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What are guaranteed returns on investment?
Every investment comes with different levels of risk. An effectively guaranteed return on your investments simply means that investors are promised with some levels of certainty that they will receive a return on their investment in any circumstances.
Funding Societies’ new Guaranteed Property-backed Investment is the second product under the Guaranteed line of products in which investors are effectively guaranteed to receive both their principal & interests regardless of the SME’s repayment status. It is also the 6th investment product Funding Societies has introduced since launching in Singapore in 2015.
Having come a long way from launching with just 1 product in 2015, Funding Societies now has 6 products to offer to investors. As the investor base grew over time, we quickly realised that we needed to continue innovating new products to meet the needs of different investor profiles.
What are Guaranteed Property-backed Investments?
Guaranteed Property-backed Investment (GPI) is an investment into a property-backed note that is currently offered to SMEs, but with an additional guarantee of repayments to investors. We have combined the strength of a collateral backed investment product seen in Property-Backed Secured Investments (PBSI) with the element of guaranteed returns seen in Guaranteed Returns Investment (GRI) to give investors another option to further diversify their portfolio.
Key Investment Information
- Interest rates: 3% – 8% per annum
- Tenor: 6 to 12 months
- Repayment schedule:
- Monthly Interest
- Principal at the end of the tenor
As the deal will be backed by a collateral in the form of a local property, Funding Societies has the right to liquidate the property to recover the funds if the SME is unable to fulfil their obligations. However given that this investment product is a effectively guaranteed product, investors will receive their returns regardless of any property liquidation actions. The only difference is that if there is a need to liquidate the property to recover funds, investors will receive the remaining repayments within 45 days after the last payment is due.
Why should you be excited about this guaranteed returns product?
When we launched Guaranteed Returns Investment in August last year, we were met with an overwhelming response from our investors. This shows that we have a wide range of investors, some who might be looking for assurity in their returns even if it’s on the lower side compared to the other platform products.
- Returns are effectively guaranteed – During the scheduled interest repayments, investors will receive their returns
- Extra security – There is an additional security of a local property as collateral backing the note
- It’s a short-term investment – Tenors typically range from 1 to 12 months with monthly interest repayment
- Low minimum investment amount – You can invest with just S$20 into this product
- Fair returns for a lower-risk product – You can get between 3%-8% per annum on your investment
- Additional Diversification – Existing investors now have an additional guaranteed returns product to invest into. Whereas new investors can take this opportunity to start investing on this lower risk product as compared to other products on our platform
Please invest with the knowledge that while returns are effectively guaranteed by FS Capital Pte. Ltd., there may be a chance where we might not be able to fulfil the obligations under this arrangement. To mitigate this risk, a cash reserve buffer to allow for repayments to be made on time is maintained.
What happens if a SME defaults?
Should the SME default, Funding Societies has the right to liquidate the property to recover the funds. To ensure that this recourse action is done effectively, Savills, a leading global property agent with one of the largest agent networks in Singapore has been empanelled to help liquidate these properties as and when required.
However regardless of the property liquidation outcome, investors are effectively guaranteed to receive the remaining repayments within 45 days after the scheduled last payment is due. In addition, investors will also receive late fees during this period for every day of delay.
Disclaimer: The information above is meant purely for informational purposes and should not be relied upon as financial advice. Users may wish to approach a financial advisor before relying on any advice provided by the website to make any decision to buy, sell or hold any investment product. The above article is published on 21st Aug 2020 and accurate as of date of publish.