I've been on Kiva for some time now, but today is my first investment at Microplace. Now, the Microplace versus Kiva debate could go on for several blog posts but I will just give a brief explanation of Microplace for now. Unlike Kiva, Microplace is a for-profit company registered with FINRA. I don't think they actually turn much of a profit, but since they are a subsidiary of eBay it's pretty hard to actually get any detailed financial information on them. Since they are registered with FINRA, they have more flexibility than Kiva in regards of paying a return. Investments purchased are securities called 'community notes,' which basically walk and talk like a certificate of deposit with returns between 1% and 3% with terms between six months to four and a half years. That's not a fantastic return, basically equal to inflation, but with the Reserve Fund breaking the buck and the current market toil, putting some money into a sector that is rather uncorrelated to the market might not be an unwise decision anyway. While loans through Kiva generally have a low default risk, investments through Microplace have close to none since they are generally obligations of the issuer of the security (Oikocredit or the Calvert Foundation) and are not tied to a specific borrower or MFI. If you're interested in learning more, you should check out their website.While Kiva presents actual borrower profiles, you have to do a little more investigation into the MFIs you want to lend to. Although I'm sure that Oikocredit and Calvert have done their own due diligence, personally I am a bit leery about lending money to an MFI that I can't get any information on because they don't have a website. After some digging around, I am going with a $250 loan to Asmitha Microfin Limited, based out of Hyderabad, India, for 1.25% for nine months. They seem to have their act together and were ranked 29th in the world out of 641 MFIs by Forbes magazine. If that wasn't impressive they don't just have a motto - they have five of them. My personal favorite is "the gusto to outshine," although "the inclination to betterment" was a close second.
It's not much but it'll help me figure out more about how Microplace works. As my little loan progressives, I'll be sure to give you inappropriately frequent updates on it.
Bonus: if you invest $500 on more you get a handcrafted artisan piggy bank. Talk about incentives people!
2 comments:
Thanks for sharing. I haven't personally loaned on microplace as of yet, but I plan to sometime soon so I have a better understanding of how it works.
If I may ask, where did the "7th street" come from?
Congratulations Drew you are our first official commenter. 7th Street is the street our hopefully-soon-to-be-nonprofit is located on, i.e. my living room.
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