Portfolios Of The Poor: Highlights Segment

1209 words - 5 pages

Portfolios of the Poor, a book written by a group of four authors, gives an insight to the financial lives and struggles of the world’s poor through portfolios they assembled. Specifically India, Bangladesh and South Africa were focused upon through the extensive portfolios of their spending, saving, and borrowing habits. Poverty in the world today is an ever-pressing issue, as there are no definite answers to solve the problem of the astronomical level of poor people that inhabit the earth who live in less than favorable conditions. But, one aspect of great importance to those who are poor is finances and money in general, an aspect that, as this book relays, can be improved, in turn improving the lives of the poor. Although the poor have an overall lack of money (poor being defined in the book as less than $2 per day), they do not ignore the greatly important practice of saving and financing the money they make. What must be improved is the ability for the poor to manage their money, as “not being able to manage whatever money you have is… the hidden bind of poverty (184)”. What the poor needs is improved, more trustworthy and formal ways to invest their money.
Through the studies conducted in the Portfolios of the Poor, it is found that the poor are seemingly untrusting of most formal ways of managing money. They instead tend to put their trust in more informal systems of financial management. This is a problem, and finding a solution to the problem would go a long way to helping increase the livelihoods of the impoverished inhabitants of the world. The poor already have a minimal amount of financial tools available to them, as many formal financial groups do not trust the poor, worried they will not be paid what they lend. Informal groups are easier for the poor to use, more accessible in that they often conduct their meetings in the villages and slums of the poor. Informal financial instruments are also usually free of interest. But the informal tools cannot fulfill all of the needs of the poor, as formal tools would be much more fruitful and secure. What is it then that the poor are looking for in these formal financial instruments? The poor want security, or a sense that when they invest in the microfinance (which are technically semi-formal) or other fully formal instruments, that they will be making a wise investment in which they will not lose their money. In formal instruments, the impoverished are also looking for more than security though.
The poor greatly need better formal tools to save and borrow money. The formal groups must find ways for the poor to trust their companies. The formal groups must bring down the costs of interest or borrowing, because high interest makes it impossible for many of the poor to invest. The formal groups also must increase the speed in which they make their payments to the poor, as the poor often need their money very suddenly when a disaster strikes, such as a family illness or death, or crops being...

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