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In a perfect world, we’d invest our money and get big returns every single time. Alas, investing is filled with uncertainty that leaves many people concerned about losing their hard-earned wealth.
But, as the famous economist and investor, Benjamin Graham, once said, “Successful investing is about managing risk, not avoiding it.” So while risk is inherent in any kind of investing, whether you’re buying stocks or buying property, you can take steps to minimise it and maximise your returns,
At PSA Capital Investments, we’re proud to offer low-risk investment opportunities that help you maximise investment returns by consistently delivering annual returns of over 8% to our investors.
Types of Investment Risks
All investments share a single primary risk: you could lose your money. Exactly how this might happen, and to what extent, is what varies among different types of assets. For example, buying stocks comes with certain risks that are different to the risks you face when investing in real estate or private equity.
Private lending also comes with a number of risks. Here are the most common ones we deal with at PSA:
- Credit or default risk — A borrower might be unable to make the payments set out in the loan terms.
- Liquidity risk — The uncertainty that an investor will be able to convert their investment into cash quickly and at market rates.
- Collateral valuation risk — There’s a chance that the lender might incorrectly estimate the value of a loan collateral, which could prevent a full recovery in case of default. Even if valuation is accurate, the value of the collateral might go down in the future or it might be harder than anticipated to sell it if the borrower defaults.
- Operational risk — This refers to potential failures of internal lender processes, such as risk analysis, documentation, and due diligence that increase investment risk.
How PSA Minimises Risks and Maximises Returns
Here are the steps we take to reduce risks, maximise investment returns and secure investor capital at PSA:
1. 160% Minimum Security and Asset Backing
As part of our lending terms, we require at least 160% security backing on credit loans. Not only does this reduce the risk of failing to make a full recovery in case of a default, it also ensures we can still recover the full loan amount even if the value of the collateral goes down in the future.
2. Capital Buffer 10% Co-investment by PSA
To provide additional security for investor capital, we have a 10% co-investment capital buffer that absorbs losses before they impact your investments.
So far, the capital buffer has stayed intact thanks to our efforts to diversify across a wide range of borrowers and industries, which has reduced risk exposure.
3. Redemptions After 12 Months
After a 12-month investment period, investors can request redemptions within 3 months. While it’s not the most liquid investment you can make, it’s more liquid than other options such as venture funds, private equity and infrastructure investments.
It’s perfect for investors who don’t need exceptionally high liquidity, but don’t want to lock up their capital for years.
4. No Consumer Credit Lending
We do not engage in consumer credit lending, only focusing on commercial lending to small and medium size businesses.
Commercial lending is less risky since businesses have more predictable income and they face less volatility in their cash flow, meaning they are less likely to default.
5. Fair and Affordable Loan Terms
The best way to preserve investor capital and deliver consistently strong returns is to make sure borrowers are able to repay their loans on time. We offer fair and affordable terms that allow businesses to pay back debt and exit quickly without any penalties.
This is a win-win situation for borrowers and lenders; businesses get back on their feet and improve their profitability while investors enjoy lower risk and stable returns.
6. We Don’t Handle Legal Matters and Collections
Collections and legal issues can get messy, exposing us and our investors to increased risk and liability. To avoid this, all legal matters including debt collections, are outsourced. In addition to lower risk exposure, outsourcing also allows us to focus on what we’re good at — maximising returns for investors and helping small businesses.
7. Rigorous Risk Evaluation
To reduce the risk of default and loss of investor capital, we take due diligence seriously. We conduct extensive checks and request character references to ensure that we only lend to borrowers who are able to pay back their loan.
Invest Safely With PSA
If you’re looking for an investment to add to your defensive portfolio, we offer returns that outmatch many private lenders, while maintaining a low-risk investing environment that keeps your capital safe.
Contact us at 03 9847 7516 to start investing with PSA and maximise your investment returns.
Disclaimer: The information contained in this document is of a general nature only and has been prepared without taking into account your objectives, financial situation or needs.
