DoFinance provides a nice offer, perfect for those who want an extra easy P2P investment with a reasonable performance: interest rates range from 4% to 11%, depending on the investment duration and early withdrawal terms.
At first, choosing your strategy between the multitude of available options can feel a daunting exercise.
In reality, lot of those options feels sub-optimal to me, meaning you will receive less interest for the same amount of risk. All products offer buy-back guarantee: is not clear from the website nor the research I did if the loan originators are independent between themselves and Alfa Finance Group, DoFinance parent company; my assumption is that they are not and therefore it is unlikely the loan originator in Indonesia, linked to the highest interest rate paying product, would break the buy-back guarantee while the originators behind the 9% product still maintain it. Even if they are independent, would you still invest in other products knowing the highest paying broke the buy-back promise? Anything can happen in life, my bet is that if shit hits the fan in Indonesia, the whole Group would have to stand behind the losses, otherwise the risk to endanger the whole business would be too high. Investing in the 9% product is therefore paying insurance in favour of the 11% investors.
Leaving on the table 4% (11% -7%) for the privilege of investing for less than 6 months should not be your default option, since we are all here for the long game. I see fringe cases where you would roll your investments for short periods of time, like you are buying an apartment but you are still in the middle of paperwork for example, so the 7% for 2 months is a nice-to-have option, but please do not use it as a long term plan.
The 4% and 5% options are for people that do not understand that the balance on their current or saving account is insured if the bank defaults (or do not value their time enough). Remember to use P2P lending only for money you can (almost happily) lose and not (only) because your current account offers a (shitty) 0% return. Why? Not because I like those YouTube videos that explain how 9/11 was a conspiracy organised by aliens and I do not trust anyone, but because start-ups are risky businesses and tend to fail (and yes, there are scams too).
There is no secondary market on the platform but each product offers the possibility to redeem your investment before the due date with different degrees of penalty. To avoid those penalties, I suggest for example that you divide the amount you want to invest in 12 equal tranches and invest one-twelfth each month for 12 months; this way every month you will have something maturing, ready to move your funds if any other better opportunity arise. This flexibility comes with a risk: when I started to use DoFinance two years ago I could invest at 12%, then the product was discontinued and for some months the best available yield was only 9%.
The fact that DoFinance looks a lot like a black-box, since you have very limited visibility on the characteristics of the loans you invest in, is its main advantage and disadvantage: it is easy to have in the back of your head the idea that the whole thing can be a scam but it is also the most effective, less time consuming way on internet to invest your money in 3 clicks.
In these two years I had no surprises, funds were paid on time and I withdraw part of the gains with no problem, so if you are looking for a quick, hassle free way to invest speculate (always remember the risks involved!) go for it…and let me know your experience.
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