The current economic environment encourages more Mexicans to choose crowdfunding investments. High interest rates and a greater demand for financing have made these investment models -where investors fund loans to individuals or companies- more attractive.
According to the Asociación de Plataformas de Fondeo Colectivo (Afico), crowdfunding platforms have placed a total of 10 billion pesos, with the platforms aimed at financing individuals and loans between individuals having the highest placements, with 31% and 34% of the market, respectively.
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Crowdfunding Investments in Mexico
Fernando Padilla, director of Afico, explained that in the face of rising interest rates, which make credit more expensive, there is greater interest in investing through crowdfunding platforms.
“The growth is due to a combination of factors, the macroeconomic situation with the increase in interest rates and the higher risk makes traditional players such as banks take more conservative positions because they have to protect savers. So companies and individuals seeking financing are turning to crowdfunding models, and with a greater demand for credit there is more supply for investors, generating an attractive model,” said Fernando Padilla.
In crowdfunding there are different investment models, among them crowdlending, a word that is the sum of two ideas: crowd (crowd) and lending (lending money), that is, this model allows individuals or companies to obtain financing from a group of investors.
Unlike the traditional system in which financiers take your money and lend it, crowdfunding publishes on its platforms the credit applications which indicate the amount that applicants need and the interest rate to be paid for the financing, this is to gather the requested money through small amounts from each investor.
That is to say, the interest paid by the applicants, who can be both companies and individuals, are the yields charged by the investors, platforms such as Yotepresto, Prestadero, and Doopla have an annual rate of return between 15 and 16 percent.
The Afico’s director explained that as a result of the pandemic, there was greater concern and interest in learning about personal finances, which led to a greater interest in putting money to work and generating returns, which is why models such as crowdfunding, which are simple to understand, favor interest in investing.
Diversification in crowdfunding investments is important
A study prepared by the Fintech Yotepresto indicated that investments through personal loans are one of the models with which Mexicans begin their journey as investors; in addition to investment funds, Cetes, and cryptocurrencies.
In this regard, Fernando Padilla recommended investors reduce the risk presented by all investment models through diversification.
The expert detailed that currently, by having greater demand for financing in crowdfunding, there is a greater opportunity to diversify within the platforms, since investors can finance different companies on the same platform, which generates ease of diversification; however, he recommended investing in different investment models of fixed and variable income.
The director of Afico explained that it is important to invest in a healthy way, to identify and know in advance the operation of the platforms and investment models, since it is key to recognize risk factors.
It is necessary to know if there are any commissions or penalties for early withdrawals, as well as opening hours and deposit times.
At the same time, it is advisable to use tools such as Condusef’s Financial Services Providers Registry System (Sipres) or the Financial Entities Bureau to identify whether the institution in which you are going to invest is regulated or whether the site is truthful.
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First published in EL ECONOMISTA. A third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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