One Cure for Year-End Account Statement Blues? A Guaranteed Investment "Note"

Calvert Investment Note photo
In the last few months, reading your savings and investment account statements is a depressing business, even if you have been dedicated to green investments. Calvert Foundation's Community Investment Note - defined as an unsecured security - says it has a guaranteed rate of return and a socially responsible twist: Buyers of the 1,3,5, 7 or 10 year versions of the note get to choose their interest rate (up to 3%) and also get assurance that their money will be working to help make micro-loans to nonprofit and social enterprise organizations. Calvert also allows investors to specifically target their money to be put to work close to home - an investor can earmark funds go strictly to Alaska projects, for example, or to the Midwest, or to only International projects.

But here's the 3% question: Why would any right-minded investor choose lower than the 3% return rate, and are these investments safe?

Money Returns photo

Socially responsible investment but no safety net
Calvert, a popular socially responsible investment company, says that by choosing a lower interest rate, you as the investor allow the company to offer more flexible terms or better rates to nonprofit borrowers, which would enable them to devote more resources in the field. For example, Calvert said $10,000 invested for 3 years at 3 percent would generate $600 in interest plus the prinicpal returned at maturity and could finance as many as 36 microenterprises and create as many as 50 jobs abroad or fund the building of two affordable housing units for low-income families. The Foundation provides a calculator for investors to figure out approximately how much impact they can have in the community they choose to funnel investments toward.

Calvert said its borrowers have a 99.8% repayment rate, and the company claims to put its borrowers through a rigorous screen. However, (and this is a big caveat!) unlike with some other "safer" investments such as certificates or deposit and or regular savings plans, the Community Investment Fund is not FDIC insured. So don't forget to read the prospectus! Via: Social Funds
Photo credits: ArtemiFinland (graph), Jake the Linux Geek (money) at flickr.
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