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Businesses That Should Consider P2P Loans

Peer-to-peer (P2P) lending is the practice of lending money to individuals or businesses through online platforms that match lenders and investors directly with borrowers. Anyone can take advantage of P2P loans, so long as they pass the required credit assessment.

P2P loans are particularly advantageous for small businesses and SMEs; applying for financing through a P2P lending platform offers a faster, simpler process – very useful for small businesses that need quick hits of working capital and cash flow aid. Whether or not you need a business loan depends on your financial condition, but if you are looking at financing options, P2P loans can be the loan product for you if you fit the categories below.

Businesses Looking to Grow

Looking to expand your business? P2P lending platforms can be the financing source for you. P2P lending platforms often target small businesses, with the appropriate revenue requirements and loan sizes to prove it.

Businesses Looking for More Working Capital and Cash Flow

A small business, no matter how profitable or healthy, needs constant cash flow. Because P2P lending platforms provide faster processing and approval notification time, businesses can get their funding faster than from a traditional financial institution. This is useful for certain businesses, as they need running cash flow more than others. Wholesalers, for instance, always need to buy more stock inventory.

Read More: 5 Useful Tips To Keep Your Business Finances Healthy

Younger, Smaller Businesses

Why is P2P lending an excellent option for young SMEs? Because even though they may be financially healthy and are generating good revenue, they usually have no suitable assets for secured loans. P2P loans generally have competitive rates and no collateral requirements, making it ideal for small businesses hungry to expand their companies (or maybe just need financing to fund a new project). P2P loans have a structure that is short-term with competitive rates.

Read More: When Should Your Business Apply For A Loan?

5 Reasons You Should Invest in Peer-To-Peer Lending

As peer-to-peer (P2P) lending grows in popularity as an alternative investment option, people pay more attention to the opinion climate about it. However, the hype surrounding P2P lending mostly talk about how the system enables SMEs and borrowers to get funds with less restrictions, by cutting out the traditional middlemen (banks and other financial intermediaries). Not much has been said about what is in it for the P2P investor.

This video explains the advantages P2P lending brings to the investor, and how they can increase their returns while helping out SMEs.

Read also: 5 Reasons To Invest In Peer-To-Peer Lending

Find out more about P2P lending at Funding Societies here.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

4 Things About Your Personal Finance To Handle Before Thinking Of Starting Your Own Business

Prime Minister Lee Hsien Loong made a trip down to Silicon Valley earlier this month to visit some of the top start-ups in recent years. During his trip, he met some of the top entrepreneurs in the world over including Facebook’s Mark Zuckerberg and Tesla & Space X CEO Elon Musk.

Starting your own business is not easy, especially if you are not born with a silver spoon. Aside from needing a top notch idea, a great team for execution, the perfect timing, the right investors and a nice dose of luck, you also need to get your own personal finance in order…first. Failure to do so would cause unnecessary stress to an already stressful career.

Before you think of taking the plunge to be your own boss, here are some personal finance matters that you should consider first.

Read Also: 5 Signs You Are Ready To Change Your Job

1. Can You Embrace A Simple Lifestyle?

When you run your own business, a large part of the effort you put in is to grow the business for tomorrow. Start-ups or new businesses do NOT work for today. They work for tomorrow, while balancing today’s need.

When you hustle, you hustle for tomorrow.

This has two main implications.

The first implication is that if (and that’s a big “if”) the business succeeds, you get to enjoy the long-term value that it brings to you, its shareholders. That could be in the form of passive income to shareholders or a big exit through an eventual sale of the business.

The second implication is that you are not going to be paid well (if any) for running this business of yours today. And that “today” can easily last 4 to 5 years.

Forget about flashing your CEO namecard at clubs or buying expensive bottle of drinks for your entourage, you wouldn’t be able to afford it. Those restaurant meals that your friends are enjoying may also be out of the question.

Rather, homecooked dinners followed by cheap coffee are likely to be the norm. So would squeezing onto the train to get to work each morning.

Billionaire Elon Musk once lived on about $1 per day in his college days. The reason for him doing so was to test himself if he really had what it takes to be an entrepreneur, and be able to survive under extreme circumstances. Elon Musk rational was that if he could survive on $30 per month on food, then it shouldn’t be too difficult for him to earn and survive on that amount as an entrepreneur.

He could. Can you?

2. Are You Able To Endure Being Underpaid?

Businesses take time to grow. If you are creating a start-up (i.e a business that nobody has done successfully), you will need even more time to grow it.

People who work regular jobs expect to be paid salaries that commiserate with their average output. When we are worth $3,000 per month as a fresh graduate, we expect to be paid that amount. When our skills and experiences increase, we expect to be paid more.

When you are working on your own business, this logic needs to be thrown out of the window. Even if you are the super employee/boss of the company doing everything from closing business deals, delivering great products and services to your clients and being a one-man accounting team, you might still be paid $2,000 per month – for doing a great job.

You might be working harder and smarter than all of your peers and still be earning the least amount of money among everyone whom you know, at least for the first few years.

Can you handle that?

3. Can Your Family Cope Financially With Your Decision?

Most of us have financial commitments in life. Some of these commitments are long-term, such as paying for the home mortgage and taking care of the needs of our children and elderly parents.

Like it or not, financial commitment to our family is one thing that we cannot get ourselves out from. You might be able to live a simple life, but your family would need to be able to cope and live with that decision you are making.

The hard and unfair truth is that not all of us are born into family that can manage the stress of financial uncertainty.

4. Do You Have A Strong Savings Plan?

Even if your business eventually turns out to be sustainable in the long run, personal cashflow challenge is one aspect that you cannot ignore.

Most businesses have cashflow challenges. Account receivable is one area that finance managers are always keeping a lookout of because poor management of your cashflow can potentially sink an otherwise profitable business.

From an individual standpoint, there might be days where you might need to allow your business to owe you unpaid salary in order to stay afloat. Your personal savings will have to step in for these challenging days in order for you to tide over short-term cashflow difficulty.

Read Also: 5 Reasons To Quit Your Job Even If You Have Not Found A New One

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

The Best Advice We’ve Heard about Crowdfunding and P2P Lending

Don’t invest in a person or a company on the basis of its name and fame

The rise of crowdfunding and its offshoots have attracted big names. Celebrity artists like Neil Gaiman and Whoopi Goldberg have utilized crowdfunding campaigns. Businesses more familiar to our ears have tapped into peer-to-peer (P2P) lending. How exciting to invest in their projects!

Careful though! You know the saying: “if something is too good to be true… it usually is.” A famous person or big company can create awe and a false sense of security. We can automatically assume they are more investible. But be cautious, more often than not, crowdfunding and P2P lending are generally utilized by up-and-coming artists, growing startups, and SMEs. Of course, well-known establishments can choose to raise funds from crowdfunding or P2P lending, usually because crowdfunding provides a faster process.

How do we tell if these crowdfunding opportunities are the real deal? Treat famous names like any other investment. Objectively and don’t forget thorough due diligence. Ask the important questions: does this well-known figure have financial problems? How is this company doing according to its financial statements? Growing? Healthy? Well-run and profitable?

Do your research

Related to advice number 1, avoid fraud by asking for fact sheets (borrower background summary) and reviewing them. A crowdfunding or P2P lending platform should have performed their own assessment, but protect your funds by doing your homework and going through the assessment.

You are allowed to ask for the crowdfunded entity’s financial details if you are investing in it. In fact, be wary if you can’t access financial information easily.

It’s crucial to learn how to read financial documents. Learn which accounting elements show business health. Learn which accounting elements display promising business growth.

Read More: Is Your P2P Platform’s Interests Aligned With Yours?

Do diversify your loans

Our third advice relates more to P2P lending investors than crowdfunding donors. Crowdfunding backers tend to donate funds out of altruism or for intangible rewards. However, if you are crowdfunding as an alternative investment, diversifying your loans is a must do!

What is diversification? It simply means distributing your money across as many loans as possible to prevent loss in case of default.

No matter how thorough the due diligence, risk is an inevitable element of any investment. Diversification is the answer for such risks. For example, if you pour SGD 1000 in only one company and it defaults, your returns will drastically drop. You’ll probably lose money. Yet when you spread your funds to ten, twenty, even fifty businesses, your returns will remain positive and will stay close to the expected rate of return.

It’s important to repeat: diversification keeps your rate of return steady, even in the case of defaults.

Read More: Investing In An Uncertain World

Do reinvest your returns

Our final advice also pertains more for investors building a portfolio. If you want to maximize your venture into P2P lending, you need to start reinvesting.

What we mean by reinvesting is using your gains to fund other businesses. Reinvesting multiplies your returns. The compounding effect of such reinvestment can be very strong!

Without reinvestment, you simply receive gains according to a loan’s expected rate of return. Here’s an example: You invest SGD 1000 in a business that offers an annual 20% rate of return. The business succeeds. You earn returns of SGD 200 in a year.

Let’s see what happens when you reinvest. You invest SGD 1000 in a similar business that offers a 20% rate of return. After month 1, you earn a return of SGD 16.70 (from annual gain of SGD 200 divided by 12 months). Immediately, at the start of month 2, you reinvest the money into a similar loan. At the start of month 3, you reinvest your earnings from month 2 into yet another loan. And so it goes until the end of the year, when it is very likely you have doubled your investment instead of only gaining a profit of 20%.

Reinvestment requires minimum effort and is a great form of passive income. All the more reason it is a definite do!

Should you be interested in learning more about the many benefits of investing in P2P financing, click here.

This article was first posted on the blog of Funding Societies (Singapore). Click here for the original article.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Why Invest in P2P Lending?

Many people are new to peer-to-peer (P2P) lending as an investment option. Questions arise. Is it trustworthy? Does it fit my needs as an investor? Who else have invested in it?

All valid concerns. Nearly no one wants to jump in blind when it comes to investing hard-earned money. Not billionaires, not angel investors – even they do extensive research prior to investing. People want examples of successful P2P investors and whether P2P lending works for their portfolio.

However, you’d be surprised by how flexible this form of alternative investment is.

Flexibility

Let’s start with individual or retail investors. Why is a relatively new investment opportunity so appealing to this segment?

The financial market can strike one as tangled, complicated, and unpredictable. Where does one even begin? P2P lending can feel like a breath of fresh air as it offers a much simpler concept. Basically, it is a form of alternative investment where investors collectively fund loans and earn interest-based earnings in return. Think of P2P lending as profitable crowdfunding! Where crowdfunding projects usually support charities and artistic ventures, P2P lending lets you collect attractive returns.

Due diligence and credit assessment guides your choices

Also, compare P2P lending with stock investment. Navigating the stock market requires expertise and research. Credible P2P lending platforms perform all the necessary due diligence and credit assessment to guide your investing choices, which saves time.

You still need to do some of your own research though, so you can decide for yourself which businesses you want to invest in. But overall, P2P lending jargon is more accessible compared to other investments.

Read Also: Three Key Risks of P2P Lending

alternative and affordable

Other bonuses? The affordable entry. At Funding Societies, you can invest in each small business with as little as SGD 100. P2P lending is also a profitable, with returns up to 14% per year.

It’s easy to see why individual investors are seeking alternative investments like P2P lending. Through it, you make passive income with ease and you earn higher returns from lower capital.

Read Also: 3 Alternatives To A Dividend Portfolio

More and more, P2P lending is gaining popularity. Respected media outlets such as Forbes have talked about its benefits. P2P infrastructure is thriving and all the indications point to one conclusion: P2P lending is here to stay!

This article was first posted on the blog of Funding Societies (Malaysia). Click here for the original article.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Life At A Fintech Startup: 5 Interns Share Their Lessons Learned

At Funding Societies this summer, we welcomed a diverse group of interns from various universities in Singapore. To conclude their internship journey at Funding Societies, we had organized a HTHT session consisting of Kelvin Teo, co-founder & CEO and the summer interns of 2017:

  • Sherman Lim, BSc (Economics) and 2nd major in Strategic Management, Singapore Management University (SMU)
  • Clarissa Poedjiono, BSc (Information Systems), SMU
  • Eugene Ng, BBM (Finance), SMU
  • Victor Tan, BSc (Economics & Finance), Singapore Institute of Management – University of London (SIM-UOL)
  • Martin Indrawata, BA (Political Science), National University of Singapore (NUS)

Why intern at a FinTech Startup?

Victor: Like many of my peers, I work at a large company during summer break. However, after reading about Singapore’s startup culture and how the economy is primed for a startup ecosystem, I was certain that I wanted to work for a startup. As a finance student and someone who would use Fintech such as cashless transactions, virtual wallets and crowdfunding, I knew I wanted to learn all about what goes on behind the scenes in a FinTech startup.

Clarissa: As a major in Information Systems, I wanted to join a tech firm. After reading about the FinTech disruption in the banking sector, I realised that perhaps the best learning ground for me would be to join a tech start-up.

Sherman: Having interned at a traditional corporate set-up before, I thought it will be interesting to find out what it will be like to intern at a startup. Of course, I have heard many stories and read case studies in classes that working in a startup will be really hectic and challenging. I also thought this will be a good chance to explore what I wanted to pursue as a career. As to why FinTech, this is the latest trend in the financial sector and is sure to disrupt the business models of traditional financial institutions. I figured, why not join a FinTech startup to learn more about it.

Read More: My Greatest Takeaways From The 12-week Internship At Funding Societies

What was the job seeking and interview process like?

Clarissa: I found out about FS through SMU’s career portal. I found the background of the company and the job description attractive. I went through 2 rounds of Skype interview and 1 assignment submission.

Martin: I met Ishan (Head of Data Science) during a talk at NUS and he shared about the opportunity. The interview process was great as I got to learn more about the team dynamics and leadership of the company (as positively reflected by Xin Ying and Vikas, Head of Business Development and Marketing respectively). What I was heartened about was that my interviewers asked me on things non-related to the job, which I feel was a positive valuation of me as a potential contributor to the company.

Eugene: I got to learn about Funding Societies through a friend of mine who was going to work at Oliver Wyman, who was in turn told how one of the seniors at Oliver Wyman had left the company to join Funding Societies, a startup. The 2 co-founders are also from Harvard and consulting background. It goes to show the caliber of people who run the company, they hail from some of the best institutions around.

Oddest question during interview?

Sherman: Right at the start of the interview – “Do you have any questions for me?”

Victor: “How would your family describe you?”

Martin: “Why do you think Trump won the elections?”

Eugene: “Don’t you want to spend your holidays travelling instead?” (I did, but I definitely didn’t wanna travel for 4 months straight)

What were your most memorable moments during your internship?

Sherman: Definitely the karaoke session during the company retreat! I had a really enjoyable time with the entire company (including our Malaysian colleagues) unwinding and playing hard after an extended period of crazy and intense work. It was also funny seeing our bosses (Not Kelvin) doing the Macarena & Gangnam Style dance.

Victor: I recall all the nights the team spent together watching Game of Thrones which the company airs weekly. It’s really cool that the team stays back after work for dinner and watch TV together. Fun fact: The company even has a Slack channel dedicated to the discussion of our favorite TV show.

Eugene: The most memorable moments for me were all the small chats and hangouts with the colleagues in the office. They went pretty deep into personal viewpoints and philosophies, and I got a really good feel of the diversity in the office from these chats.

What have you learnt that you can apply in school or life?

Clarissa: As an Information Systems student, I’ve always strived to improve my technical skills and this internship has given me insights on how IT projects  solve real business problems. I got to run a flagship project with Sherman and was given freedom to explore the possibilities of executing the project. I was inspired by the leadership skills of the leaders in FS who were gifted yet very kind and helpful.

Victor: I think my biggest takeaway is the need to start broadening my scope and venture into skills beyond my own field. Especially in a startup, you have to make sure that you have multidisciplinary skills as you might be called upon to do a task that would require a skill set that is different from what you learn in school. For instance, I’ve witnessed how some basic coding skills can really help to accomplish certain tasks more efficiently as well. In a company sharing session, I remember Kelvin sharing about the need to learn as much as possible but also ensuring that you have a unique specialization to set yourself apart from others.

Eugene: Technically I’m already a graduate, so I’d say adaptability. The dynamism and pace in the workplace far exceeds that of school life, especially so in a startup like Funding Societies. It’s great to get used to being able to operate and thrive in such a charged up environment.

Has this internship met your expectations?

Sherman: Honestly this internship has exceeded my expectations. We were given full autonomy to initiate and drive projects in the company with the full support of our mentors and the teams. I even commenced my investment journey here by investing into loans on the platform. I have seen how detailed the SME assessment is and that gives me the confidence to earn handsome returns.

Clarissa: It has exceeded my expectations in every way. I’m thankful for the people I got to work with and the skills that I got from this internship.

Victor: Definitely. I didn’t expect to learn from so many brilliant individuals. (The team consists of alumni from various local universities and from different disciplines, including NUS, SMU and SIM as well as alumni from Ivy-league universities including Harvard, Stanford and LSE. I had the opportunity to learn vastly different skill sets from the best and the brightest people.

Martin: Exceeded expectations. The amount of smart and driven people crowded into a 15m by 10m room (old office at Raffles Place), plus my wonderful mentor (Xin Ying) made my 7 weeks there an amazing one.

Kelvin: Yes, FS would be a full step slower, if not for our interns. It’s amazing what one can achieve, if you put a little faith in them. All our interns in the previous batch has joined us full-time. We’d be delighted to have our star interns onboard too before or after their graduation, including Eugene even if he’s joined the ‘dark side’.

Read More: This New App Can Help You Kick Start Your Investment Journey

Weirdest thing you’ve done in FS?

Sherman: Doing the Macarena & Gangnam Style dance with the bosses. It was weird but still fun.

Victor: I literally designed the toilet signs. The Game of Thrones fans in office (probably half the office) was upset that we couldn’t name the meeting room after the locations in Game of Thrones and Lord of the Rings, so as consolation we named the toilets Hodor for ladies and Mordor for men.

Martin: I used Kelvin’s nerf gun (Sorry Kelvin) and had a nerf battle with some of the team members after work!

Advice for future interns?

Sherman: Be a sponge and absorb as much as you can during your internship. Always be ready to learn and accept challenges even if you think you do not have the skills required. The FS team is always ready to guide and support you along the way.

Martin: Come in with an open mind. Be prepared to accelerate your learning, because the learning curve will be steep. Talk to everyone, especially someone from a function you don’t know much about. Ask, ask, ask; but also ask the right questions – questions you cannot find the answers for in Google. If your reaction to topics like UI/UX or Software Engineering is “eeeh, so difficult”, then FS is not the place.

Eugene: Don’t be choosy about what you do, there’s no place for picking and choosing in a startup. Nobody can silo themselves off as just “Business Development” or “Tech”, everybody has to synergize with each other in order for the company to thrive. If this means doing something outside of your own job scope or your initial expectations, just embrace it! It’s another chance to learn.

Kelvin: “Don’t let anyone look down on you because you are young, but set an example for the others in speech, in conduct, in values, in faith and in conscience.”

This article was first posted on the blog of Funding Societies (Singapore). Click here for the original article.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

6 Different Types Of Alternative Investments You Should Consider

Whether you’re just looking, or starting out in investing, it will be helpful to understand the major instruments with which people tend to invest. This video gives an overview of 6 main investment options, as well as their qualities and characteristics. 

Read More: Starter’s Guide: 6 Different Types of Investments For You To Consider

Read Also: This App Can Help You Kick Start Your Investment Journey

Find out more about alternative investing at Funding Societies here.

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

 

How Technology Can Revolutionise The Way We Invest

The older generations love gold and properties as their mode of investment and method to hedge against inflation. With the advancement of the Internet and technology, the new generation of investors are now more well-equipped with information and new investment opportunities. This is especially so in recent decades, when the huge leap in technology opens up a whole lot of new sub sectors in the digital industry which can potentially revolutionise the way we invest.

Let us look into 5 growing digital sub sectors and how it can create new investment opportunities.

1. Crowdfunding

According to Investopedia, Crowdfunding refers to the use of small amounts of capital from a large number of individuals to finance a new business venture. Typically, crowdfunding is either reward-based or equity-based.

For reward-based crowdfunding, entrepreneurs or inventors will pitch their product idea to investors, in exchange for a free or discounted finished product. An example of such crowdfunding website would be Kickstarter, the world largest reward based crowdfunder where over US$2 billion has been pledged by more than 10 million people since they launched in 2009. Oculus Rift began as a Kickstarter project 3 years ago, and eventually raised US$2 billion. Pledgers of the project were promised to get the upcoming Oculus Rift for free (how we wish we knew this project back then!) However, this type of crowdfunding is not considered as an investment.

As for equity-based crowdfunding, investors can chip in for the projects in exchange for the equity of the firm. The more prominent equity-based crowdfunding platforms are Seedr and CrowdFunder. Locally, Fundnel also offers various funding methods for businesses and investors depending on their suitability.

Based on 2014 statistics, Asia is recording exponential growth in crowdfunding market, contributing 21% to the global funding volume. Globally, an estimated US$87,000 is raised every hour.

2. Peer-To-Peer (P2P) Lending 

P2P lending refers to a debt financing method which enables individuals to borrow or lend, without the traditional brick and mortar financial intermediaries. Investors can lend money to the businesses in exchange for periodic interest payment and the principal amount upon maturity. It is also known as social lending. Without the traditional financial intermediaries such as banks and finance companies, P2P lending narrows the interest spread between lenders and the borrowers which is beneficial to both parties.

P2P lending is usually deemed as risker as investors are lending their money to businesses that banks might have rejected their loans. However, there are many reasons why banks can reject a loan. And one of the main reason is that these SMEs do not have enough history of track records in earning ability or cash flows.

P2P lending platforms can help to assure the investors by doing first-round screening of the SMEs before posting them online. Financial information are also provided for the investors to do due diligence.

MoolahSenseFunding Societies and Capital Match are some of the P2P lending platforms in Singapore.

3. Bitcoin

Bitcoin is a digital currency (also known as crypto-currency) created in 2009 with the promise of lower transaction fee than traditional online payment methods. It is the most accepted digital currency and some businesses accept Bitcoin as a mode of payment for goods or services. Besides acting as a mode of payment, Bitcoin is also seen as a type investment for many people. However, price of Bitcoin can be very volatile. The highest recorded price was US$1,151 per Bitcoin in 2013 while the lowest was US$205 in 2015. As at 15 Feb 2015, price of 1 Bitcoin is at US$404.

To find out moreBitcoins Investopedia 

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4. Direct Purchase Insurance (DPI)

DPI enable consumers to buy basic life insurance policies directly from the insurance companies online, without having to go through financial advisors and hence, bypass commission charges. This initiative implemented by Monetary Authority of Singapore (MAS) to allow Singaporeans to have access to basic protection without any financial advice. Consumers can compare financial products offered by different insurance companies using online platforms like CompareFirst and take their time to decide which policy best suits them.

This initiative, together with vast availability of information online, people can make more informed choice and hence reduces the conflict of interest for insurance agents. The current commission based system might prevent some of the agents from recommend the soundest advice for their clients.

Read Also: Will Buying Life Insurance Online Be The Next Big Thing?

5. Ecommerce

Everyone loves Ecommerce. Yes, everyone, even the Durian sellers.

People love to buy things online for many reasons. It can be due to convenience, price competitiveness, price comparison or variety. The trend of buying things online is set to grow further and hence, listed ecommerce companies presents an unprecedented investment opportunities for the investors. The ecommerce sector is undergoing explosive growth, attracting US$112 billion worth of investments globally in 2014.

With increased connectivity and the advancement of technology, it spurs a new wave of innovation and the birth of new subsectors. This also presents more investment options hence moving investors away from the more traditional investment methods. It is worth looking more in-depth in digital sector than ever before.

To find out more about the digital sector, visit sgx.com/digitalsector

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

Source of top picture

Investing in an Uncertain World

Here’s an example of how uncertainty can affect the average investor: prior to the 2016 US Election Day, most polls had projected a Hillary Clinton victory. The eventual result was different, not to mention unexpected. The shock impacted the markets even before the official winner was declared. As Donald Trump’s victory became more and more assured, gold prices soared; the metal is generally seen as a safe asset and a hedge against inflation. Meanwhile, emerging market stocks tumbled and the US dollar reached its highest point since 2003.

In the immediate aftermath of the 2016 USA elections, the markets certainly reacted and the fluctuation reflected anxiety for the future. Investors asked: is long-term market stability still possible? Will the markets continue on this volatile streak? Will they calm after a while? Given a situation of financial instability, what should the typical investor do?

Donald Trump’s victory was a catalyst for financial swings, but the reality is, market instability often happens and investors need to prepare accordingly. Certain (but not excessive) precautions should be taken to buffer against unexpected upheavals. How to do so? Diversify your portfolio, hunt for new investment opportunities, and stay calm even during choppy times.

Diversify Your Portfolio

Political events often upset both the markets and investor confidence. Some investors choose to behave in a more conservative manner (see the spike in demand for gold immediately after the 2016 USA presidential elections). Others choose to try and time the market in the middle of insecure times by pulling their assets and getting back in later when the markets stabilize.

But timing the market is a very risky affair, even for experts. If you want to fortify your portfolio in anxious times, you should diversify across different asset classes and rebalance your instruments periodically to maintain your risk profile.

Telling investors to diversify is very basic advice, but think about it. Diversifying your investments is something you can control in the midst of uncertainty. You get to choose which instruments to purchase and how much money you are comfortable allocating into each asset class.

The main idea here is to balance the potential for risk and reward. For example, let’s say your portfolio consists of company stocks and precious metals. Your stock value may have been erratic over the USA election season, but the value of your gold has gone up. As you can see, with a well-diversified portfolio, you remain in the clear if the stock markets fluctuate for the long-term, as your returns aren’t determined by the performance of a single asset class.

Don’t overload yourself with real-time market information, but do look at all asset classes and see how they will fit into your portfolio and your risk tolerance. The bottom line is: if your overall portfolio is doing fine, then geopolitical situations matter less.

Read Also: This Infographic Will Tell You All You Need To Know To Defend Your Investments

This Is a Good Time to Hunt for New Investment Opportunities

If you think your investment portfolio is already well-balanced and you have covered the basics (fixed deposits, bonds, gold, stocks, etc), you can research new places to invest your money. There is an advantage to routinely looking at all the available options and seeing how they fit your portfolio because over time, asset classes produce different results. So to maintain your preferred risk profile, an investment portfolio needs periodic rebalancing.

If the current market climate is rendering you a little skittish, you can try investing small sums into alternatives. Technology, for instance, can be a promising sector.

Internet stocks are obvious suspects. Think about how essential brands like Google have become. But note that unless you are an early investor in these tech companies, your returns won’t be spectacular. Also, if you already own company stocks, other areas in technology can answer the gap in your portfolio.

Innovative and profitable technology companies are not exclusive to Western markets. One technology-based investment opportunity that’s growing in Singapore is peer-to-peer (P2P) lending, which utilized online platforms to match borrowers and investors. Borrowers take out financing for working capital or other business necessities, while investors who had collectively funded the financing opportunities gain interest-based earnings in return. Investing in P2P lending has several benefits: good return rates higher than deposits or bonds, a low entry barrier suitable for those wanting to try the business model first, and a streamlined online process.

Despite being a relatively new instrument, a study by the UK Peer to Peer Finance Association (P2PFA) stated that so long as investors are educated and the regulatory framework is sound, P2P lending does notcreate systemic risk. In fact, defaults would need to increase at least threefold from current levels to whittle down investor interest rates to below zero.

These days, certain apps can give you real-time updates on your favorite investments or even figure out the best investment mix for you. New opportunities are out there. Take the time to research and find new investments you can be confident in. Look for instruments with good growth that you can feel secure in.

Stay Calm and Don’t Make Rash Decisions

Yes, it can be difficult to enact this advice when your portfolio contains your hard-earned money, future hopes, and retirement plans. Investing can be as emotional as politics, making it difficult to stop watching the market’s every move. Yet it is counterproductive to overanalyse the current situation; there are too many variables. All the information overload can induce panic and cause you to “sell low, buy high” instead of the other way around. Additionally, don’t succumb to the temptation of making speculations. Impulsive decisions can change your portfolio drastically and at the moment, you need a balanced and stable portfolio.

Read Also: Invest Based On Your Investment Objectives, Not What Others Are Saying

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.

The Fintech Revolution In Singapore: Here’s Why It’s Here To Stay

It’s undeniable that technology will increasingly impact the way we live, work, communicate and entertain ourselves. From the moment we wake up, we are logged on to technology.

We check our phones to reply any messages we’ve received. We use Grab to book a ride to work or check the arrival timings on buses. We also reply emails or catch up on news stories and social media gossips on the way to work.

Throughout the day, we use Google to search for information, Facebook to look into what our friends and family are doing, browse Agoda, Expedia, TripAdvisor and Airbnb, to look into our holiday plans. Other aspects of our lives including dating, either using Tinder or stalking dates on social media, travelling, using Google Maps, playing games on our phones, shopping on Zalora and Alibaba or RedMart and Amazon, and also to watch our favourite TV shows on Netflix if we are willing to pay, or to stream from illegal websites if we are not.

Having infiltrated most aspects of our lives, it’s not difficult to fathom that our phones will not only be our source of entertainment, our shopping mall, our travel agent and our personal assistant, it will also be our bank.

The Fintech Revolution In Singapore

As a nimble, technologically advanced country with an educated population, Singapore is well-placed to be a laboratory for technological solutions and innovations, including in the Fintech space.

Testament to the importance placed on fintech in Singapore, several schools themselves have started to include fintech modules into their courses. This will supply a talented pipeline of workers to the sector as schools continue to broaden their programmes to include fintech.

At the tail-end of 2016, Singapore hosted its first Singapore Fintech Festival. Just to get an idea of the scale of this, there were more than 11,000 attendees from more than 50 countries over the five day festival.

The country has also showed its intention to continue being at the forefront of fintech by committing to an investment of over $225 million over the next five years in 2015. Besides funds, implementing a collaborative system and vibrant fintech infrastructure is another initiative the Singapore government is taking seriously to grow the industry.

For the longer-term, the government seems set to playing its part to drive the industry. The MAS (Monetary Authority of Singapore) has confirmed that it will host the Singapore Fintech Festival again this year. Moreover, it will also be awarding up to $1.15 million at the Fintech Awards.

Read Also: 4 Jobs In Finance That Technology Will Be Disrupting

Despite these efforts, there are some reports stating that fintech penetration in Singapore is not the pretty picture everyone is painting it. Ernst & Young’s EY FinTech Adoption Index 2017 placed fintech adoption in our island nation at 23%. This is behind the likes of Switzerland, Hong Kong and Mexico, and way behind even developing nations such as China, India and Brazil.

The reason for this may be that penetration is easier for developing countries whose regulations are more relax. Whereas in Singapore, there are strict laws in place, which includes protecting copyrights and intellectual properties.

There are also developed countries that place ahead of Singapore, and this is an area that should be improved. One reason it may have happened is due to the strong companies that dominate the local financial marketplace, especially in the banking and insurance sectors. These companies that dominate the local markets are also highly profitable, which makes it less likely they would change the status quo without being encouraged to do by regulation.

How some of these walls can be broken is by good regulation and working with industry players to seek win-win solutions. This can be seen in MAS’ recent establishment of a Payment Council, that includes 20 leaders of such institutions in Singapore. The country has a great number and penetration of e-payment systems – but these are not interconnected which makes it a hassle for consumers even though easy solutions could be at hand to link them to one another.

Fintech Companies Are Also Doing Their Part

Companies and individuals in the country are also doing their part to upkeep a vibrant fintech arena.

Block 71 at Ayer Rajah, proclaimed as the world’s most tightly packed entrepreneurial eco-system with close to 750 start-ups, has been producing many technological companies, several in the fintech space, which are ready to make their mark in Singapore and beyond.

At the same time, Lattice80, a co-working space, was launched in the heart of our Central Business District during the fintech festival. Claiming to be the world’s largest fintech hub, Lattice80 says it prides itself on creating an eco-system for fintech start-ups to collaborate, connect and co-create.

Events like ShareInvestor’s InvestFair has also started to adopt a fintech spin to put forward a relevant event for audiences. DollarsAndSense was invited to be the moderator of two panel discussions this year, and we gained good insights into what the industry was doing.

How You Can Benefit From The Fintech Wave

In the insurance space, there are more and more companies trying to sell insurance online. This means consumers get more information and may pay less in commissions to insurance agents if they’re savvy enough to buy the insurance products they need.

Some new insurance companies are also trying to be the Agoda of insurance, where they list products and help you compare and rate insurance policies, letting you make a more informed decision. One such company you can buy travel, car, home, pet or maid insurance from is Insurance Market, which does not have a single agent selling products for the company – everything is done online.

Within the payments space, e-wallets and mobile applications such as DBS’ Pay Lah!, OCBC’s Pay Anyone as well as a peer-to-peer payments system Pay Now that allows consumers to transfer money to anyone. Mobile payment solutions have also been accelerated by Samsung Pay, Apple Pay, Google Wallet, PayPal and even cryptocurrencies such as bitcoin playing their part ensure consumers have the most convenient solutions to make their payment. This space is one of the most vibrant with many players in the market.

The lending space is predominantly catered to companies that require financing. Some of these companies may not be able to receive it because they haven’t built enough traction to get a bank loan or in other occasions they only require it for a very short term. Based in Singapore, Funding Societies, the only Southeast Asian digital lender to ranked in Fintech 250, a global list by CB Insights of the top 250 fintech companies in the world.

Also Read: One FinTech Company Hopes To Help SMEs Solve Cash Flow Challenges That Even Banks Have Problems With

Funding Societies provides P2P lending to SMEs in Singapore, Malaysia and Indonesia. Even though they lend money out to riskier borrowers to earn a higher rate of return, they have a robust system in place to ensure credit risk is minimised. Investors like us can earn higher returns by putting our money with them. To-date, Funding Societies has made over 750 loans and have a repayment rate of 96.1%.

Investing is another sector that investors can greatly benefit from. Traditionally, we used to use brokers and this gradually moved to many people investing through online portals. The next wave is to leverage on robo-advisors to invest your money for you.

Companies like iFast has its My Assisted Portfolio Solution (MAPS) that frees you from the challenge of building a robust investment portfolio and then having to constantly monitor and rebalance it. And because this is done through algorithm-based investing, transaction and management fees are brought down too.

Read Also: FSMOne: How Singapore Investors Can Now Trade SGX Stocks With The Same Platform They Use For Bonds & Unit Trusts

Funding Societies is a DollarsAndSense Brand Connect partner. If you are interested to know them better, you can find out more on what they do on our DollarsAndSense Brand Connect Page.