Run a step-by-step check on one P2P platform, collectible or other alternative you are thinking of buying.
Every few months something new is put in front of savers as a better option than the usual investments: a platform that lends your money to businesses, part-ownership of a cask of rare whisky, a fund collecting music royalties, a token of some new design. Each one arrives with words of its own and an explanation of why it is unlike anything else. Nobody has time to master all of them. A fixed routine works better: put the same short set of questions to every offer, always in the same sequence, and record what you find.
For the exercise, choose a single alternative that you are genuinely weighing up, or one somebody pitched to you lately. Set aside about 25 minutes. You will need the provider's website and documents, plus two MAS resources: the Financial Institutions Directory and the Investor Alert List. At the end you should have a one-page assessment of that one alternative, including your decision and the reasons behind it.
Four core questions do most of the work: which regulator oversees it, who actually holds the asset, what it costs in total, and how you would get your money out. Answer each in a single sentence and record where the answer came from.
Start with regulation. Look up the provider's full legal entity name in the MAS Financial Institutions Directory; searching the brand or app name will not do. Lesson 3.4, "Run a licence and terms check on one exchange", walks through that search. Record which licence the entity holds and check that it extends to this particular activity. Run the same entity through the Investor Alert List. Where no Singapore regulator oversees the product at all, your sentence should say so in plain words.
Next, find out who holds the asset. Three arrangements are possible: the asset belongs to you directly, you hold shares in a company that holds it, or all you have is a claim against the provider. If the provider collapses, the gap between owning an asset and being owed one matters a great deal; Lesson 6.3, "Gold ETFs and gold savings accounts", sets out the reasons.
For costs, trace the money from the day you buy to the day you sell and list each charge along the way: entry fees, annual fees, fees deducted from income, spreads, storage, insurance and exit fees. Lessons 6.4 and 7.2 show how fast these accumulate.
For the exit, write down how long a sale would take, the discount you would probably have to accept, and any lock-up, notice period or cap on withdrawals. Lesson 7.3, "Liquidity: how fast you can sell and at what price", explains how to weigh each one.
Provider pages usually open with averages and strong years. Go looking for the bad figure instead: the worst year, the weakest loan vintage, the biggest loss or the peak default rate the provider has published. It is normally further in, on a statistics page, in an annual report or among the risk disclosures. If you find no bad year at all, check whether the provider has been operating through a downturn, since a record built only in good conditions says little.
Any alternative needs to do better than something simpler. Set it against two plain choices: a low-cost index fund and Singapore Savings Bonds. Singapore Savings Bonds carry the backing of the Singapore Government, you can redeem them in any month, and MAS publishes current rates on its website. An index fund is exposed to market risk, but it costs little, sells easily and holds many companies; the course "Investing 101: from zero to your first ETF" covers it. Work out the alternative's expected return after costs and put it beside both. Then decide whether the extra return is large enough to pay for the extra risk, the extra cost and the harder exit. An offer that pays about what Singapore Savings Bonds pay, can lose you money and is hard to leave fails that test.
Before you reach any verdict, list your "say no" conditions, the findings that would turn your answer into a no. Typical ones are no MAS licence covering this activity, a fee you cannot pin down, no worst year disclosed, and an exit slower than you can afford. Setting these down early means you cannot argue your way around them later, once the investment has started to appeal to you.
Kumar used the routine on a peer-to-peer lending platform; the numbers below are invented for illustration.
In the MAS directory he located the platform's legal entity, which held a capital markets services licence, and the entity did not appear on the Investor Alert List. The platform issued notes for each loan, so Kumar would own those notes while still relying on the platform to collect what borrowers repaid. Its charge was a 1% yearly fee deducted from repayments. He could exit only when a loan matured, as there was no resale market.
The headline rate was 9%. Digging further, he found that in the worst year the platform disclosed, defaults reached 3% of loans outstanding. He subtracted the 1% fee and the 3% defaults from 9% and arrived at about 5% a year as a rough expected return, before allowing for any bad luck beyond that worst disclosed year.
He then checked the current Singapore Savings Bonds rate and placed it next to his platform estimate, with a note that the bonds could be redeemed in any month while the platform loans could not.
Kumar's "say no" list held four conditions: no MAS licence, no published default history, fees taken before he could see them, and loans longer than a year. The platform cleared all four. In his decision paragraph he wrote that a small trial could fit, but only once module 8 had given him a written cap for it.
Your own finished sheet takes one page per alternative and contains five parts:
your four core answers, each with its source the worst case the provider admits to how it compares with a low-cost index fund and Singapore Savings Bonds the "say no" conditions you wrote beforehand a short decision paragraph giving your reasons
Now open the documents for the alternative you chose and start with who regulates it.
Fill in the alternatives due diligence sheet for one option. Then write one paragraph saying what you decided and why.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).