Dividend Magic

Saving and Investing towards Financial Independence in Malaysia

Funding Societies

Funding Societies – My First Default

By
Filed Under: Other Investments, Dividends, Financial Independence, Investment 9

First off, an update on my portfolio’s performance with Funding Societies Malaysia. Annualised returns have gone down from 13% to 9.23%.

A lower figure compared to January but still, a 9.23% return is commendable for an investment.

Mainly due to –
1. A default; and
2. New unutilised capital.

My First Default(s)

It caught me off guard when I first received notice on the default on the issued notes, of which I’ve put in RM300 each into the affected notes.

MBBT-18080032
MBBT-18080033
MBBT-18080034

Being caught off guard like that isn’t always a nice experience but it was mitigated somewhat because I’ve constantly been managing my own expectations and prepping for a few defaults.

Re-adjusting Funding Societies’ Auto-invest Bot

If you’ve noticed, all the notes come from a single issuer or company. So it’s back to the drawing board for me.

I’ve now switched my auto-invest bot settings to have ‘Max Issuer Exposure’ from the previous 25% to a mere 5%. I don’t want to be over-invested in one single issuer.

In the event that a single issuer defaults, my loss exposure will never exceed 5% of my total loan portfolio.

Steps Taken by Funding Societies

It all started on 7 January 2019. The issuer contacted Funding Societies to delay payment. Below will be the notices I received from Funding Societies. In chronological order.

This will be pretty lengthy but it is important you as investors know the step-by-step process taken by Funding Societies.

7 January 2019

Dear Investor, The Issuer has reached out to us to push back the repayment of January 2019 due amount because pending receivables from their client, this will include late interest charges. Tentatively, repayment of January 2019 due will be on 18 January 2019. Thank you for understanding the situation. Team Funding Societies 7/01/2019, 6.20pm

** And thereafter, lengthy amounts of back and forth discussions with the issuer on the settlement. I’ll spare you the details. With the issuer failing to make repayments in March, Funding Societies finally decided to serve a letter of demand.

10 April 2019

Dear Investor, We wish to update that we have served the Letter of Demand as of 8 April 2019. At this stage we continue to be in contact with Issuer through our lawyers to demand for RM 50,000 which due on 31 March 2019, and upcoming RM 150,000 which is due 15 April 2019. As we wait for Issuer response to the Letter of Demand, kindly allow us to update you by 17 April 2019. Team Funding Societies 10 April 2019, 8.30pm

18 April 2019

Dear Investor, We would like to inform you that Note Issuer has made a partial payment of total RM 10,000 and it has been distributed as principle to investors on 16 April 2019. However, the amount made by Issuer is less than what we have requested from the Issuer. We are still in the midst of negotiating the outstanding repayment term with Issuer. As per our last update, the Letter of Demand has been served to the Note Issuer, and the Note Issuer has only made payment of RM 10,000.00 of the promised RM 200,000.00 upon the expiry of the Letter of Demand on 17 April 2019. At the meantime, we are escalating our recovery efforts through legal avenues and are discussing with the appointed panel lawyer on how to approach this matter effectively. You may refer to your email for full update. Kindly allow us until 3 May 2019 to provide you updates on the progress of recovery. We truly appreciate your kind patience and continued support. Team Funding Societies 18 April 2019, 1.25PM

End.

So there you have it. I’ve said there would be defaults and I’m sharing with everyone the first of mine.

There are inherent risks in investing in P2P financing. To mitigate, I am diversifying as much as I can. Putting in small amounts in every note issued.

And now, as I’ve learnt the hard way, not to overexpose myself to one single issuer.

I hope everyone learns from this.

That being said, I am still getting a 9.23% return. So don’t let yourself be discouraged by my defaults.

😀

Sign Up!

If you have not already, you can sign up with Funding Societies hERE.
Alternatively, you may use the code: j1mwa37p
You’ll receive RM50 upon investing your first RM1,000.

Note:
Funding Societies has reduced their referral bonus from RM50 to RM30 effective 1st March 2019.

Using my code and link, you’ll still receive RM50.

Dividend Magic Recommends: All the Stuff I Use

Why Dividend Magic Recommends? I’ve never once when asked the question ”What should I invest in?” told anyone to invest in a specific stock or a security. Instead, I provide you with the stuff I use, the tools and the means to do that through my own trials and experiences. For example, if you’re looking to venture into stock investing, I give you a comparison of Malaysia’s brokers.

If like me, you want to head to and invest in the US, I give you a comparison of that too. Of course, there may be other better options out there but these are what I’ve personally tried and used.

Whatever you choose, onwards and upwards!

You are done with the Investing Series, check out article 001 of the FI/RE and Savings Series – Is the First RM100K the Hardest?

As always, Facebook, Instagram. Follow, keep up to date.

Dividend Magic Recommends: Investment Platforms

1. MooMoo Malaysia

Link to register: hERE

Code: DM77

MooMoo Malaysia is finally licensed by our own Securities Commission and is finally available for trading here in Malaysia.

You’re able to complete your registration 100% online, and hassle-free.

Key Benefits:

  • Interest earning cash account – interest >3%
  • Low fees – one of the lowest!
  • Licensed and regulated by the Securities Commission of Malaysia
  • User friendly interface
  • Nominee account – free corporate action. ie. no fees charged for Dividend Reinvestment Plans
  • Loads of free gifts for new and existing users, for latest promos, check out my page on MooMoo hERE.

How I Use This:
Like Rakuten Trade, MooMoo MY offers Nominee Accounts instead of the traditional Direct CDS accounts.

Other brokerages generally charge a fee for corporate actions such as signing up for Dividend Reinvestment Plans but I’ve gotten confirmation from MooMoo that they will continue to provide the services free of charge.

MooMoo is also constantly having promos and giveaways. I’ve gotten tons of free shares, points, figurines etc from them. Read my full review on MooMoo Malaysia hERE.

2. Rakuten

Rakuten Trade Malaysia

Link to register: hERE

Code: DIVMAGIC

Rakuten is the first brokerage in Malaysia that offers points for stock trading. You can redeem you RT points for AirAsia flight tickets, a Starbucks drink or fuel from Shell.

How I Use This:
Rakuten Trade offers Nominee Accounts instead of the traditional Direct CDS accounts.

Other brokerages generally charge a fee for corporate actions such as signing up for Dividend Reinvestment Plans but I’ve gotten confirmation from Rakuten that they will continue to provide the services free of charge.

On top of that, you get points for every trade you make. 

Read more on Rakuten Trade hERE.

3. eToro

eToro Malaysia Review

Link to register: hERE

My US Portfolio has been generating pretty good returns ever since I started investing in 2020.

I switched from using Hong Leong as a broker to eToro. I went from getting zero dividends due to fees and taxes to paying zero fees on eToro. My eToro review can be found hERE.

4. Luno

Luno Malaysia Review

Link to register: hERE

Code: HFCCY

Sign up to get RM75 worth of Bitcoin when you buy RM250 or more. That’s an instant 30% return on your investment. Working together with Luno Malaysia to get the highest promo code right here.

Read my full review more on Luno hERE.

5. Stashaway

Link: hERE

Sign up with me and get a deduction on 50% fees for the first RM100,000 invested for 6 months.

More on Stashaway can be found in my article hERE.

6. CapBay Malaysia

CapBay Malaysia Review Dividend Magic

Link to register: hERE

Code: DIVMAGIC

If you’re signing up and registering with CapBay, don’t forget to use my code and link for a free RM100. To qualify, you’ll have to make the RM10K deposit and select one of the Auto Invest profiles (Conservative, Moderate and Aggressive). The full terms and conditions can be found here.

Read my full review on CapBay hERE.

Dividend Magic Recommends: Travel Platforms and Credit Cards

1. Trip.com

trip.com dividend magic best referral code

Link to register: hERE

Using the above link, you’ll receive RM20 worth of exclusive promo codes for hotels and flights.

2. Best Credit Cards – AMEX

Dividend magic amex

I’ve recently come up with a comprehensive credit card strategy that’s easy to emulate. You can find it here.

Dividend Magic Recommends: Books

Booklist as recommended by me and some of our readers.

“The more that you read, the more things you will know. The more that you learn, the more places you’ll go.” – Dr. Seuss

These are all books that I’ve read and found extremely useful and motivating in my path to Financial Independence.

I’ve posted the links as e-book and Kindle versions. If you’ve not got a kindle, I highly suggest getting one because getting your reading materials there is way cheaper compared to conventional books.

If you have any other suggestions do leave a comment here. Your contributions are highly appreciated.

Frugality and Philosophy

Investing

Others

End.

You are done with the Investing Series, check out article 001 of the FI/RE and Savings Series – Is the First RM100K the Hardest?

Investing in Malaysia – Your 7 Investment Options

By
Filed Under: Dividends, FI/RE, Investment, Portfolio - Freedom Fund 19

What can I and should I do with my savings and excess funds? What are my investment options in Malaysia. That ought to be the question in the back of our minds, constantly.

My train of thought has always been as follows.

Savings – Investment – Passive Income – Reinvestment – Financial Independence

I know, Dividend Magic is almost always about Dividend Investing. And, I’m aware it can be somewhat intimidating for most of you to start dabbling in the stock market and investments in Malaysia.

In light of that, allow me to introduce the 7 viable, long-term investment options in Malaysia that might suit your needs.

When I say investing, I mean investing and not speculating. The difference?

Investors seek to generate a satisfactory return on their capital by taking on an average or below-average amount of risk. On the other hand, speculators are seeking to make abnormally high returns from bets that can go one way or the other.

The list is arranged from safest to riskiest.

Fixed Deposits (“FDs”)

Returns per annum: 3 to 4%

CIMB Unfixed Deposit
CIMB’s Unfixed Deposit

Let’s start with the simplest of them. Fixed deposits or FDs if you will.

Now, I wouldn’t even classify fixed deposits as investments. They’re more of a financial instrument where you place your money while waiting for investment opportunities.

Most of you may have heard of fixed deposits but I know for a fact that most Malaysian youths have their money in savings accounts. And they leave it at that. So instead of earning 3-4%, they earn that miserable 0.1 – 1% provided by most savings account.

And yes I know M2U savers gives you 2%.

Where can you place FDs?

I’d suggest going to your own bank and opening an online FD account. It is important to have an online account as it will save you time. You’ll be able to handle all fixed deposit placements and upliftments through the click of a button without having to be physically present be at a branch.

Treasury Notes and Bonds

Returns per annum: 4 to 6%

Before everyone starts making a fuss about how bond returns can go up to 8-9%, let me remind you that this article focuses on long-term and calculated investments in Malaysia, for the masses.

And the term used for high-risk, high return bonds is Junk Bonds.

Moving on, treasury notes are actually safer in comparison to fixed deposits because they’re issued by the government. However, they’re usually issued in the millions and not for most of us.

Bonds, if you don’t already know are a fixed income investment in which you, as the investor loan your money to a company. In the event that the company goes broke, you as the bondholder gets paid first, before the company’s shareholders.

In the past, the way I invested and put my money into bonds was through mutual funds via Fundsupermart. I’ve been told that they’ve recently started offering bonds right off the bat broken down into lower values ie. RM10,000. This makes it easier for the average Malaysian to get a piece of the bond action.

Gold and Silver

Returns per annum: N/A

Look, there’s no way I’m going to give you an estimate on the returns of trading in precious metal. One thing holds true, however, during times of uncertainty, the price of gold and silver goes up. They, therefore, serve as a good defensive asset.

If you time it correctly and buy them during economic booms, you’ll have an investment that will see you through the decades ahead.

Silver Coins

Personally, I chose to invest in silver years ago. The way I invested was by buying and collecting silver coins offered by various governments around the world. My favourite is the American Eagle and Canadian Maple coins. The Chinese Panda coins are also part of my collection.

My coins cost a total of RM2678 back when I purchased them in 2013 and in 2015. They’re now worth about RM2975. About RM95 each. Cheapest I found on Malaysian sites.

That’s about a 10% gain for me over 5 years. It’s nothing to shout about but I’ve seen my silver increase to 50-100% during recessions. Still, I don’t plan to dispose of them anytime soon.

Stocks

Returns per annum: 3-10%

Welcome to my neck of the woods.

Investing in stocks in Malaysia has always been viewed as a risky business. Why? Because Malaysians confuse investing with speculating.

In my personal, honest opinion, Dividend Investing is a really safe and sound way to invest and achieve financial independence.

Dividends are like the gift that keeps on giving because as the company you invest in grow and increases its profits, the dividends they pay out increases every year subsequently.

But guess what? You would have still paid that same RM10K initial capital and your dividend yield will continue to increase every year. A quick look at my portfolio – the Freedom Fund would show that sweet increment in dividends.

Of course, to enjoy these kinds of returns and yields, you’ll have to get some legwork in and pick only financially sound companies to invest in. And you’ll have to invest for the very long term. Think 10 – 30 years.

I’ve compiled a list of the Best Dividend Stocks in Malaysia here for your perusal.

Blue-Chip Defensive Stocks

Now, blue-chip defensive stocks like NESTLE are stable stocks you can hold for the rest of your lives. You’ll receive increasing dividends every year without ever having to work for it.

And because blue-chip companies are huge and stable by themselves, they won’t be as affected by the volatility of the market.

Another fine example would be investments in Malaysian banks. My  RM26,527.86 investment in Maybank alone since 2016 has brought in a total of RM4,685.36 in dividends alone. That’s a 17% return in passive income for me. I’m enjoying a 7% yield this year with Maybank and hope to see this value increase in the near future.

Real Estate Investment Trusts (REITs)

Another type of stocks that I always encourage beginners to invest in Malaysia are Real Estate Investment Trusts.

My all-time favourite Malaysian REIT right now is IGB REIT. They’re mainly in charge or Mid Valley Megamall and The Gardens.

The dividend yield from IGB REIT has skyrocketed to RM2,865.43 which translates to 7.09% for me this year.

My gross investment is RM40,417.74 (at RM1.3563 per share).

Market value (as of 9 Dec’18) is RM50,660.00 (at RM1.70 per share).

My capital gain is RM10,242.26 or 25.34%.

A comprehensive review of the company can be found hERE.

Real Estate

Returns per annum: 3-10%

Property. This is a tricky one for Malaysians.

The current mentality of Malaysians is to purchase your first residential real estate right off the bat. If your monthly salary is RM5K, get a home that’ll cost your RM4k in monthly repayments. They’ll tell you to hold on to that and in 10 years time, sell it and double your money.

This isn’t investing. This is speculation. A savvy investor would look to a property that can not only cover your monthly repayments but give you a positive net income every month.

And from what I’ve seen and from personal experience, the only two types of real estate that can give you positive returns right now are low-cost residences and commercial properties.

If you’re looking to buy and hold and bank on the real estate’s value skyrocketing, you’re better off purchasing a piece of land.

Low-cost Residences

I personally own 2 low-cost flats. How I manage and my returns are all detailed hERE.

TLDR: They net me a positive income every month. But they’re giving me a headache in terms of maintenance and tenant management. I’d rather have invested my money in REITs.

Commercial Real Estate

Specifically, shop lots and offices. Having companies and registered businesses as tenants is a much less risky affair compared to low-cost residential tenants.

The cons. You’ll have to fork out a huge sum to get yourself a commercial lot.

Unit Trusts and Mutual Funds

Returns per annum: 1-5%

I am for all intents and purposes anti Unit Trusts and Mutual Funds here in Malaysia. Why? Read this article here and you’ll come to realize how the exorbitant fees charged by funds in Malaysia will impact your financial wellbeing.

Private Retirement Schemes (PRS)

Nevertheless, I’d recommend investing and putting your money in Private Retirement Schemes. If you’re a Malaysian youth, you get an extra bonus from the government. If not, there’s always that extra tax-deductible afforded when you put your money into PRS. More on PRS hERE.

Robo-Advisors

You’ll also want to check out Stashaway. You pay much less fees compared to Unit Trusts and Mutual Funds. And you get access to the global markets.
Less fees!

More on Stashaway hERE.

P2P Lending

Returns per annum: 10-12%

Funding Societies

I’ll never recommend investments and services I wouldn’t use and/or purchase myself. I’ve put up some of my own funds and tried P2P lending with Funding Societies.

My experience and the review can be found hERE.

All you need to know about Peer to Peer Lending and Funding Societies can be found there. My annualised returns have reached 13.12% per annum.

Which actually beats the returns from my stock portfolio last year. Go figure.

The risk with P2P lending here in Malaysia isn’t high at all contrary to popular belief. It ranges in the 0.1 to 0.5% right now. The key is to diversify and place RM100 in 100 different loans, as opposed to RM1,000 in 10 loans.

End.

I’ve personally invested in all 7 of the aforementioned investment options here in Malaysia.

I’m sure many of you will have additional investments not listed above that you’ve put your money and faith in; Do drop me a comment letting me know what they are and why you think they’re investments worth considering.

I’m both excited and eager to hear what Malaysians invest in.

As always, due diligence on your own part is required when deciding to invest. I urge you again to invest and not speculate. Invest for the long term and invest in the fundamentals.

This has been a particularly long one. That’s what she said.

As always, thank you for reading! Follow me on Facebook and Instagram for weekly dividend updates!

Onwards and upwards!

A Review of Funding Societies – P2P Lending in Malaysia

By
Filed Under: Investment, Other 20

Funding Societies – Let’s Finance!

So I’ve started investing in P2P financing/loans a few months ago via Funding Societies.

I decided to wait a couple of months before having this post up as I wanted to be sure of the returns as well as the credibility of the site.

And.. So far so good!

I’ve put up RM3,000 as initial capital and, after all the fees, I’ve gotten back RM66.73. My first investment was made on 29 November 2017. This gives me an annualized gain of 13.17% per annum, outperforming my Freedom Fund.

Of course, the risks of financing are higher compared to shares. I’d advise everyone to carefully go through the various businesses’ prospectus before jumping in. And as always, higher returns will mean higher risk on your part as a financier.

 

How does Funding Societies Work?

As an investor, you’ll first have to register an account. More info on signing up below

Once your account is activated, and you’ve deposited some money into your account, you’ll be able to begin financing small businesses in Malaysia.

You’ll typically receive email notifications when investment opportunities become available. Note that you may have to wait a bit for such an opportunity.

The next step is to then decide on the amount to invest, from as little as RM100.

From experience, you can expect to receive your first repayment a month after the funds have been disbursed to the SME.

The Risks

I feel it is important to delve more into the risk part of P2P financing, especially for us as investors.

Funding Societies do themselves vet through the various SME issuers through its rigorous and rigid scorecard-based risk assessment. The tenure of financing is also relatively short (between 1 to 12 months).

Default rates are currently at around 1.5% across the countries Funding Societies operate in – Indonesia, Singapore and Malaysia. Good news though, Malaysia is, at the moment, default-free – 0%.

To further minimize your risk, I would recommend spreading your investments across different loan issuers, should anyone default. A simple example will be investing RM10,000 across 100 different deals. A 1.5% default rate will probably result in a default in 2 deals. Investors will still be able to generate returns from the remaining RM9,800.

 

Signing Up – RM50 BONUS

Signing up to be an Investor 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.

Don’t worry, all the links provided here already has my code embeded.

Alternatively, you may click on this link Funding Societies.

A big thank you in advance!

Funding Societies - Sign up page
Funding Societies – Sign up page

 

Easy to Use Interface

The interface of Funding Societies has changed significantly compared to when I first joined. It is now much easier to get your annualized performance (no more calculating this on your own) and you get to view your net income, after expenses and fees easily.

Funding Societies Malaysia - Interface 1
Funding Societies Malaysia – Interface 1

 

Funding Societies Malaysia - Interface
Funding Societies Malaysia – Interface 2

 

Funding Societies Malaysia - Interface
Funding Societies Malaysia – Interface 3

Funding Societies – Conclusion

I expect great things from Funding Societies in the coming years.

Already they are the largest regional P2P financing platform in Southeast Asia, connecting creditworthy SMEs with retail, high net worth and institutional investors.

Funding Societies is recognized and regulated by Securities Commission (SC) Malaysia and has received various awards and recognition both regionally and globally, including making the prestigious Fintech 250 list and winning the Global SME Excellence Award from the United Nations’ ITU Telecom Unit.

If you’ve ever wondered what it feels like lending money to businesses as a bank does, give Funding Societies a go. The business is self-sustaining and is based on the fees they receive from your loan payments. And the returns are commendable.

 

Update (24 Nov 2018)

My investment in Funding Societies so far stands at a cool 13.12%. It’s actually doing better than my share investments.

Also, thank you, everyone, for the referrals. You’re amazing.