Has anyone done investing with microloans?

[joecaf53]

I was looking st some alternative investments and wondered if anyone has had any experience with microloans. I was on the website, microplace.com and it states that no issuer has defaulted on payments since its 2007 inception.

Would appreciate any feedback.

Thanks

[ShortInSeattle]

Quote:

Originally Posted by joecaf53 I was looking st some alternative investments and wondered if anyone has had any experience with microloans. I was on the website, microplace.com and it states that no issuer has defaulted on payments since its 2007 inception. Would appreciate any feedback. Thanks

I may be wrong, but I'm not sure microloans offer any interest or investment return. You loan the $$ and get your principal back.

SIS

[donheff]

I have a chunk of change in micro-loans administered through Kiva and reinvest it as principle is returned. I don't think there is interest (paid to me - there may be to Kiva) but, if there is, I just let it turn around to the next loan. I like Kiva -- you choose exactly who your loan is going to and you get feed back as they pay it back. Lots of tiny little businesses all over the world.

[DangerMouse]

I also make loans thru Kiva. There is no interest paid to lenders like ourselves. The MFIs charge interest to the borrowers but that goes to the MFI to enable them to run their organisation. Kiva makes it money from lenders like ourselves donating to them.

[Quantum Sufficit]

I'm clueless but if you don't earn anything, why do it?

[ShortInSeattle]

Quote:

Originally Posted by Quantum Sufficit I'm clueless but if you don't earn anything, why do it?

It's a charitable activity, where the recipients build self-sufficiency and then repay the loan at 0% interest.

[ShortInSeattle]

Quote:

Originally Posted by ShortInSeattle It's a charitable activity, where the recipients build self-sufficiency and then repay the loan at 0% interest.

Correction.... The local lender gets paid interest.

[clifp]

I was early investor in prosper.com one of the pioneers in peer to peer lending.. I managed to lose a modest amount of money ~10% over 3 years (which considering the stock market performance over that period of time isn't as bad as it sounds.). I think that the lendingclub.com business model makes more sense than prosper.com

If you are trying to make money, I think best case you would say that is an unproven model. Worst case it is a creative new way of losing money. In fact just last week I received a notice that I am part of class lawsuit, which is suing prosper.com and its officers for way more than they have, which alleges that Prosper.com executive did all kinds of awful things including selling unregistered securities to naive buyers.

In the case of microplace.com and kiva.com the emphasis is more on doing good for others rather doing well (financially) for yourself.

In all case there is a certain amount of hubris involved by the participants. Essentially that I am able to make more informed decision by reading a paragraph or two about the borrower, and relying on a few statistics than a bank (in the case of prosper.com or lendingclub.com) or an NGO with operations in country (for kiva.com or microplace.com) could do with systems and trained folks. I can argue both sides, but I have become skeptical.

Before putting serious money to risk it is worth reading threads here about prosper.com and kiva.com, also on Motley Fool, and doing some Googling on peer to peer lending.