In the search for an alternative investment instrument that can potentially gives higher returns than the EPF, I stumbled upon Funding Societies. Crowdsourcing was one of my research areas, so it is not that difficult for me to understand the mechanisms behind it. The experience is not bad at all. In a year, I’ve managed to gain more than RM2k nett profit from a total of RM 50k capital that I gradually increased from few hundreds initially. As of today, my annualised profit rate is 8.8%.
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Returns growth to date |
However, like any other investment types, it is not without risk. The risk is when the issuers (SME companies that make loans) default payment. The Funding Societies team will do the necessary and take appropriate actions if that happens and we will be informed. Nothing we can do beyond that. Fortunately, for me, all such issues have been resolved.
My practice is to balance between guaranteed loans and non-guaranteed loans. The former has lower profit rate (but still higher than most other instruments) but repayments are guaranteed. For non-guaranteed loans, I will take time to go through the factsheets before investing. I will only invest in companies that have excellent (prompt) repayment track records. This will help to reduce defaults, although there is no guarantee. My advice is to avoid setting the auto-investment bots, unless for guaranteed loans.