BigFundr's Real Estate Debt Investments: A Low-Risk Investment Option

Looking to grow your funds in these challenging times? Why not consider various low-risk investment options to grow your funds? 

In this article, we will cover the major global and local challenges faced by investors in 2023 as a case study. We will suggest why you should spread your investment funds across various asset classes and introduce BigFundr’s property-backed loans as a low-risk investment option.

Recent Global Economic Challenges   

The financial landscape has certainly experienced significant turbulence, providing a valuable case study for navigating inflation periods. During 2023, we witnessed the collapse of major institutions like Silicon Valley Bank, Signature Bank, First Republic Bank, and Credit Suisse. These events heightened concerns of a wider credit crunch and increased economic uncertainty.

To dampen soaring inflation, the US Federal Reserve raised interest rates by another 0.25% back in May 2023, bringing the range to 5.00% - 5.25%. Their goal was to reduce the inflation rate from 5% to their target of around 2%. 

However, this increase in the cost of capital also heightened business risks and pushed the US economy closer to a potential recession. 

Even seasoned investors like the late Charlie Munger of Berkshire Hathaway noted the increased difficulty in investing. 

"I think value investors are going to have a harder time now that there's so many of them competing for a diminished bunch of opportunities. So my advice to value investors is to get used to making less," Munger said. 

This remark was made against the backdrop that the Federal Reserve's hikes would squeeze both consumers and businesses by increasing borrowing costs.

Cooling Singapore’s Property Market

Closer to home, the Singapore government has continuously addressed escalating residential property prices through various cooling measures designed to curb demand. 

For example, they hiked the additional buyer’s stamp duty (ABSD) for foreign investors from 30% to 60% for any residential property purchases. This preemptive measure was implemented amid growing demand from foreigners who view Singapore as relatively secure for their investments. Thankfully, locals and permanent residents buying their first residential property were relatively unaffected.

With bank mortgage interest rates peaking at more than 4%, the risk of default in mortgage loan repayments increased. This led to expectations of a rise in mortgage sales. The resulting uncertainty in the residential property market would have prompted many investors to adopt a ‘wait-and-see’ approach before making further investments.

By studying these events, we can better understand the dynamics of inflationary pressures and the strategies to mitigate associated risks.

Diversifying Your Investments to Beat Inflation

If you are like many investors who prioritise security, you might find yourself becoming more cautious. You start thinking about where you can stash your extra cash where it’s not only secure but can also keep up with inflation.

And let’s not forget, inflation isn’t exactly taking a break—especially in Singapore, where the core inflation rate is still holding steady at about 3.1% as of May 2024.

In this risky business environment, how do you reduce your exposure to uncertainty? One effective strategy is diversifying your investments by incorporating low-risk options. Risk-averse investors might consider investment choices with protected principal and returns to hedge against inflation. A viable low-risk option includes real estate-backed loan notes, which provide both security and steady returns.

Real-Estate Backed Notes: BigFundr 

Real estate-backed notes are debt investments secured by real property. This means that if the borrower defaults on the loan, the lender can seize the property and sell it to recoup their losses.

The benefit of such instruments is that they allow investors to reap the benefits of investing in property without the hassle of owning a property.

BigFundr is the first and only MAS-licensed fintech platform that offers such investment products with principal and interest protected by our strategic partner and shareholder, Maxi-Cash. We are able to provide investors access to shorter-term, principal and interest protected products with fixed returns through our proprietary platform.

Our current product offers Australian real estate-backed loan notes with protected principal and interest repayments of up to 6.28% per annum with tenure of 6 to 18 months. This is a good hedge against current inflation rates. Such investments also help preserve and grow your purchasing power overtime.

Why are BigFundr’s Deals considered low risk options? Our next section covers the protective measures taken to mitigate risks.

BigFundr’s Multiple Layers of Protection

BigFundr offers a compelling low-risk investment opportunity by leveraging real estate-backed notes for the following reasons: 

#1 Conservative Lending Practices

BigFundr's conservative lending practices play a crucial role in mitigating risk. By capping the Loan-To-Value ratio at a prudent level of 70%, the platform creates a substantial buffer against market fluctuations, enhancing the security of investments even in volatile conditions.

#2 Strategic Partnerships for Enhanced Security

The platform's strategic partnerships with established fund management companies add another dimension of security. These collaborations involve companies managing between S$1 billion and S$3 billion worth of loans, which offer buy-back provisions for loan notes at agreed times. This demonstrates BigFundr's commitment to protecting investor interests and maintaining stability in their investment offerings.

#3 Comprehensive Repayment System

Perhaps most notably, BigFundr has implemented a comprehensive repayment system. This includes personal liability agreements with borrowers, ensuring they remain responsible for any shortfalls even after property liquidation. 

Additionally, BigFundr has secured a legally binding contract with Maxi-Cash, a reputable financial services provider. This arrangement ensures the full repayment of both principal and interest to investors, even if a borrower defaults or misses a payment.

By combining these protective elements, including real estate collateral, conservative LTV ratios, strategic partnerships, and partnership with Maxi-Cash, BigFundr has created a low-risk investment environment that significantly reduces exposure to common pitfalls associated with real estate lending. 

This comprehensive approach to risk mitigation makes BigFundr an exceptionally attractive option for investors prioritising capital preservation. For those seeking to grow their wealth steadily and securely, BigFundr stands out as a prudent choice in the realm of real estate-backed investments.

Conclusion

In these uncertain times, it is more important than ever to diversify your risks across various investment options while keeping pace with inflation. 

While real estate debt investments are considered less risky compared to direct property purchases or stock market investments, it's essential to conduct your own research and consider your financial goals and risk tolerance before making any investment decisions. The security of these investments is also subject to the credibility of the platform, overall economic conditions, and other external factors.

Always remember, the higher the returns, the higher the risks. It is always wise to diversify your investments and not put all your eggs in one basket.

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Please note that the links provided are for informational purposes only and do not constitute financial advice. Always do your own research or consult with a financial advisor before making any investment decisions.