MoolahSense is a lending platform that connects SMEs (small-to-medium enterprises) who seek short-term business loans from investors. They work on the principle of crowd-lending where investors make income returns from the repayments made by the loan borrowers.
The popularity of crowd-lending in Singapore is growing as an alternative investment class for Singaporean investors. For MoolahSense, their minimum amount for investment starts as low as S$1,000. This allows retail investors like you and me who don't want to risk too much of their portfolio, a diversification. Also, the campaigns listed on MoolahSense typically give an upwards of 10% interest per year (amortized interest). That is a very attractive rate for retail investors!
However, nothing comes for free. With the high interest rate, comes the high risks with it. The biggest risk for investors is the loss of their capital in the event the loan borrowers default on their payments. You could lose your entire invested capital! Besides the risk of losing your capital, you also have the risk of your funds being illiquid due to late repayments.
I had created an account with MoolahSense way back in Jan 2016. Initially I was skeptical about the rewards from the risks required to be taken by the investor. However, seeing so many successful campaigns throughout the year, I recently decided to dabble in one of their campaigns as well. I took out the minimum S$1,000 and subscribed to one of their campaigns.
Needless to say, for every campaign, you need to do your own due diligence by looking up the company as well as the provided financial information on MoolahSense. The financial information provided are sometimes not verified and maybe even undisclosed.
I will be sharing my experience moving forward. I do hope that my campaign goes well. I might just go for a few other campaigns if I see good feedback from this trial!
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