Currently, I have investments on three peer-to-peer (P2P) lending platforms. They are Capsphere, Fundaztic, and Funding Societies Malaysia. The results are as on 30 September 2021. In this article, I am not going to follow the formulae of the previous year. I am only going to take account of the received interest, excluding the projected returns.
The formula that I am going to use to calculate total return is as follows:
Total received profit ÷ Total capital employed
To calculate for annualised return, I am going to employ the following formula:
(1 + total return)(1/N) – 1
where N is the years of investment
Capsphere
I have invested in a total of 33 notes on this platform. Out of these notes, two are waiting for disbursement, one has been settled and one was restructured. So far, there is no default on Capsphere yet.
My total return from this platform is 5.65%. As I started to invest on this platform since September 2020, this represents my annualised return too.
Fundaztic
I have invested on this platform since July 2017, so this is the fourth year.
My total return on Fundaztic equals to 110.03%. This is really a surprise to me. I previously thought that Fundaztic had the lowest return. This translates to an annualised return of 20.53%! However, by not reinvesting the proceeds, this might have contributed to the increase in return as the defaulted notes cannot exceed my unsettled notes.
This platform still has the highest default rate among the three P2P platforms. My own default rate is 11.08%, including write-off. It has increased from 10.43% last year.
As I have mentioned in a previous article, I have stopped investing in new notes on this platform. Nonetheless, there is a significant improvement in the recovery efforts by Fundaztic. I am contemplating to restart my investment on this platform due to its high return.
Funding Societies Malaysia
This is my earliest P2P lending platform. I started investing here since June 2017.
My total return on this platform is 40.72%. It is equal to an annualised return of 8.92%. This is much lower than Fundaztic. However, my consistent reinvestment might have contributed to this low return as some notes are still not being repaid yet.
My default rate on Funding Societies Malaysia is 2.32%, which is much lower compared to Fundaztic. However, it has also increased from 1.95% in 2020.
Conclusion
To simplify the comparison, I am going to put the returns in the table below.
| Platform | Total Return | Annualized Return | Default Rate |
|---|---|---|---|
| Capsphere | 5.65% | 5.65% | 0% |
| Fundaztic | 110.03% | 20.53% | 11.08% |
| Funding Societies Malaysia | 40.72% | 8.92% | 2.32% |
Based on my updated calculation, the returns on these P2P lending platforms are actually better than the ASNB fixed-price funds. Overall, P2P lending represents an investment with good return.
I think I should start to invest on Fundaztic again. Though its default rate is the highest, its return is also the highest. Perhaps this is a good example of the high-risk high-return investment.
This calculation is the best way to compute returns of P2P lending platforms that I could think of. Nevertheless, if my calculation is wrong, the conclusion would be wrong also. So, if you have better ideas, do enlighten me in the comments section below.