There are various direct and indirect benefits for members of a community who support locally owned businesses. To start, when a consumer spends money locally their dollars recirculate through the local economy at a greater rate than when those dollars are spent at a national chain or e-commerce store. Why does this occur? Local businesses tend to spend money with other local businesses for services like accounting, advertising, and legal work.  Another indirect benefit is that locally owned businesses are also more than twice as likely to donate to the community than national chain stores. Supporting local businesses helps a community thrive because the money stays in the local economy!

Now is a time to take it a step further. Instead of merely spending capital locally, community members should want to invest their capital locally for the future of their community. Investors looking to grow & diversify their investment portfolios and see real change in their own backyard should be investing in local businesses & real estate!

There are a plethora of reasons to invest in your local community, here are my top five reasons for community members to invest in their backyard.

1) Impact Investing – Making a Real Change with a Financial Return 

Everyone likes to make a positive community impact. Everyone also likes getting a solid return on their investments. Why not do both? Well, an investor now can with smart community impact investments. This occurs when there is both a positive financial and social or environmental return. Investing in your community through real estate or in local businesses is one way to make an impactful investment. These investments could potentially attract tourists with a new hotel, create space for businesses to be able to develop, grow, and flourish or even provide quality living spaces to attract and retain current residents. Overall, there is a wide array of options to make impactful investments in your community. Every community has real estate needs.

2) Rural Communities Attracting Young Families

Right now, is a great time for rural communities to invest in themselves to become a permanent destination for young families looking to get out of the metro areas and become involved in a tight knit community. Specifically, in rural Minnesota, we are currently seeing a “brain gain.” According to Ben Winchester, a sociology researcher for Minnesota Extension, his work has shown that rural America is not dying as the narrative typically likes to portray but making a comeback. Many in the 30 to 50 age cohort are returning to rural communities with education, work experience, and most importantly children. If rural communities want to become appealing places for families looking to move or keep current families they should make sure they are setting themselves up with proper investments into the community – schools, parks, hospitality, amenities, etc.

3) Diversification & Asset Protection

In 2020, the equity market experienced extreme volatility. We experienced the largest daily price swings in the markets since the Great Depression. Investors should continue to utilize the stock market but not place all their marbles in one basket. Diversifying portfolios can protect investors, increase returns and allow them to sleep better at night! How can investors do this? By investing in their own backyard! This is where investors may have the most knowledge of the market, instead of betting on large national & global companies with little to no knowledge of what is truly going on behind the scenes. Diversify, protect and grow your portfolio by investing in local real estate and businesses!

4) Exciting Way to Get Involved in the Community

Investing locally makes people more aware of how their investments are affecting their local community both socially and environmentally. As opposed to investing in domestic & global markets where the social & environmental effects are often never seen (or simply ignored) when investing in local projects one becomes more aware of its effects. These investments will be affecting the personal investors, their friends & family and the overall community. With this in the back of an investor’s mind they are more aware of how these changes affect everyone. Why not invest in the local community where one can see their capital positively change the community in an assortment of ways?

5) The Local Multiplier Effect – Community Economic Driver

Lastly, as stated before spending money locally creates an environment where dollars recirculate through the local community over and over again. Investing locally does the same thing as it puts a community in a better position to have a self-sustaining economy.

There are numerous reasons to support local & buy local with the impacts it has on the community economically, socially & environmentally. However, there are also many reasons why investors should diversify their portfolios & invest in alternative assets like local real estate to get both a financial and social return to the community. Investing locally does not have to be a burden or a chore for an investor but should be viewed as a safe & strong investment. Even though it is rather cliché everyone should always invest in themselves but now is the time to both invest in yourself and the community at the same time!