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Investing in women's entrepreneurship creates educational opportunities for girls in Mexico

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Research shows that women who have control over the household resources are more likely to spend it on the welfare of the family, specifically investing in food and the education of their children. This is particularly true for those living in poverty and in marginal areas.

In the Yucatan Peninsula southeast Mexico, a number of Maya women group together to work in microbusiness cooperatives as an additional source of income. These initiatives are highly needed in indigenous communities located in isolated regions since the low levels of education in these rural villages do not allow them to compete fairly in the labor market. This is especially true for adult women, most of whom have not completed primary education.

For microbusiness cooperatives to have a real impact not only on women but the development of their families—especially girls—my research findings suggest that there are three key elements of success that should be taken in consideration when working with groups of indigenous Maya women to increase the sustainability of initiatives: social capital, follow-up activities, and ethical leadership.

First, it is important to financially support groups of women that are composed of friendships and/or families, since it is more likely that they will stay together as they face the challenges of operating a microbusiness cooperative. This value based on trust is also known as social capital, or a support network among community members. Social capital helps women confront the difficulties they face in relation to poverty, the migration of their husbands and sons due to labor reasons, and the gender inequalities that persist in these indigenous communities.

Second, follow-up activities carried out by representatives of the organizations that financially supported these initiatives is an excellent opportunity to provide additional guidance to women to grow the business over the time and foster their entrepreneurial skills, instead of being a monitoring activity merely to verify the efficient use of resources. Despite this, there are language barriers and I recommend that follow-up activities and training be conducted in their mother tongue, the Maya, the primary language in remote Maya villages. This will better facilitate the channels of communication and assure a full understanding between the representatives and the women.

Third, the presence of ethical leadership among entrepreneurial women will favor the sustainability of a microbusiness cooperative over time. As Albert Bandura stated, human beings modify their behavior to adapt socially; using this theoretical approach, ethical behavior is promoted and subsequently permeates inside the cooperative, among business partners, and clients. This is an alternative to doing business that is based on honest work.

In my book Enhancing Maya women’s development through cooperative associations: What factors support or restrict the contribution of cooperatives? I find that once a cooperative microbusiness is sustainable, Maya women invest their gain to support their children to achieve higher levels of schooling, especially with girls. Based on my nearly 90 interviews with Maya women, they understand first-hand the gender norms present in these rural communities that favor boys over girls. In other research, Understanding Girls’ Education in Indigenous Maya Communities in the Yucatan Peninsula, I demonstrate the important role and influence that mothers have in the educational development of their girls. Therefore, they may be more likely to invest in their daughter’s education when they have the financial means to do so, as one of the women said, “I’m working to help them with their school’s expenses, so they can have a better future.”

Following these recommendations will increase life opportunities not only for women but also for their daughters. Women’s empowerment through education and participation in economic activities reflects the value of self-sufficiency. This is an essential step towards human development based on effort and honest practices, which fosters respect towards women in communities traditionally ruled by patriarchal structures.

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Impact Investing: The Intersection Of Funding Founders Of Color

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In the past couple of years, lots of capital has poured into social impact businesses, taking pages out of the original black investors playbook. Since venture capital funds have long sought out high growth companies with strong bottom lines, factoring in a new level of consciousness can be tricky. Now with impact investing on the rise are we likely to see more black venture capitalists as the old becomes new again?

The Breakdown You Need to Know

Traditionally VC’s haven’t focused on impact investing, which is a subset of socially responsible investing. CultureBanx research found these investments have been driven by returns, sometimes at the expense of other companies. “Yes, many VCs are primarily interested in high growth companies. This is typically because their limited partners are looking for a high ROI which high growth companies are more likely to provide. In some cases, an angel investor will work with a slower growth company if they believe in a personal cause or decide that the long-term ROI makes sense for them,” said Heather Gates, National Emerging Growth Company Practice Leader for Audit & Assurance at Deloitte.

McKinsey forecasts impact investing to grow to more than $300 billion by 2020. They note this would be a small fraction of the $2.9 trillion or so that will likely be managed by private-equity firms worldwide in 2020.

Social impact companies need investors ready to put capital into more than just benchmarks on a spreadsheet. This is something Edward Dugger, one of the pioneer investors in black founders knows all too well. Dugger was a managing partner at UMC Ventures in the late 80s and early 90s, the fund only invested in black founders. During that time they were able to finance more than $2 billion for these companies to grow. “We were providing a counter point that black founders could grow and scale companies along with tapping into tradition forms of capital,” said Dugger.

In The World Economic Forum’s “Global Risks” Report they determined it’s vital for global economic stability to address the inequity in access to capital. The need for growth stage impact investments is extremely high and something Dugger is tackling with his new fund Reinventure Capital. His four decades of experience in the space taught him that the “increased concentration of wealth, is contributing in an unintended way to less equity in society.”

Diversifying Venture Capitalists

There have been several other black investors to follow Dugger’s lead including Lo Toney of Plexo Capital and Richard Kerby from Equal Ventures. Social impact companies need investors with expertise in developing and establishing a viable business model, basic operations, along solid capital structure.

The lack of diversity within venture capital is something Richard Kerby has been trying to figure out. Within the industry it’s been very hard to attain, when more than 70% of venture capitalists are white, 26% are Asian and only 3% of them are black, Kerby found in his research. He also noted 40% of venture investors have attended either Stanford or Harvard.  “ It is no wonder that this industry feels so insular and less of meritocracy but more of a mirrortocracy,” Kerby writes.

Even 50% of black investors in venture capital went to Harvard or Stanford, leading Kerby to conclude that while talent is evenly distributed, unfortunately, opportunity is not. The growing negative impact on the venture ecosystem has ripple effects throughout the tech industry, and Kerby highlights how it suffers from a lack of cognitive diversity.

Impact Investing Mindfulness

Capital commitments to socially responsible companies will expand as the VC’s calling the shots start to diversify. The demographics of most venture backed startups reflects the venture capitalists that fund these companies, meaning change has to be a top down approach. Yes, it is possible for these companies to meet the financial challenges and goals the people backing them set out, while achieving the desired social returns.

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Zero-fee investing is on the rise, but it won't make you a successful investor

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Remember when the biggest obstacle to successful investing was high costs? Whether it was mutual funds with exorbitant fees or brokers gouging you with commissions, the entire investment industry was for decades an elaborate way of transferring wealth from Main Street to Bay Street. Unless you were extremely savvy, you didn’t stand a chance as a retail investor in that environment.

The investment business will always be fuelled by ego and greed, but today, there are more low-cost options than ever. In fact, if recent trends continue, it may soon be possible to build and maintain a portfolio for free.

The first barrier to fall was trading commissions, which have dropped from about $29 only a few years ago to less than $10 today. Some online brokerages even allow you to trade exchange-traded funds (ETFs) with zero commissions and no account fees, and the robo-adviser Wealthsimple has just announced it will soon offer free stock trades, too. All of this allows even the smallest investors to get access to the markets like never before.

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Now, it looks like we’re close to seeing fund-management fees disappear, too. In August, Fidelity Investments in the United States became the first fund provider to offer a family of index funds with a management fee of zero per cent, and no minimum investment.

Some industry experts think we’re only a short step away from index funds and ETFs with a negative fee. That’s right: The fund would pay you to manage your assets. It’s starting to feel like we’re in the Upside Down, the alternate dimension in the Netflix drama Stranger Things.

So will a zero-fee universe make us all successful investors? We can hope, but I’m not sure it will improve as many lives as it should.

The fact is, super cheap investing options have been available for years. All of the major ETF providers in this country offer broad-market Canadian equity ETFs with fees of 0.06 per cent or less. That’s $5 a month on a $100,000 portfolio – not zero, but less than one small Tim Hortons coffee a week. ETFs listed on U.S. exchanges are even cheaper, and if you include GICs in your portfolio, you can push your costs lower still.

Bottom line, you can already build a globally diversified portfolio for negligible cost. So if you’re a cost-conscious DIY index investor, reducing your fees from a few basis points to zero is an incremental improvement, not a fundamental shift. And if you’re a committed stock picker, or if you work with an adviser who picks stocks and funds for you, then further fee reductions on index funds are unlikely to have any effect on your financial plan. In my years as a financial journalist and adviser, I have met every conceivable objection to index investing, but I have never heard anyone say, “I would be an indexer if it weren’t so expensive. If the fund companies and brokerages would just reduce their fees to zero, I would embrace the strategy.”

Nor will a modest decline in fees do anything to prevent the biggest mistakes investors make: timing the markets, forecasting interest rates, misjudging their risk tolerance and forgetting that everything starts with disciplined saving. Even passive ETF investors have a tendency to make too many transactions, and commission-free trades may even encourage more tinkering.

I’m also skeptical of ulterior motives, because nothing is really free. We need to ask, if they offer index funds with no fee, how will the investment firms earn their profits?

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The source of revenue for zero-fee index funds will likely be securities lending, which is the practice of charging interest on shares loaned to short-sellers. For huge-fund providers, this revenue can be significant: some U.S. funds hold more than US$10-billion in assets, so even 0.01 per cent earned from securities lending could generate more than $1-million in annual revenue.

Many funds lend securities: ETF.com has reported that 60 per cent of ETFs in the United States engage in the practice while calling it “the best-kept secret in the ETF business.” It’s not especially risky, since lenders insist on high-quality collateral. But as fund companies face pressure to lower fees they’ll have an incentive to do a lot more of it, and they may loosen their standards and take greater risks as they look for ways to replace lost revenue. At least fees are transparent.

It’s also worth noting that Fidelity’s new zero-fee index funds do not track benchmarks created by third-parties, such as S&P and MSCI. Index providers charge licensing fees, so Fidelity has created its own to avoid these costs. This isn’t necessarily a bad thing: You can certainly argue that popular indexes such as the S&P 500 are somewhat arbitrary in selecting companies for inclusion. But holding an index fund accountable to an independent benchmark has some value in terms of imposing discipline and consistency.

A few years ago, I spoke to the head of an ETF firm who was frustrated with the performance of one of his dividend funds, and he suggested that he might approach the index provider about tweaking the criteria. That’s fundamentally at odds with passive investing, and no self-respecting index provider would entertain such an idea. But a fund company that “self-indexes” may well consider it if its product lags its competitors in performance. I’m willing to pay a basis point or two in licensing fees to eliminate that risk.

Unless you believe that fund companies have become charities, they must at least be planning to use no-fee funds as a loss leader to bring on new clients whom they expect will buy other, more expensive products. That has always been the strategy of brokerages offering zero-commission trades on ETFs: They know many investors who sign on for that deal will get bored and start trading stocks as well, paying the normal commission for doing so.

As someone who has lobbied for lower investing costs for more than a decade, I want to jump for joy at the arrival of no-fee funds you can trade without commissions. And I applaud any move by financial firms to make investing easier for those of modest means, even if their motives are not entirely pure. I just hope investors will maintain a healthy skepticism and recognize that what stands in the way of investing success today is not just fees, but our own behaviour. That’s a burden from which humans will never be entirely free.

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Dan Bortolotti, CFP, CIM, is an associate portfolio manager at PWL Capital in Toronto. He is the creator of Canadian Couch Potato, an award-winning blog about index investing.

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Which Is Better, Day-Trading or Investing Long-Term?

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You can get rich quick through day-trading, but it carries significant risk.


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Opinions expressed by Entrepreneur contributors are their own.


There is more than one way to approach the stock market, and many different schools of thought exist on how best to make money when buying and selling securities.

One method that often gets a lot of attention is day-trading. On one hand, day-trading is lauded as the best way to get rich quick. On the other hand, there are countless warnings about the dire risks of day-trading.

In this video, Entrepreneur Network partner Phil Town breaks down the differences, benefits and risks of day-trading and long-term investing so you can figure out which is best for you.

Click play to learn more.

Related: Intimidated by the Stock Market? Try Trading Index Funds.

Entrepreneur Network is a premium video network providing entertainment, ewitducation and inspiration from successful entrepreneurs and thought leaders. We provide expertise and opportunities to accelerate brand growth and effectively monetize video and audio content distributed across all digital platforms for the business genre.

EN is partnered with hundreds of top YouTube channels in the business vertical. Watch video from our network partners on demand on RokuApple TV and the Entrepreneur App available on iOS and Android devices.

Click here to become a part of this growing video network.

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