by Tunku Danny Mudzaffar
For a very long time, investing has been largely labelled as a rich man’s pastime – something only the wealthy and large institutions had access to. Over the years, investing has gradually become more inclusive as strides in technological advancements have allowed platforms to provide access to investment products in a cheaper, quicker, and more efficient manner. This has led to many market intermediaries looking to find relevance in an age where more Do-It-Yourself (DIY) investors are coming into the picture. The by-product of this is that investors need not spend large sums of money to begin their investment journey, with many fintech platforms allowing micro-investments from just a few sen to only RM50. This democratisation of investing has led to the boom of P2P financing / P2P lending seen in many countries throughout the world, including Malaysia.
So, what is P2P Financing? P2P Financing is an alternative financing tool that allows Issuers (borrowers) to obtain financing from Investors (lenders) without having to go through a financial institution. Therefore, it is both an alternative financing product as well as an alternative investment product at the same time. Currently, there are 11 P2P Financing Operators that are regulated by the Securities Commission Malaysia (SC) offering a variety of investment options – from investing in micro-enterprises to larger SMEs, from clean financing to invoice financing, and from Shariah-compliant to conventional.
While investing is more accessible than it has ever been, DIY investors still need strategies that can help maximize one’s profit and reduce your risk at the same time. As always, investing is not an exact science and a combination of skill and luck may be required. Below are a few recommended tips that I use on my own P2P Financing platform that I founded, called microLEAP, which you may find useful: