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BillSavings.com BlogBoost Your Bank Account While Helping the PoorMake Money Off a Good CausePosted By Mindy
BillSavings.com Brief:
Who’d have thought there’d ever be an honest way to make money off of helping the poor? There is, and it all starts with a microloan.
Ever stop and wish you had enough money to make a difference in the world? Chances are, you do. Thanks to the combination of microloans and electronic investing, the world of philanthropy has opened up to the middle class. Find out how you can invest your dollars to earn a strong return and help others at the same time. How micro-lending works In countries where access to banking is virtually non-existent, socially conscious organizations are stepping in to function like banks and make loans to the poor. These organizations take the money invested by individuals in developed countries (which may only be a few hundred dollars at a time) and turn that money into microloans to help the poor. Better yet, investors like you can make interest on those initial investments. Let’s say you have $1,000 you’d like to invest. If you invest your money through a socially conscious microloan website, that money will be wired to an impoverished country in need of loans. In some cases, you can even pick the country and the type of recipient (e.g., women, artisans, farmers, etc.). Your money is then split up into small loans for the group of your choice. If you picked farmers in Peru, then chances are three different farmers will each get a loan of about $330. In most impoverished countries, a few hundred dollars is more than enough to supply the necessary tools, supplies, or labor to launch a successful enterprise. While the farmers who received loans thanks to your investment work on paying back what they owe, your investment earns interest. Most microloan site interest rates are compatible with the 2%-6% rate offered by banks. After a year, your $1,000 investment may have earned as much as $60 in interest. On top of all that, your investment is relatively liquid. Though it depends on the company managing your investment, in most cases you’ll be able to withdraw your money with little or no notice. Why micro-lending works Most successful businesses we buy from got their start from a loan. Generally speaking, that means either a bank was involved in the transaction or a wealthy investor had a finger in the pot. But in impoverished countries, it’s a different story. Entrepreneurial ideas and spirit are present just as in developed countries, but access to money is virtually non-existent. Without startup cash, would-be business owners are unable to get their ideas off the ground. Enter microloans (also known as microfinance). Microloans are a way to empower individuals to lift themselves up out of poverty. As one popular microfinance website, MicroPlace.com (www.microplace.com) puts it, “Microfinance is a hand-up, not a hand-out.” Money given to sites like these is not simply doled out through charity. It actually assists in the alleviation of poverty by allowing poor individuals a way to build a sustainable future. How to make a socially conscious investment Once you choose a socially consious investment site, you can begin by investing as little as $20. Most companies let you open up an investment account just as you would with any broker. After that, you choose where your money will be invested. Options for investment at MicroPlace.com include green business, rural area loans, loans with a special focus on women, or fair trade investments. You’re also able to pick the level of poverty your money will be directed at – from extremely poor to very poor to simply poor. On top of that, you can choose the geographic area where your money will be rewarded – anywhere from Africa to Latin America to Southeast Asia, the Middle East, and beyond. You can choose your level of financial return and the timeframe in which you’d like to receive your return on investment. You’re also able to decide whether your money will go to a single institution or individual or whether it’ll be split up between multiple institutions or individuals. Most payments are made via credit card, but you can also pay with a PayPal account. In turn, you can receive interest payments as a deposit back into your PayPal account or directly into your bank account. Why microloans are a safe investment In many cases, repayment on microloans averages as high as 97%. To understand this, you have to consider that participants in the process have a huge incentive to pay back on their loans. Staying in good standing with their lenders means they will have access to further expand and build their businesses, and it’s also their coveted ticket to a life out of poverty. Make your own socially conscious investment At a time when purse strings are tight, the process of micro-lending offers an admirable opportunity. If you’re like the many Americans who don’t have loads of money to donate to good causes but want to build up an investment portfolio so you’ll have a safety net, microloans present a great option. They let you help out a good cause along with building your income. What could be better? Category: Mortgage & Loans 10/12/2009
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