Saturday, 17 October 2015

Peer to Peer Lending: How I invest and minimize my risk

Some readers may have noticed: Under “My Portfolio” section, I have listed Moolahsense as part of my portfolio. What is Moolahsense?

Moolahsense is a peer to peer lending website where registered users are able to lend money directly to a company who is doing a fund raising campaigns. While the returns seem high, do note that the registered users assumes a large risk where the company may default anytime. Fortunately, the money registered users lend to these companies are similar to bonds; however these bonds are only enforceable in Singapore.

How I screen companies

My criterion is simple and that is to only “invest money” in companies which are past the startup stage of their life cycle. The reason is because matured companies have an operating track record in that business unlike start-ups. It indicates a lower risk of default as compared to start-ups whose business are new and cash flow is tight. 

It is worth noting in Singapore; almost 9 in 10 businesses fail within their first one-two years of operation. In addition, I go for companies that plan to use the proceeds to finance projects or to expand outlets. I will do my online searches to verify the company’s operations.

The second criterion is to check the debt to equity ratio and interest coverage ratios. Like many listed companies, I prefer companies who have a debt to equity which is lower than 0.6. Also, a higher interest coverage ratio indicates the company’s ability to repay debts. A higher interest coverage ratio indicates a stronger financial position.

Moolahsense Portfolio

Below is a screenshot of my portfolio.

Moolahsense Portfolio

While the returns is high, do note the risk is high too as there is a possibility of losing your entire capital unlike shares, I will recommend that only well-versed individuals invest via moolahsense. This is because understanding of finance and due diligence is really needed to invest in peer to peer financing.


  1. Hi Choon Yuan,

    Thank you for sharing your experience with MoolahSense. It was an informative post.

    Just wondering have you heard of Funding Societies?

  2. Hi Adarina,

    Yes, have heard of it. Recently saw its advertisement on social media