Funding Societies (Link) is one of two peer-to-peer financing platforms that I am actively using. The loans can be divided into business term financing and invoice financing. Every loan is known as an investment note on this platform.
Investment notes properties
The differences between the two types of financing have been explained in a previous post. To recap, business term financing has a longer tenure (between 1 – 24 months, generally 12 months) with equal monthly instalments of interest and principal, while invoice financing has a shorter tenure (between 30 – 120 days) with repayment at the end of tenure.
Honestly, the differences between these two types of note do not really have a significant impact on selecting the note.
My criteria
The first criterion that I set a target is the interest rate, specifically the simple interest rate per annum. My minimum requirement is 10%, which is actually the minimum rate on this platform. Thus, every loan is qualified.
Since every loan is qualified, is there still a need for me to select the note? Yes. Some businesses will raise fund before fully repaying previous loans. I tend to avoid these notes, especially if I have already invested once in the borrower. So, the determining factor will be the presence of outstanding loan of the borrower with the platform.
Auto investment bot
The auto investment bot is a useful tool in Funding Societies. Once we set it up, the bot will invest automatically for us. Based on my experience, using auto bot will have a higher chance of investing successfully than doing it manually. Nonetheless, it still falls on us to check the quality of every note. The platform gives us the chance to opt out from a note before the investing starts even if the auto bot has allocated our fund into the note.
Conclusion
This is how I select the notes in Funding Societies. My strategy is mainly to reduce the risk of default. However, this risk cannot be completely avoided. Nonetheless, this platform has its own mechanism to try to recover the defaulted loans. Thus, I would say that we do not have to worry too much. What’s your investment strategy for choosing notes in Funding Societies? Do share with us in the comments section below.
Referral link
Below is the referral link to Funding Societies. By clicking on this link, I may gain referral rewards from your registration with the platform. If you think I have done a good service in explaining the topic, please click on the link below if you have interest to register. Otherwise, you can always search Funding Societies Malaysia with Google and register yourself.
Funding Societies Malaysia: Link here – If you register and invest through this link, both of us will get RM 30*.
*Terms and conditions apply.
