, this amount will just be enough for a downpayment of a loan for a 4-bedroom resale flat in central Singapore. However, S$100K as a ready-to-invest corpus is still a very sizeable sum to add to your long-term life savings and goals.

Two tips to remember when thinking about investing your money

#Tip 1: Build a diversified portfolio

To maintain healthy finances in this volatile financial world, you need to diversify your investment portfolio. Your appetite for risky investments should inversely correlate with the amount of grey hair at the time of investing! So make sure your portfolio consists of low-risk investments, medium risk, and high-risk instruments like stocks, exchange-traded funds, cryptocurrencies, etc.

#Tip 2: Factor in compound interest

If you want to see your money multiply, know that compound interest is your best friend. Simply put, compound interest is when your interest from investments generates further interest. Who wouldn’t want to make money out of money they don’t even have? To see this in action, you must take a long-term view of your investments, and hold it for a very long period of time (decades).

Now that we’ve covered some basic tips about investing, here are some investment options you should consider to make the most of your S$100K savings.

Ok, disclaimer here: You don’t actually need $100k to begin investing in these options. You can start even if you have only S$500.

1. Singapore Savings Bonds (SSB)

SSBs are Singapore government-backed securities that offer you a low-risk way to grow your money, albeit slowly. With SSBs, this is as safe as it gets. SSBs are ideal for the risk-averse, guaranteed-return-seeking investors. We don’t recommend putting all your money in here, since the return isn’t very high. But what makes them attractive is that unlike other instruments, you are not penalised for withdrawing anytime during your investment.

Here’s a possible idea: If your savings in your high-interest savings account have maxed out the limit for bonus interest, and you’re thinking of waiting for the next market correction or bull market before you enter, consider putting a small sum of money into SSBs. When the market corrects, use your cash first, and you can liquidate your bond investments within a month. At the very least, your money won’t be left idle.

Read more about SSBs here.

2. CPF Special Account:

If planning for retirement is one of your goals, then this is the choice for you. CPF Special account is as safe as SSBs but guarantees a higher return (up to 5% vs 2.4% for SSBs). The only caveat, however, is that you cannot withdraw this money till you turn 55. So, know your end goal.

Find out how to make top-ups to your special account here and you can also get tax relief when you make top-ups to your CPF SA.

3. Straits Times Index, Exchange Traded Fund (STI ETF):

Designed for those who are moderately risk-averse and would like to include some high performing shares in their portfolio. The simplest way to understand this is that STI ETF tracks and invests in the top 30 best-performing stocks on the Straits Times Index in different levels of allocation. The benefit of an STI ETF is the diversity it provides along with the high-quality, high-return stocks. The two primary funds to invest in are SPDR STI ETF and NIKKO AM STI ETF.

4. S-REITs: Singapore Real Estate Investment Trusts

Given Singapore’s small size, increasing population, and business-friendly nature, the property market will always be in demand for the foreseeable future. While S$100K may not be enough to buy property in Singapore, it is still sufficient for you to invest in property. REITs allow you to invest in various types of real estate investments like malls, offices, hotels etc.

These investments typically tend to give a higher return than safer investments but are also tied to the volatility of the economy and property market. Do you research carefully to select good performing REITs and REITs with potential.

Get updated S-REIT data from The Fifth Person here.

5. Robo-Advisors

If you believe that robots can outdo humans at certain jobs, then read on. Robo advisors are algorithm-based investment advisors. They are the ‘Siri’ of investing. Robo-Advisors ask you a few questions to gauge your risk appetite and goals, crunch the numbers, and recommend a customised portfolio. Also, Robo Advisors charge much lesser management fees than traditional services like mutual funds and brokers. Popular ones in Singapore are StashAway and AutoWealth.

There are many ways to invest your money and grow them, and these are just a small number of options. Regardless of which way you prefer, bear in mind that money that doesn’t grow will simply be eaten away by inflation. Start thinking of how to grow your money today for a more secure future.

 

This article was contributed by BankBazaar.

Money Sitting In Savings Account? Time To Start Investing!

When it comes to personal finance, most of us usually lock up all our cash in a Savings Account. Even the well-paid lot are averse to investing, keeping their money stashed away in a Savings Account.

Though keeping one’s money in a Savings Account is a safe option, it will earn very little interest compared to the other options. The returns usually are not even enough to beat rising inflation rates. In that case, why aren’t these high-earning individuals not opening up to investments?

This mentality could be due to the surplus investment choices out there. It is common for people to avoid making a choice when there are a lot of options to choose from. The reason is that they don’t want to end up making the wrong choice.

Also, most people are afraid of making mistakes. What if they make an investment and later realise that there was a better option? Therefore, some people feel that it is better to let things be as they are. So, they let their money lie in the bank even if it is not earning much. At least it is not losing value because of any investment error.

Who is most affected by this syndrome?

Well, the people who fall in the age group of 40 to 65 years (Source: Economic Times). The rise in incomes, that we see today, is more of a recent occurrence. The people that fall in the above-mentioned age group may have been born and brought up in a rather inflated and deprived environment.

But today, people have access to a lot of wealth – many earn way more than they can spend. Yet, they are still not open to the idea of investing. They still maintain a conservative stance when it comes to spending and investments. Everything boils down to confidence and caution.

So, what should people do to get rid of their fear of investments, build confidence and practise caution at the same time? Here are a few quick tips to follow:

Past is history

Investment mistakes you have made in the past should not determine your present decisions. If you are still working and retirement is not anywhere on the horizon, then you still have a lot of time to make up for past mistakes and invest and grow your money.

How to get started? First, choose an investment intermediary to help you with your investments. There are a plenty of options, like automated ‘robo’ advisors, personal advisors, tech platforms, Internet operations through your bank, etc.

No complications, please

Your investment decisions should not be complicated. Out there, people are going to tell you that you must set your goals and invest in a variety of products each dedicated to a specific goal. But, it is better to un-complicate things and start by focusing on just one goal – to grow your wealth that is parked in your Savings Account at a rate that beats inflation. If you manage to do this, you will be able to fund all your other goals easily.

Typical formulas don’t work for everyone. For example, if you already save half your income and have more than enough money in your bank to buy a new house, then you will just have to focus on growing the money in your bank by investing it wisely. You get the drift here, right?

Annual plans

Create an annual investment plan for yourself. At least four to five investment products should be a part of this plan. If you are not confident enough to make this decision, you can always take the help of your investment intermediary – financial advisor, banker, broker or platform.

Make sure that you nag your intermediary for thorough information about an investment. Don’t forget that you are paying them to do this job. Apart from that, you’ve got to do your own research and make comparisons if you don’t want to end up investing in dud products.

For example, when it comes to equities, you need to check the long-term performances of funds rather than just the immediate performances. Make your decision only after considering and carefully analysing the investment product.

Also, you need to review your plan every year (that’s why it is called an ‘annual plan’). And do not hold more than 10 different products in your portfolio at a time.

Consistent investments

Now that you have already chosen the best investment products, stick to them. You may be tempted by new products with big promises. Or your funds may not be performing very well. But, always remember that you had chosen these products after much deliberation.

So, don’t give in to the temptations and stick to your plan, as long as it makes financial sense. Consistency matters!

Nothing new

If you think that a particular new investment product is worth considering, you can think about it further during your annual review.

Whenever any new product hits the market, it will come with a lot of promotion, advertisements and public discussion. Don’t let these get the better of you. Rather wait till the product proves itself in the market and only then should you consider putting your money in it.

On a final note…

Money lying in a Savings Account isn’t going to help you build wealth. If you want to grow your money, you need to invest in the right products. Investments may seem scary at first. But with a little caution and the right help, you will be able to get rid of your fear and become a pro-investor. All the best!

If you want to get started with your investments right away, sign up as an investor on our website now!

 

This article was contributed by Sanesh Mathew.

What is P2P lending and borrowing: All you want to know about Digital marketplace for loans

Peer-2-Peer platforms offer access to first-time loan applicants, small business owners or SME employees to get credit on easy terms when required.

In layman’s terms, Peer-2-Peer (P2P) lending and borrowing is like a digital marketplace for loans. Hence usually it is known as ‘marketplace lending’ or often gets confused with crowd-funding. Instead of applying for a loan with a bank, NBFC, private finance company or any other loan institution, you can request a loan from regular people like you and me (therefore, the term Peer-2-Peer).

Most of these loans are unsecured for a large number of people who are underbanked or thinly banked. Most of the financial institutions stay away from giving loans to first-time loan applicants, small business owners or SME employees, women or people living in negative pin-code areas. Peer-2-Peer platforms offer access to these very groups of people to get credit on easy terms when required.

The actual logistics of Peer-to-Peer can be a little more complicated in India, but some platfoms like ours allow the borrower to download the app, fill the application form and apply for the loan. As a borrower, you have to fill a quick online registration form and pay the upfront registration fee which is refundable. Then proprietary credit assessment is done and a brief commentary of why you want a loan is shared with the lenders. The app requires the loan applicant to submit bank statement, upload basic KYC documents like PAN card, Aadhaar card etc. The proprietary algorithm assigns the loan interest rate and tenure to post the loan on the marketplace for lenders to assess and invest.

Lenders on the Peer-2-Peer marketplace are able to browse loan requests of multiple applicants. Each loan request offers relevant information about the borrower to the lender such as income, credit history, reasons for loan etc. If the lender likes the loan applicant’s profile then they can fund a certain portion of the loan. Partial funding enables lenders to diversify their investments and hedge potential risks. Once the transaction is completed, the loan applicant repays the loan in the form of equated monthly installments or popularly known as EMIs.

Is Peer-2-Peer Loan for You?

P2P lending and borrowing is not for everyone. Like any other financial investments, it has its risks and payoffs.

A major benefit of taking a Peer-2-Peer loan in India is that it is paperless, transparent and fast. The rate of interest is traditionally lower than NBFCs or other finance companies. The application process is faster and convenient with minimal documentation. Platforms like this perform a soft credit check and allow the borrowers to explain the reasons that led to a bad credit in the past. As long as lenders show confidence in the borrowers’ ability and intention to repay the loan, the borrower will get the loan. These loans are given without collateral based upon the creditworthiness of the borrower alone. However, the borrowers cannot expect a guaranteed funding. They can attract penalties if the EMI repayments are late and attract huge payments in case of a default.

Lenders on the Peer-2-Peer platform in the past few years have seen an average return between 12% and 18% annually. Also, it is a form of passive investment tool that offers great returns against the cash parked in savings accounts. By allowing lenders to invest in loans across a broad range of loan applicants for small amounts of fund, Peer-2-Peer investments offer an in-built mechanism to diversify.

 

This article was written by Priyanka Singh.

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