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Crowd funding bond with 21% interest


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Came across this link in my facebook.

https://moolahsense.com/running-campaign.php?company=Beauty

 

Clicked, and woots... a bond that promises 21% returns per year.

And already raised 82% of its required capital??

 

My first thoughts... why does the company raising the funds want to give 21% interest?

Loan sharks is only 24% afterall!!

 

2nd thoughts. Deal sounds too good to be true for the investors. Damn bloody risky. But with just a simple video and wall of text, they can get $200K? S'poreans money very easy to take.

 

post-49492-0-62632200-1439891977_thumb.png

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No offence but I personally know the co-founder of Moolahsense and it is not fair of you to slap it before you fully understand how the crowd-funding model works.

 

In the example that you have given, 15% is the lowest qualifying offer and it sets the lending base rate at this moment. Given that there are still 7 more days to go, the lending rate should fall further as competition amongst lenders heats up towards the close.

 

 

Came across this link in my facebook.

https://moolahsense.com/running-campaign.php?company=Beauty

 

Clicked, and woots... a bond that promises 21% returns per year.

And already raised 82% of its required capital??

 

My first thoughts... why does the company raising the funds want to give 21% interest?

Loan sharks is only 24% afterall!!

 

2nd thoughts. Deal sounds too good to be true for the investors. Damn bloody risky. But with just a simple video and wall of text, they can get $200K? S'poreans money very easy to take.

 

attachicon.gifCapture.PNG

 

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No offence but I personally know the co-founder of Moolahsense and it is not fair of you to slap it before you fully understand how the crowd-funding model works.

 

In the example that you have given, 15% is the lowest qualifying offer and it sets the lending base rate at this moment. Given that there are still 7 more days to go, the lending rate should fall further as competition amongst lenders heats up towards the close.

 

 

 

 

Hi OmOm I though it will be cheaper it biz try to loan from bank instead from crowd funding? if a company or individual need to use crowd funding to gather fund, my impression is the company may not be able to loan that amount from the bank /or he have already depleted that option.

 

Is it cheaper to loan from via crowrd funding, im talking about those business loan from bank (biz property loan, commercial vehical loan etc) not credit card or credit line.

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Hi Bacteria83,

 

The funding requirements of borrowing companies vary but one of the most common reasons is cash-flow. For example, a company can be solvent with healthy receivables but still run into cash-flow problems due to poor payment practices by its customers.

 

Many finance companies today have stringent lending standards. This is good for the financial sector on a whole but can result in genuine and solvent borrowers not able to obtain the required funding in time to tide over tight cash-flow situations.

 

One of the premises of this platform is to invite competition from lenders (investors) and as a result of that competition, cause lending rates to fall to reasonable and meaningful levels.

 

Many of the campaigns seem to have closed with publicised nominal rates that look out-of-this-world but if you look into the effective interest rates (EIR), they hover between the 4% to 6% mark, which may seem high to the man-in-the-street but are average for corporate loans.

 

I am not obliged to defend Moolahsense but I feel it is unfair to slam them as a scam when they are a young start-up living out their dreams of creating something innovative which can potentially benefit genuine companies requiring cash-flow or project financing as well as investors who are seeking good yields on their funds.

 

There is always risk in any form of investment and the same applies to those featured on the platform. So if you decide to go into it, enter with your eyes wide open, spend time to understand how the crowd-funding model works, carry out due diligence on the borrrowing companies and have a strong stomach for financial risk.

 

My words are not meant to endorse this platform but more of standing up for entrepreneurial folks who are willing to put in time and effort to create something that they truly believe in.

 

 

 

Hi OmOm I though it will be cheaper it biz try to loan from bank instead from crowd funding? if a company or individual need to use crowd funding to gather fund, my impression is the company may not be able to loan that amount from the bank /or he have already depleted that option.

 

Is it cheaper to loan from via crowrd funding, im talking about those business loan from bank (biz property loan, commercial vehical loan etc) not credit card or credit line.

 

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Investment 101.. high return = high risk. Simple as that.

 

 

Even ah beng loan sharks knows that and give out loan with different interest rate depends on the debtor status.

Edited by Tigershark1976
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thanks for the explanation

 

 

Hi Bacteria83,

 

The funding requirements of borrowing companies vary but one of the most common reasons is cash-flow. For example, a company can be solvent with healthy receivables but still run into cash-flow problems due to poor payment practices by its customers.

 

Many finance companies today have stringent lending standards. This is good for the financial sector on a whole but can result in genuine and solvent borrowers not able to obtain the required funding in time to tide over tight cash-flow situations.

 

One of the premises of this platform is to invite competition from lenders (investors) and as a result of that competition, cause lending rates to fall to reasonable and meaningful levels.

 

Many of the campaigns seem to have closed with publicised nominal rates that look out-of-this-world but if you look into the effective interest rates (EIR), they hover between the 4% to 6% mark, which may seem high to the man-in-the-street but are average for corporate loans.

 

I am not obliged to defend Moolahsense but I feel it is unfair to slam them as a scam when they are a young start-up living out their dreams of creating something innovative which can potentially benefit genuine companies requiring cash-flow or project financing as well as investors who are seeking good yields on their funds.

 

There is always risk in any form of investment and the same applies to those featured on the platform. So if you decide to go into it, enter with your eyes wide open, spend time to understand how the crowd-funding model works, carry out due diligence on the borrrowing companies and have a strong stomach for financial risk.

 

My words are not meant to endorse this platform but more of standing up for entrepreneurial folks who are willing to put in time and effort to create something that they truly believe in.

 

 

 

 

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True in most cases but not always. High returns can come from relatively low risks if there are information gaps that are available to the individual investor.

 

Investment 101.. high return = high risk. Simple as that.

 

 

Even ah beng loan sharks knows that and give out loan with different interest rate depends on the debtor status.

 

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I just read a book where the author describes his major investment mistake as investing in a company which did this.

 

Millionaire teacher by Andrew Hallam.

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No offence but I personally know the co-founder of Moolahsense and it is not fair of you to slap it before you fully understand how the crowd-funding model works.

 

In the example that you have given, 15% is the lowest qualifying offer and it sets the lending base rate at this moment. Given that there are still 7 more days to go, the lending rate should fall further as competition amongst lenders heats up towards the close.

 

 

 

 

Regardless of the final rate, fact is, the company in question is willing to pay 21% P.A interest on that $250K loan.

That is not a rate that a sound company would be willing to pay. This is afterall Singapore where interest rates are at all time lows.

 

In the FAQ section, I found a single line response to the worst fear of any investor... Not very assuring wor.

post-49492-0-43885300-1439905541_thumb.png

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True in most cases but not always. High returns can come from relatively low risks if there are information gaps that are available to the individual investor.

 

 

 

information gap? maybe happening 50 yrs ago when people still using type writter and telegram... now people use smartphone and 4G. News travels within minutes....

 

Information available to individual investor? perhaps yes but thats confirm not applicable to average retail investor like most of us here. In the 1st place, why does the business owner wanted to offer higher return to that individual investor while he could give lesser returns to the public?

 

Of course, for the sake of argument, you can say that a son have a business that sure make money and ask the father to invest... that will fit in well to your theory of "information gaps that are available to the individual investor." but such example doesnt not really fit into our discussion here.. Its more like family affair.

 

Low risk high return investment doesnt exist. but If you believe in fairy tales, then thats another set of story...

 

Regardless of the final rate, fact is, the company in question is willing to pay 21% P.A interest on that $250K loan.

That is not a rate that a sound company would be willing to pay. This is afterall Singapore where interest rates are at all time lows.

 

In the FAQ section, I found a single line response to the worst fear of any investor... Not very assuring wor.

attachicon.gifCapture.PNG

 

The disclaimer is kanna sai... with or without such disclamer, the investor can sue. but sue who? the company that winded up?

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I feel your intentions are good in wanting to warn people about the dangers of jumping into risky propositions and I applaud that. As mentioned, I am not incentivised to defend their business model. However I do hope that you see the angle that I am coming from - this is a platform that functions like a match-making site for businesses and investors.

 

The owners and administrators of any platform have the responsibility to ensure safety of their users but it is logistically impossible to guarantee that there will not be any malicious intent on the part of the people using it. It is akin to a discussion forum where people from all walks of life converge to discuss various subject matter. Moderators can help police the platform but the crux is that bad things can still happen even though most outcomes are positive.

 

It is not fair to claim that the platform is a scam when its primary role is to provide the link-up for financing. This discredits the founders who have put in time, energy and resources to make it work. It is akin to claiming that social media is bad for society because there are a lot of bad hats who use it to prey on the weak and vulnerable. Ultimately these modern platforms are tools and they can be used for both good and evil. The individual users still have to exercise discretion and caution.

 

 

 

Regardless of the final rate, fact is, the company in question is willing to pay 21% P.A interest on that $250K loan.

That is not a rate that a sound company would be willing to pay. This is afterall Singapore where interest rates are at all time lows.

 

In the FAQ section, I found a single line response to the worst fear of any investor... Not very assuring wor.

attachicon.gifCapture.PNG

 

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The point that I am trying to put across is that a blanket statement "high return = high risk" is impossible to defend because there are situations in which risks are low to moderate and returns relatively high. As you have highlighted, such situations may not be applicable to the average retail investor, but that does not mean it is non-existent.

 

This is one of the keys reasons why the wealth gap is increasing in the world. Individuals with resources tend to have access to information that most people do not have. This information gap provides the arbitrage opportunity to achieve a low-to-moderate risk and high return combination. Coupled with capitalism, this produces a powerful force that segregates the wealthy from the rest.

 

 

 

information gap? maybe happening 50 yrs ago when people still using type writter and telegram... now people use smartphone and 4G. News travels within minutes....

 

Information available to individual investor? perhaps yes but thats confirm not applicable to average retail investor like most of us here. In the 1st place, why does the business owner wanted to offer higher return to that individual investor while he could give lesser returns to the public?

 

Of course, for the sake of argument, you can say that a son have a business that sure make money and ask the father to invest... that will fit in well to your theory of "information gaps that are available to the individual investor." but such example doesnt not really fit into our discussion here.. Its more like family affair.

 

Low risk high return investment doesnt exist. but If you believe in fairy tales, then thats another set of story...


 

The disclaimer is kanna sai... with or without such disclamer, the investor can sue. but sue who? the company that winded up?

 

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21%, GIC temasek got invest?

21%, must as well borrow from bank

 

reach banker's limit already? so cannot borrow more?

if banker don wanna lend, you want to?

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Turbocharged

The point that I am trying to put across is that a blanket statement "high return = high risk" is impossible to defend because there are situations in which risks are low to moderate and returns relatively high. As you have highlighted, such situations may not be applicable to the average retail investor, but that does not mean it is non-existent.

 

This is one of the keys reasons why the wealth gap is increasing in the world. Individuals with resources tend to have access to information that most people do not have. This information gap provides the arbitrage opportunity to achieve a low-to-moderate risk and high return combination. Coupled with capitalism, this produces a powerful force that segregates the wealthy from the rest.

 

 

 

True and it is also true that this platform is open to retail "investors"

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The point that I am trying to put across is that a blanket statement "high return = high risk" is impossible to defend because there are situations in which risks are low to moderate and returns relatively high. As you have highlighted, such situations may not be applicable to the average retail investor, but that does not mean it is non-existent.

 

This is one of the keys reasons why the wealth gap is increasing in the world. Individuals with resources tend to have access to information that most people do not have. This information gap provides the arbitrage opportunity to achieve a low-to-moderate risk and high return combination. Coupled with capitalism, this produces a powerful force that segregates the wealthy from the rest.

Well, since you know them and so confident about their model... How much you invested?

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