The Top 3 P2P Investing Tips

05 October, 2015

While you might be new to this form of investing, the peer-to-peer lending phenomenon has made a recent surge in the US, UK and beyond.  Borrowing and lending via an online marketplace, rather than a conventional financial institution, is still a relatively new concept and can be difficult to understand and trust.  But there is immense potential in the budding P2P market and there are exciting times ahead. 

We at Monexo are at the forefront of this revolution in Hong Kong, and have put together our three most important tips for you to consider as you make the exciting leap into the world of P2P lending!

1. Know your lending platform: P2P Lending has taken off and that has invited a myriad of platforms to move into the marketplace lending space. Look into the processes of a particular organization thoroughly and compare with other platforms before contributing your hard earned money. Enquire about the industry’s regulations and what steps the company has taken to ensure their offerings are compliant with them. Ask the company how their offerings are bankruptcy remote so you will never have to worry about some other failed project cascading and dragging down your own.

At Monexo, we pride ourselves on being Hong Kong’s first peer to peer marketplace and have put many regulatory checks in place to ensure the complete transparency and safety of your investments.

While P2P lending is still unregulated in Hong Kong, Monexo has adopted the best practices from the UK FCA regulations for Peer to Peer Lending and consistently works with the HK government to develop a regulatory framework for the industry here.  Perhaps most notably, Monexo keeps an arms length away from both the borrower and lender by using a third party trust company, The Hong Kong Trust Company (HKTC) to store all funds securely.  The HKTC will hold the lenders’ investment and receive repayment from borrowers who transact through the Monexo marketplace, providing additional security to the platform’s users.

2. Diversify: This is one of the major advantage of investing on a P2P platform.  You now have the ability to contribute a smaller amount of money over a much wider array of opportunities.  A high level of diversification protects you from the event of an individual default and also makes your investment returns more predictable.  So we advise you to spread your eggs across different projects, asset classes, platforms and geographies.  It’s easier than it sounds.

On Monexo’s platform, a lender will have the option to peruse through all the approved loan applications from potential borrowers and allocate as little or as much money as they want to each one.  In fact, Monexo allows lenders to deploy as little as HKD$1000 into any given loan.  Find out more about how you can diversify as a lender in the Monexo marketplace here.

3. Learn about default procedures: Understand how the platform operates in the case of a borrower’s default.  What measures have been employed to curb risk?  What kind of insurance coverage do they offer?

Monexo offers an insurance plan backed by AIG to protect against scenarios that might occur on the borrowers’ side.

The platform’s first product, rent-in cash, also ensures that lenders and borrowers on the platform own property in Hong Kong and are collecting rental income, considerably minimizing the risk of default.  To read more about the Monexo - AIG protector, click here.

Thanks for reading! Tune in next week and check out the next edition of #MonexoMonday! Like, share, and tweet us your ideas, questions or comments @WorldofMonexo. #MonexoMonday