The mobile app development business here in Idaho is good. So good in fact that my student loans are disappearing, I’m investing more and more with Franklin Templeton (Roth IRA, 529 Savings, growth stock mutual funds) making about 9% on my best investment (after the sales charge), and having the new baby makes the world an even better place.
So after paying the bills, and paying down huge chunks of debt, I decided to give a little back and support projects that people are trying to do themselves. One way I thought of was to fund a Kickstarter or an Indiegogo project. These are donations to projects people are trying to create and they usually give some kind of gift based on the donation amount, often times sending you their product or service if you donate enough money.
These are ok, but they’re not really an investment and I really wanted to invest in a project. So I decided to try Kiva.org and lend $200 with the idea that, that money will be used to fund small businesses and individuals around the world to give them working capital for their ventures. I decided to invest in Colombia since that’s the foreign country I know the best, it has a hard working lower class, and has a great potential to make a difference. While Kiva doesn’t give me a return on the investment, and the people borrowing the money are borrowing it at the rates that most people in the US pay on their credit cards, it does have an impact on these people’s lives. The borrowers usually provide updates on their progress throughout the lending period and you can follow along with their story. It’s a great way to find out what life and small business is like in countries you’ve never heard the name of.
With Kiva, the principal is paid back to me over time, which I can reinvest, or withdrawal. There’s about a 1-2% of default and other fees, so over time, that money will dwindle down, but until then, you can reinvest and help other people, all along hearing their stories of success.
Should we be teaching these people that borrowing is a terrible idea? Probably, but if we call it investing, it’s ok, right? Well, I figured $200 was a good number to figure out what this micro lending thing was all about. I’m still skeptical, but even if I eventually lose all that money (hopefully not for several years), it can be recirculated many times to continue to help fund different people’s small business ambitions.
If you’d like to start your own Kiva investments, sign up here and Kiva will donate $25 to fund a project. Minimum is $25, so it’s easy to begin. I’ll let you know how mine works out and what my thoughts are on the whole process.
If you know any other great ways to invest in small businesses and help get it started, let me know in the comments below!