P2P investing at Ethis Group is a prominent example of such initiatives, where investors can gain a foothold on some of the most promising Shariah-compliant campaigns comprising profitable selections from Indonesia.
In fact, EthisX was recently launched to provide a first-of-its-kind cross-border Ethical Private Capital Marketplace – a global platform for peer-to-peer and equity offerings.With EthisX, now investors can invest in companies or campaigns from around the world.
Here are a few reasons why investing via P2P on the Ethis platform is a great next move for your financial growth.
Related: Islamic P2P Crowdfunding Explained
What is P2P Lending?
Put simply, if you’re looking for a platform that allows you to borrow and lend money without needing a traditional financial institution, P2P lending is the answer.
When it comes to crowdlending or social lending, the parties involved are connected directly via a platform be it through a website or mobile app. This platform is the P2P platform that maintains the connection between loan applicants and investors.
The problem lies in the utilisation of conventional P2P platforms by muslim users, who are not allowed to engage in transactions bearing interest or invest in companies involved with activities considered haram among other things.
This can cause a falling out from platforms of many practising muslims who are interested in diversifying their portfolios but are equally concerned about the implications of P2P without Shariah.
This is where Ethis fills the demand – as an investment platform and one of the pioneers of Shariah-compliant crowdfunding.
Broad range of P2P services
P2P crowdfunding has been around for some time now, which means that many derivatives exist to provide specific benefits or results based on different preferences.
From an Islamic finance standpoint, Sukuk and micro-sukuk can be raised via peer-to-peer (P2P) financing on the Ethis platform. The newly launched EthisX also focuses on P2P options including invoice financing, as well as asset-backed, Buy Now Pay Later (BNPL), and working capital financing.
The more Shariah-compliant options investors are offered, the better they can plan their portfolio diversification process in accordance with their own ethical and religious requirements as Muslims.
Murabahah features are in line with Shariah
When P2P investors lend, they can invest in Islamic assets using the Islamic finance concept of Murabahah, which allows issuers to raise Shariah-compliant financing.
This means the issuer must not engage in activities prohibited by Shariah law, such as the production and sale of alcoholic beverages, illegal drugs, pornography and gambling.
The Murabahah contract must be done in a way that is Shariah-compliant and is usually between the crowd in a crowdfunding situation, the platform, and an issuer (like an SME for instance).
Related: Islamic Finance Contract: Mudharabah
Benefits from collective investing
When it comes to crowdfunding initiatives, a primary objective is that funding does not come from one source but instead is funded by a collective or crowd of investors all at once. The clear advantage here is that you do not have to bear the brunt of the entire project’s funding requirement.
As an individual, you pool your investment together with others in the P2P arrangement who are all also funding the same project together. This way, the project meets its funding targets through collective support, and you can reap the rewards of your contribution without having to worry about high investment thresholds.
A common problem that Muslim investors have with the diversification process for their portfolios, is the hassle of finding Shariah-compliant options to expand into. The P2P product that Ethis offers is heavily prioritised in the aspect of Shariah-compliance.
Since P2P investing is booming in popularity as an effective way to diversify investments, Ethis strives to deliver a host of ethical and halal options for users to stay ahead of the curve while mitigating risks and optimising gains.
Related: Shariah-Compliant Peer-to-Peer (P2P) Lending and Its Risks and Rewards
Promising returns from P2P opportunities
Net returns have been known to be promising when it comes to P2P engagements. For instance, an issuer on the Ethis Indonesia platform paid up to 15.3% actual returns on their project within a campaign period of two months. Of course, do keep in mind that this is not a guarantee of future results, and as with any investment, there is some risk involved.
Also keep in mind that the risk-return profile of a P2P investment is highly dependent on the trustworthiness of the platform’s issuers. Fortunately, Ethis’s screening process means that most users and issuers on the platform are legitimate and safe.
Supporting micro-financing efforts
As an innovative form of crowdfunding, P2P allows small and medium-sized enterprises to raise money from private investors. This makes it easier for small businesses to get funding, while also offering investors new avenues for making money.
Many of the Ethis platform’s issuers are small and medium-sized enterprises (SMEs), which have a harder time getting access to conventional forms of financing. You may help small businesses and the economy at the same time by investing in peer-to-peer lending.
Instead of fluctuating in value with the stock market, the return on investment of P2P engagements are usually fixed regardless of market conditions. In fact, it is not
uncommon to see monthly repayments from P2P lending a month or two after initial investments, which can be a great way to establish consistent returns along your portfolio diversification journey.
Ethical investment platform
Since its inception, the Shariah-compliant crowdfunding platform Ethis has not only demonstrated its concept but also gained valuable experience and expertise by focusing on projects with a positive social impact.
In a constant attempt to #CirculateGood, Ethis emphasises on featuring campaigns and investment opportunities that make progressive waves in some shape or form, whether it be for the betterment of the economy, the support of companies with valuable and wholesome offerings, or a cause that aims to solve a pertinent problem.
Flexible Investment portfolio building
You have complete control over your investment portfolio with peer-to-peer financing. It’s entirely up to you whether or not to invest in a campaign whether it’s property-related initiatives, industrial petroleum trade, or IT procurement projects.
The Ethis platform works on a wide range of fascinating impact-driven projects in the fields of real estate, supply chain, microfinance, and more.
P2P lending has gradually grown into a prominent option for full-blown diversification, and investors are becoming more aware of the positive implications that come with this alternative approach to other conventional choices. The next step of diversification into P2P would be finding a reliable, holistic, and established platform to offer Shariah-compliance and advanced features for better financial growth. Ethis has you covered on all those fronts.