As I have posted and shown earlier, my investments in Funding Societies has netted me an annualised return of 13.12%. As of today, it has increased slightly to 13.15%.
The referral bonus from you guys does not affect that 13.15% return.
To put the returns into perspective, my IRR and average return for the Freedom Fund is at the 12% mark for the past few years.
Calculating Simple and Effective Interest Rate
From the example, interest returns of RM10,000 for an RM100,000 investment opportunity (effective investment exposure of RM55,000) gives you an effective return as high as 18% (RM10,000 / RM55000).
The monthly repayments help reduce your risk exposure every month while increasing your investment returns. Best of all, if you choose to reinvest the monthly repayments you receive, you’ll compound and achieve even higher returns.
The folks at Funding Societies have a handy explanation for simple vs effective interest rates. The effective interest rate comes in handy when you want to compare your investments vs other choices in the market.
Default and Diversification
Most of you are worried about the risk involved when lending your hard-earned money to businesses you know almost nothing about. And you should be.
However, you’d be happy to know that the regional default rate as of November 2018 is at 1.02%. Regional meaning Malaysia, Indonesia and Singapore.
Even more good news, the default rate in Malaysia is 3 out of 300 loans. That is 1.0%. With that kind of risk and return rates, I hope you’ll be able to make a more informed decision.
I do expect the default rate to increase in the near future as more businesses seek funding through the P2P network. As for me personally, I’ve yet to have a loan default in my portfolio.
Defaults are normal in the P2P lending industry so the key to success for us as investors is to DIVERSIFY. The loans from Funding Societies give your returns anywhere from 10% to 16%.
I personally use the Auto Investment Bot provided by Funding Societies Malaysia.
I set my parameters as follows:
- A minimum investment period of 1 month;
- A maximum investment period of 24 months;
- At least 12% simple interest rate; and
- At most 18% simple interest rate.
Signing Up – RM50 BONUS
Signing up to be invest is a breeze. Just head over to Funding Societies, and all you need is your IC / passport number, an email, and your mobile number.
Additionally, you’ll receive a bonus RM50 when you sign up with my code j1mwa37p
The terms? You’ll just have to invest a collective amount of RM1,000.
I’ve been using Funding Societies for close to a year now and that 13.15% return is real. If you’re able to stomach that minuscule default rate they have right now, I think this would make a good investment alternative.
Again, thank you, everyone, for using my code upon registration.
I’ve gotten messages of concern from many of you advising against posting my referral bonus. But my aim is to always be as transparent as I can. I’m not recommending P2P for the referral fees.