Funding Societies – Risks, Defaults and Diversification

Funding Societies Malaysia

Funding Societies Malaysia

This will be an update to my earlier post on Funding Societies, Malaysia’s (largest?) P2P platform.

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

Funding Societies Effective Interest Rate
Simple vs 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:

  • RM300;
  • 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.

Tenaga Nasional Berhad (TENAGA) – Our Electrical Giant

Tenaga Nasional Berhad (TENAGA 5347)

TENAGA is the largest player in generating and providing electricity in Malaysia. I would argue to the point of being monopolistic.

They’re diversified geographically through equity ownership in the UK, Turkey, Saudi Arabia, Kuwait, India an Indonesia and Pakistan.

The company’s profits are tied heavily to foreign currency exchange rates, coal and gas prices.

The Numbers

TENAGA 2017 Financial Summary 5 Year
TENAGA 2017 Financial Summary

Increasing Profits Every Year

The electrical giant has been generating increasing revenue and profits consistently for 6 years now. One of the key criteria when I pick a stock to purchase.

With increasing profits comes increasing dividends for me as a shareholder.

Increasing Shareholder Equity Every Year

For 6 years now, TENAGA has consistently increased its Shareholder Equity also known as Net Assets annually. This is another huge check mark in Tenaga’s favor. 

We as shareholders will want a company that is constantly increasing its net assets. More assets mean more ways of generating income and also increase in stock prices.

Borrowings and Gearing

Total borrowings has increased to RM38.8 billion in 2017 with the gearing at 40.3%. An increase in borrowings is only worrying when the revenue decreases.

I do hope to see the gearing reduce to below the 40% mark in the future though.

Dividend Growth Perspective

TENAGA is a huge company, generating megawatts in electricity and dividends to its shareholders.

With the increasing profits every year, I’m not worried about the company delivering proportionally increasing dividends every year.


At the time of writing, TENAGA is trading at RM13.980, at a P/E of 11.49.

The company is a little undervalued at the moment. I’ll continue to monitor the stock and purchase more when it drops below the RM13 mark again.



Bought Price – RM14.12
Current Price – RM13.98
Capital Gain – (-0.99%)
Total 2018 Dividends – RM516,80
Dividend Yield – 3.66%

Disclosure: I hold 1,000 units of TENAGA shares in my Freedom Fund portfolio.

I will continue to hold onto TENAGA and look out for buying opportunities.

As always, my opinions and strategies are never intended to be a buy/sell recommendation. The strategy used has worked for me and it is for you to decide if it can be implemented into your own financial plan. Always do your own research and due diligence before investing.

A list of good dividend stocks in Malaysia can be found hERE.