Minimize your investment Risks with Diversification

Diversification simply means distributing your funds across as many SMEs as possible to prevent loss in case a SME defaults.


Illustration


IN NORMAL CONDITION
  • Capital

    S$1,000

    Interest rate

    20% p.a

    Tenure

    12 months

  • Total Returns

    S$1,200

Assumption: Chance of default = 3%
WHEN DEFAULT OCCURS

WITHOUT DIVERSIFICATION, your returns will decline drastically and can even become negative.

1 Borrower

Loan Condition

1 SME defaults

Total returns

S$700

Rate of returns

-30%

WITH DIVERSIFICATION, your returns will stay positive and remain close to the expected rate of return.
 

10 Borrowers

Loan Condition

1 SME defaults

Total returns

S$1,150

Rate of returns

15%

100 Borrowers

Loan Condition

3 SME defaults

Total returns

S$1,185

Rate of returns

18,5%

Assumption: Chance of default = 3% | Chance of loss = 30% | Diversify to Similar SMEs
The more diversified you are, the more protected your investment. Even defaults hardly disturb your rate of return.

Maximize your Returns with Reinvestment

Reinvestment simply means using your capital gains to fund other SMEs while maximizing your returns!


Illustration


Without Reinvestment

Without reinvestment, you only receive the expected rate of return from a loan.

  • Month

    Investment

    Interest (20% p.a)

    Return

  • 1

    S$83.3

    S$16.7

    S$100

  • 2

    S$83.3

    S$16.7

    S$100

  • 3

    S$83.3

    S$16.7

    S$100

  • 4

    S$83.3

    S$16.7

    S$100

  • 5

    S$83.3

    S$16.7

    S$100

  • 6

    S$83.3

    S$16.7

    S$100

  • 7

    S$83.3

    S$16.7

    S$100

  • 8

    S$83.3

    S$16.7

    S$100

  • 9

    S$83.3

    S$16.7

    S$100

  • 10

    S$83.3

    S$16.7

    S$100

  • 11

    S$83.3

    S$16.7

    S$100

  • 12

    S$83.3

    S$16.7

    S$100

  • S$1,000

    S$200

    S$1,200

Assumption: Total capital = S$1,000 | Interest Rate = 20% | No default
With Reinvestment

With reinvestment, you can effectively increase the size of the fund to SMEs while realizing greater returns.!

  • Month

    Investment

    Interest (20% p.a)

    Return

  • 1

    S$83.3

    S$16.7

    S$100

  • 2

    S$91.7

    S$18.3

    S$110

  • 3

    S$100.8

    S$20.2

    S$121

  • 4

    S$110.9

    S$22.2

    S$133.1

  • 5

    S$122.0

    S$24.4

    S$146.4

  • 6

    S$134.2

    S$26.8

    S$161.0

  • 7

    S$147.6

    S$29.5

    S$171.0

  • 8

    S$162.4

    S$32.5

    S$194.9

  • 9

    S$178.6

    S$35.7

    S$214.3

  • 10

    S$196.5

    S$39.3

    S$235.8

  • 11

    S$216.1

    S$43.2

    S$259.3

  • 12

    S$237.8

    S$47.5

    S$285.3

  • S$1,782

    S$356.4

    S$2,138.4

Your returns will be reinvested to other SMEs
(S$100 from month 1)

Assumption: Total capital= S$1,000 | Interest Rate = 20% | Reinvest to Similar SMEs | No default
Double, triple, maximize your returns with Reinvestment while minimizing your investment risks in case of default.



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