Investment Intel by Jakub Krivan #3: MAKE MONEY HELPING OTHERS

No matter what business you're in, your decisions always have a profound social impact. And as far as I'm concerned, it's everyone's individual responsibility to ensure that their endeavors not only do no harm, but – quite the opposite – that they help others lead a more fulfilling life. This is especially true for the investment business, where manipulating large amounts of funds really can sway lots of lives – for better or for worse.

One of the ways to make a positive difference with your investments is microfinance – an ingenious framework in which investors acquire shares in funds that support low-income families in developing countries.

Empowering the poor First of all, microfinance is NOT charity. It's still a business tool designed to make profit. The mechanism behind HOW it makes profit however, is focused on giving the poor an opportunity to secure their livelihood and improve the nutrition, health and general well-being of their whole families.

The idea is simple: through basic financial services such as loans, saving books or insurances, microfinance funds provide low-income people in emerging markets a chance to kickstart their business, save up for later or provide for their future.

This is a big thing simply because poor families have no other way to borrow money, save for family members and loan sharks, both with significant risks and drawbacks.

Long–term profit with little risk On the other end of the chain, investors who buy shares in microfinance funds through their banks or financial consultants are rewarded with sustainable income from micro-entrepreneurs repaying their loans and interest.

The whole process is facilitated through carefully selected microfinance institutions, or MFIs, which act as an intermediary between the fund and the end client. The MFIs involved are thoroughly analyzed, evaluated and monitored for performance to ensure the investor receives maximum value while the money reaches those who really need it.

Such a setup has several advantages for the investor:

• Low correlation with other investment classes stabilizes your portfolio
• Short repayment periods ensure repayment ratios as high as 95+%
• Spread over numerous countries and institutions, it offers built-in diversification
• Managed by experienced professionals, microfinance funds get periodically improved

The Takeaway The social impact of your investments matters. Microfinance allows you to invest in a good cause and support those in need, while stabilizing and diversifying your portfolio at the same time.

You can't change the world with the snap of your fingers, but you can still make millions of families lead a better life. I'd suggest looking at Vision Microfinance – it's simple, straightforward, and might be a great start to making the world a better place.

Every investment bears a risk. The basis for investments is the presently valid prospectus, the current versions of the key investor document (“KID” or “KIID”) as well as the annual report (and/or the semi-annual report), which are available free of charge at the respective management company. No assurance can be given that the investment objectives are achieved.