Diversification
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
(Assumption: Chance of default = 3%)
(Assumption: Chance of default = 3%)
When default occurs
(Assumption: Chance of default = 3% | Chance of loss = 30% | Diversify to Similar SMEs)
(Assumption: Chance of default = 3% | Chance of loss = 30% | Diversify to Similar SMEs)
WITHOUT DIVERSIFICATION,
your returns will decline drastically and can even become negative.
WITH DIVERSIFICATION,
your returns will stay positive and remain close to the expected rate of return.
The more diversified you are, the more protected your investment. Even defaults hardly disturb your rate of return.
Reinvestment
Maximize your Returns with Reinvestment
Reinvestment simply means using your capital gains to fund other SMEs while maximizing your returns!
Illustration
Without Reinvestment, you only receive the expected rate of return from a loan. (Assumption: Total capital = S$1,000 | Interest Rate = 20% | No default)
With Reinvestment, you can effectively increase the size of the fund to SMEs while realizing greater returns.! (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.