“A billion people around the world work hard every day to lift themselves out of poverty. They don’t want your charity. They want your investment. Invest today, earn a return, and provide them with a livelihood.” – Microplace.com homepage.
Sounds pretty good, right? Microplace is owned by Ebay, and is an SEC-registered broker of microfinance securities to individual investors. Loans are classified by level of poverty, financial return, length of investment, and geographical location.
Here is the loan listing page. They seem to participate in a variety of countries on 4 continents, from Armenia to Bolivia to Cambodia. These notes are not a mutual fund, and is not FDIC or SIPC insured. These are unsecured debt obligations, with partial backing of “philanthropic guarantors”. Basically, wealthy individuals and/or groups promise to repay parts of this loan if there are enough defaults. The details are a bit vague, but there seems to be a networked agreement across multiple guarantors. However, risks definitely remain.
The actual interest charged to local microfinance institutions (MFIs) are stated to be from 8-10%. The rates paid by actual individuals are not stated, but can be as high as 30%. But these are often short-term loans to people with no collateral and few alternatives. The historical repayment rate is listed to be 96%. In some of these countries interest rates are as high as 120% so it’s nice to be able to offer loans at reasonable rates to people who are just like you and me, except they were not as fortunate to have been born in America. So why not invest a little? It will possibly do your investment balance and more importantly your soul good.
0 comments:
Post a Comment