The year 2008 saw a great financial crisis in the United States of America. This crisis spelt the doom of many small businesses all over the US. Subsequently, the economy recovered. Today, you can find Crowdfunding platforms active all over the US. However, the rules are such that any business entity can seek Crowdfunding from investors located in the same state. Local investment is always desirable for many positive factors. We shall look at them one by one. However, we should understand the basics of investing local.
Importance of a local investment:
The main importance of a local investment is that they can help create a similar culture and uniqueness among the local communities and neighborhood. People from the same community usually manage the local businesses. They could be our friends and relatives. Investing in such local businesses can have a local multiplier effect. The money we invest remains in the local neighborhood. You spend it for the benefit of our own community. This ensures the prosperity of the entire community. These business entities deserve all the local support they can get. If we do not help them, how can we expect others to do so?
What do you mean by investing local?
Local investment in simple terms means investing one’s money for the mutual benefit of the investor, local small businesses, and the community at large. You can classify the benefits as financial, products, services, and cultural and so on. Local investment can catalyze various positive changes as follows.
- You can ensure that you bring the essential products and services to the local communities.
- Rather than investing the money on global markets and other corporate banks, you can invest the same for the development of your local community.
- This can enable you to enhance the local quality of life.
- You can build up the community as well as create new relationship with the local businesses.
Difference between investing local and conventional investing:
There are many differences in investing locally as compared to conventional investment. In the normal course, investing money entails putting your money in shares, bank deposits, and debts of multinational corporations and so on. Many people such as brokers, advisors, and investment managers play a major role in such investments. You never get the chance to know where they have invested your money and what is it doing. However, on the other hand, by investing in local businesses, you can see you money put to constructive use. The progress might be slow. However, it would be engaging. In addition, local investments are simpler to understand as compared to the conventional investing. You might make profits in a conventional investment. However, by investing local, you ensure fulfillment of your social responsibilities.
Different types of local investments:
There are two categories of local investments. One is investment in securities and the other is investment in non-securities. You can find the investments in securities as legally regulated, complex, and risky making them apt for seasoned investors. At the same time, investments in non-securities are simple and appropriate for the inexperienced investors. We shall list out some types of local investments for you.
- Local bank and credit union deposits: You may not know a local business entity. However, you can deposit your money in a local bank or credit unions. They in turn will finance a local business entity.
- Donation and Crowdfunding: You can invest your money in Kickstarter campaigns to help fund local as well as non-local businesses. You can receive your profits and rewards on successful implementation of the projects. However, you should check out the worthiness of the campaign or project before investing your money.
- Peer to peer lending: Some websites such as kivazip.com and www.communitysourcedcapital.com solicit depositor funds at zero percent interest rates for onward lending to local projects and businesses.
- Pre-sales: In this process, you can invest by paying for the goods and services upfront usually at a small discount to help any startup business to take root. This is one way of encouraging business growth in the local neighborhood.
- Intrastate Crowdfunding: Many states have enacted new securities laws that allow small businesses to raise capital from their local fans and customers. An example would be Illinois Intrastate Equity Crowdfunding platform VestLo.com
Safety Aspect of investing local:
Local investments are as safe or unsafe as any other investment. However, you can have the confidence of watching your money put to constructive use in a local business investment. You can choose the business entity. You can invest the money after confirming the strength and capability of the company to carry on with the business. Naturally, any investment, local or otherwise carries an element of risk. However, you would be able to mitigate the local investment risk in a better manner as compared to the conventional investment.
Your funds would be in the hands of the local business units. You can watch them at close quarters. You can ensure that the local business entity uses your funds in a proper manner. You can easily do the due diligence and arrive at a decision easily.
Evaluating local investments:
We shall take a quick look into the various aspects of evaluating local investments.
- You can make a list of investing rules and look at the bigger picture before deciding to invest locally.
- You should develop the virtues of patience while looking for investment opportunities. Usually the first opportunity would never be the apt one for you. You should think and take a decision.
- Once you make a decision, you should conduct the due diligence to ensure safety of your investments.
- Making a financial review of all the gathered information is very important. You have to look at every aspect of finance before taking the plunge.
- You should always read the fine print before signing the agreement.
- This is the most important step. You should monitor your local investment to ensure proper use of the funds. You should also ensure that you receive your share of profits or interest as the case may be.
You have seen the basics of investing local as well as the advantages of doing so. You have a social responsibility to perform. No one should forget this aspect.