You put your money where your life is, trolling farmer’s markets for veggies and shopping at local boutiques. But if you’re like most of us, your investments are in large caps and blue chips, not growing with local neighborhood businesses.
Maybe it’s time to diversify. As Warren Buffet has long counseled, it makes sense to invest in what you know. When you have an intimate understanding of a market, you are able to make smarter decisions.
Here are some ways to put money to work in your backyard:
Community Development Loan Funds make small loans to local businesses and families who can’t get traditional bank financing. The funds tend to be not-for-profit, pay CD-like rates and often have a stellar track record. To find one near you, visit the Opportunity Finance Network.
Local Investing Opportunity Networks (LIONs) are grassroots groups that link local businesses with “citizen investors.” They're cropping up in cities across the country, including New York, Seattle, Portland, Oregon, and Madison, Wisconsin. The original LION, in Port Townsend, Washington, has 60 members and has made $3 million in loans to area businesses.
Slow Money is a national organization that aims to increase investment in sustainable food and agriculture through its local chapters.
Amy Cortese is the author of “Locavesting, The Revolution in Local Investing and How to Profit From It.”