Investing Locally

This is a guest post by Rob Stretch. Robert Stretch is an experienced blogger and online marketer. He thrives on marketing to competitive financially-based niches. Currently, he works for VA Mortgage targeting VA Loans and helping military veterans.

Buy Local and Invest Local

“Buy Local” is a popular battle cry these days when it comes to anything from small, local businesses to local food. Part of the emphasis, no doubt, on spending money in local communities is due to the declining economic stability the United States has faced in recent years. Buying local ensures that your money stays close to the community in which you live and directly helps the local economy. Often, by buying local, you can also ensure that less money gets lost along the way and have the satisfaction of knowing that the producer of whatever item you’ve purchased receives more of your money. However, the “buy local” mantra could also be slightly changed to “invest local” with great results for small communities across the country when residents look at investing in local companies.

Sustainable Local Business Networks

Keeping your investments local can not only have great effects for the local economy but also for your portfolio through the development of sustainable local business networks. Studies have shown that small companies are often more profitable than large corporations and retain two to four times more investment funds than a large corporation would (presumably due to overhead). Local banks often have their fingers on the pulse of the local market and can point you in the right direction for making such an investment. Check your local activity boards or local library for investment clubs as well since many businesses rely on “friends and family” networks provide funding for their businesses and as such, many look to local investment clubs for support and advice.

Obstacles to Local Investment Strategies

If you have trouble at first finding where your money will do the most good, don’t be discouraged. Due to current regulations by the Securities and Exchange Commission regarding small public offering and local stock exchanges, current laws are highly restrictive when it comes to investment choices of unaccredited (read: not in the top two percent of wealthy Americans) investors unless legal documentation is in place, creating obstacles to local investment strategies. Unfortunately, the legal documentation required in these cases can cost up to $100,000, which is prohibitive, to say the least, for most investors.

Personal Finance Investing and Local Businesses

Luckily, changes to these laws and restrictions could be simple, painless, and inexpensive. Modest security reforms could be put in place to exempt investors from needing legal release to invest in locally owned small businesses, and to allow the formation of co-op investment funds and micro-investment funds so that small investors can pool their money and invest in their local economies. It is, after all, better for both small business owners and local investors who can both reap significant financial rewards. Personal finance investing and local businesses can join forces to fuel sustainable, local networks and help boost small economies – and large nest eggs.

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