Looking to enhance your investment portfolio? Debt investment might just be the right avenue for you. It’s not only about earning returns on your money; it’s about strategically supporting businesses with your investment. Here’s a closer look at what makes debt investment an appealing choice for investors in Malaysia.
Understanding Debt Investment
Debt investment is straightforward: you lend money to businesses, and they pay you back with interest. This approach supports SMEs’ growth while offering you the potential for steady returns.
But like all investments, you must consider all aspects of it from potential returns to risks before making financial decisions.
Low entry barrier
One thing to consider about debt investment is it doesn’t always require a hefty initial investment. With platforms like Funding Societies, you can start investing in debt with as little as RM100. So, even those with limited funds can get on the path to investing.
Exploring debt investment options
There is a wide range of products available to investors, each of which has unique characteristics to fit different financial goals and preferences.
1. Term Financing
Ideal for those seeking steady returns, Term Financing involves lending money that is repaid with interest in equal monthly payments over a set period. This option could yield annual returns of 4-8%.
However, a late payment fee will be charged if the borrower is late on a payment. The borrower’s financial health and credit score will also be assessed closely. The tenor for Term Financing can range from 1 month to 2 years, giving you flexibility.
2. Bullet Financing
Bullet Financing is a liquid investment option that allows investors to invest in short-term loans of up to 120 days. These loans are typically used for working capital or to finance the purchase of inventory. Like Term Financing, the borrower’s financial statements and credit history will also be required, and the interest rate ranges from 4 to 8% per annum. The borrower must also pay a penalty in case of default.
3. Guaranteed Investment Note (GN)
GNs are guaranteed by the issuer, which means that the investor is guaranteed to receive both their principal and interest back at the end of the investment period or no later than 15 days after the due payment date in case of late payment. The simplicity of investing in GNs is another appealing aspect – there’s no need for extensive paperwork.
What’s more, the Auto Invest feature on Funding Societies streamlines and optimises your investment process, allowing you to set your investment criteria and let the platform do the work for you.
Navigating the Investment Landscape
While the opportunities within debt investment are vast and varied, they come with their own set of considerations. Market dynamics and borrower reliability are factors that can influence your investment’s performance. An informed approach, complemented by strategic planning, positions you well to navigate these aspects and make the most of the investment opportunities available.
Play a part in the SME ecosystem
SMEs often require additional capital to expand their businesses or finance new projects, and debt investment allows them to secure funds without giving up company ownership or equity. This affordable investment helps SMEs have a steady cash flow and fund their operations and growth.
How to Sign Up for Funding Societies’ Debt Investment
- Visit this page to create an account, and choose “Sign Up as Investor.” Ensure that the information provided is accurate to your national ID card (for Malaysian citizens) or passport (for non-Malaysian citizens);
- Scan the required documents as follows and upload them to Funding Societies’s online platform:
- For Malaysian nationals: Front and back part of the NRIC.
- Foreigners residing in Malaysia: Passport and Employment Visa/Permanent Resident NRIC/MM2H Visa/Residency Pass Malaysia as Proof of Residential Address.
- Foreigners residing outside Malaysia: Passport.
- Verify your email address, click on “Fill in Subscription Agreement,” and check all boxes;
- Complete the source of wealth declaration form;
- Pay your initial deposit of RM100 via FPX, Online Banking, or ATM Transfer to Funding Societies;
- Set up your withdrawal account by submitting your bank account statement containing the bank logo and bank account details;
- Wait 2-3 business days until the verification process is complete.
Investing in any form can help one build wealth and enhance financial stability. With its low entry barrier and a diverse array of products, debt investment is an accessible option if you’re looking for a starting point or to diversify your investment portfolio. While debt investment holds potential benefits, it comes with its own considerations. If you’re interested in exploring this avenue, consider your financial goals, risk tolerance, and your broader investment strategy.
For those ready to delve into the world of debt investment, starting the journey is just a few clicks away, offering an opportunity to learn, grow, and potentially secure a more stable financial future.