Last Thursday's news analysis ("Don't take the crowd out of crowdfunding") reported that the Monetary Authority of Singapore (MAS) is considering a securities crowdfunding (SCF) platform.
But at the proposal stage, the term "crowd" means accredited investors, that is, wealthy and high-income earners, and perhaps those with net personal assets of more than $2 million.
The report said that the MAS is "understandably wary of retail investors getting burnt".
This is a concern especially for seniors and retirees who may have the savings but also cannot afford to lose any of their savings.
As a cooperative for seniors, we have been entertaining the idea of crowdfunding. But that is where the similarity ends. Because we are all seniors, we are totally risk-averse.
We see two distinct applications in the concept of crowdfunding, namely the source of the funds and the use of the funds.
We believe in the concept of the pooling of funds as it can deliver better returns. But we also understand the risks involved in, for instance, the technology business and even non-tech start-ups.
The MAS' stand on the SCF platform did not clearly separate these two applications.
If the SCF platform is purely to fund risky ventures, such as start-ups with no track record or proven business expertise, then it is understandable that the "crowd" needs to be knowledgeable investors who know how to manage the risks involved.
We are looking for a crowdfunding platform that will allow retirees who otherwise cannot access certain higher-return assets, such as bonds and other fixed-income instruments, to pool their funds together and achieve returns that are better than what banks' savings accounts offer.
If the "crowd" is eventually defined as people with net assets of more than $2 million, then the majority of the senior population will have to be resigned to receiving less than 1 per cent interest in their low-risk bank accounts.
The MAS should help the majority of Singaporeans by having a separate SCF platform that allows ordinary Singaporeans to invest at a lower cost, with benefits comparable to what the financial institutions get.
(Re-Engage Valuable Experienced Retirees to Serve Elders)
This article was first published on Feb 23, 2015.
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