What is Local Investing?


For years, top financial advisers on Wall Street urged Americans to invest their hard earned money in huge corporations promising returns to guarantee a relaxing retirement. But what about Main Street? What exactly is local investing? And will it provide profitable returns?

Local investing occurs when residents of a community with capital invest that capital in local projects or small businesses. Small businesses are the backbone of this country. As of 2011, 27.5 million companies classified as small businesses by the Small Business Administration. These companies contribute half the national private sector GDP and “are responsible for more than two out of every three jobs created” according to author Amy Cortese.

Investing in these small businesses and their local projects can occur in a myriad of ways including loans, preferred stock, and royalties. The main barrier with local investing, however, is who can invest. Right now, it is difficult for the everyday American to invest in the business that operates less than a mile from his house. Due to SEC securities laws, investment is limited to friends and family, accredited investors, and few other exemptions.  Hopefully this will change soon and allow the public to support their local communities.

Thanks to human ingenuity, however, committed individuals have found a way to invest locally while obeying the law. There are investment strategies for almost any small business enterprise and any type of investor. Some strategies include crowdsourcing like Kiva Zip and co-ops which include the outdoor store REI.

Investing in your local community is rewarding both through monetary returns and building the community in which you choose to live. Supporting your local community can give you profitable returns but also that investment stays in the community as opposed to buying stock in corporations who operate overseas to save money. If you want to learn more about investing locally, check out the Investment Toolkit on our website at HERE.

Additional Reading:

Locavesting: The Revolution of Local Investing and How to Profit from it by Amy Cortese


Self Directed IRAs and Supporting Local Investment

Excited for retirement? The golden years mean relaxation, travel, and no 9-5 schedule. But everyone knows they need to save to guarantee their desired retirement. Even as a child, I was told to start saving early – as in the moment I got a job I needed to start putting money away. It’s a smart idea, as studies have verified that saving a few years earlier could mean tens of thousands more for retirement as shown in this image from Business Insider illustrating the power of compounded interest:



compound interest


Now the only question is: how do I save? There’s the traditional 401K model, but there’s also a lesser known model called a self-directed IRA.

A self-directed IRA allows investments in previously unavailable markets such as real estate or tax lien certificates along with the benefits of the traditional IRA, namely tax-free investment. A self directed IRA shares most of the same qualities of a 401k including the same rules to cash out. But you will be in charge of your own investments and have the freedom to invest in businesses or people you know and personally believe in. Take for example, Meghan Williamson’s self-directed IRA. She helped local business owner Karen Lawrence by investing her savings in Karen’s business to help her get out of debt. Essentially, Meghan loaned some of her savings from her self-directed IRA to Karen as an investment. It was a mutually beneficial experience because Karen repaid her debts and Meghan earned interest on her investment.  


Using a self-directed IRA allows you to invest tax free in businesses you trust to better save for that long awaited retirement. Through investing locally, you help your community thrive while watching compounded interest transform your savings into a hefty sum. With self-directed IRAs the world is your investment oyster, so to speak.

Additional Reading: