Looking for decent profits for your money online? Try microfinance.
Before elaborating further let me take you to my post, Muhammad Yunus and Grameen Bank that dealt on how the 2006 Nobel Peace Prize was awarded to Prof Yunus and Grameen Bank for their path-breaking service to help the poor and needy of Bangladesh through micro-credit system.
Microfinance, as this article is going to dwell on, is modeled on the same system as Grameen Bank’s but with a big difference. The money is collected online and disbursed globally to the needy people of poor countries.
And in doing so, you, as an investor, stand to gain profit on your investment.
This October on 24th the online auction giant eBay launched MicroPlace, an online microlending website. This is said to be the first e-microlending initiative.
What MicroPlace does is collect your investment presumably through PayPal, another ebay owned company, and use the money to buy securities from security issuers.
The latter being responsible for managing your investment and earning you returns use the collective fund to support loans to lending organizations, who then use those funds to provide loans to borrowers. As loans are repaid, security issuers are able to provide you with a financial return.
To understand the cycle of money movement, refer to How MicroPlace Works.
MicroPlace was founded by Tracey Turner who later sold out to eBay in June last year. According to Tracey, who has worked extensively with her project in poor countries, the loan repayment rate among the really needy people is unbelievably high, often more than 98%. This has been found to be true by Prof Yunus as well in Bangladesh.
As if to prove the adage, Do what you preach, the eBay founder Pierre Omidyar and his wife have invested hundreds of millions of dollars into microloans through their own foundation. They have also invested in Kiva, another online microlending website.
Kiva appears to differ from MicroPlace, for in this case you lend as little money as just $25 (as of now) for direct use by the borrower. The other difference is that you give money as an act of altruism, meaning you may not expect returns.
Coming to investing your money in MicroPlace that assures you a return, all you perhaps need is to open a PayPal account, park some fund there, and thereafter get going.
Meanwhile, here is a video of ex-US President Bill Clinton extolling the virtues of lending to Kiva.
[Collated from eBay launches microlending website]