Local Investment: 5 Ways to Grow Your Savings in Your Own Backyard

Local investment is all about people putting their hard-earned money back into their own community. A local economy thrives when small businesses hire and spend dollars in the local area, and investing locally is a great way to keep that cycle going strong.

Ever since the SEC adopted rules to permit crowdfunding in 2015, the investment from locals in small businesses has been increasing substantially every year. With that, the growth potential in locally-owned businesses is more promising than ever. Here are some of the top ways to start investing back into your local community while also planning for your own financial future.

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5 top ways to make a local investment

1. Put the money in a local banking institution or credit union

One of the easiest and the most popular ways to make a local investment is through a locally owned banking institution or credit union. You can open an account in these organizations and put the money in them right away without risking anything. Credit unions, in particular, are known for redistributing that money into the community through business and community-wide development loans.

local investing through crowdfunding2. Lend to local businesses and startups

When you lend to local businesses and startups, they create and preserve jobs locally while promoting the growth and prosperity of local economies. Furthermore, they generate tax revenue locally, which can be used for the vital needs of your community. Investing locally in businesses and startups helps ensure that the local dollars stay within the local area. Be sure to do your homework, though. Make sure that you are aligned with the business’s goals, that they have a solid business plan, and offer products or services your community wants and needs.

3. Pre-purchase local goods and services

Preselling is not recognized as security in many US states. For this reason, many local stores in your area tend to offer pre-purchase deals for their goods and services. You can use your money to buy these deals and assist these small businesses who constantly seek to expand their day-to-day operations. You may even get a discount for buying early and can use that money to pad your savings account at that local credit union.

4. Use a self-directed IRA

With a self-directed IRA, you can say goodbye to the ups and downs of the stock market and invest your dollars in worthwhile local investment options. Although it restricts you from investing in your home or family business, you can purchase rental properties or give loans to local businesses that you have no personal ownership in or close ties to. Make sure you’ve consulted with a tax professional and properly understand the rules of using a self-directed IRA.

5. Contribute towards crowdfunding campaigns

Crowdfunding campaigns are all about people contributing funds online towards a business. In donation-based crowdfunding, you can get returns in the form of a product or service. Meanwhile, for investment-based crowdfunding, you receive ownership stakes and have a chance of attaining financial returns. Search crowdfunding sites for businesses based in your local area, state, or region to support.

Benefits of local investment opportunities

An excellent local investment plan can help you achieve higher interest returns and lower the risks of potential losses. Furthermore, it can safeguard your money from fluctuations in major global markets and give you a better quality of life through community-wide development. Also, the level of transparency with investing locally is very high compared to the many other forms of investment. When you are close to your investment, it is much easier to keep tabs on it.

Use a compound interest app to create your local investment plan

Before you jump into an intensive local investment plan, you should first invest in yourself. It may mean deciding whether to pay off loans, become a homeowner, stay on course with your monthly budget, start an emergency fund, or so on. Consider using a unique and powerful compound interest app having five different variables that allow you to compare your savings and interest options. With that, you can create a plan to purchase a primary residence, an investment property, or devise a local investment plan that positively impacts your finances. Visit Apple’s App Store now to download the CWS Financial Planning Calculator and get started with securing your financial future.

Harvey Neiman

Harvey Neiman serves as President and Chief Investment Officer of Neiman Funds Management LLC based in upstate New York. Read his new book, Customize Wall Street, and see how anyone can invest in Wall Street.

Harvey earned his bachelor’s degree in Political Science at U.C. Santa Barbara, his JD degree at University of San Diego School of Law, and later earned an LLM degree in Taxation, also at USD School of Law.