Higher returns are a big draw for small-time investors, but there’s little recourse if things go wrong
It was a simple concept that first drew financial analyst James Yeo to crowdfunding – the chance to earn bumper returns when decent yields from other investments were pretty hard to come by.
Mr Yeo (not his real name) made his first investment on a peer-to-peer (P2P) lending platform late last year, putting up a $1,000 loan to a seafood wholesaler that was raising funds to buy and farm hairy crabs. The lure? A handsome annual return of 23 per cent.
Mr Yeo, who has received repayments for nine of the 12-month loan tenure, tells The Sunday Times: “It’s good that in crowdfunding, I have control over my risk through my choice of loans. It’s as though I’m playing the role of a bank in choosing which companies I want to lend to.
Here is why this article is important: Many of you are interested in investing in crowdfunding loans. This is a great article about the things you should consider first.