There’s an old adage that diversification is the only free lunch when it comes to the stock market. Most savvy, long-term investors have positions in multiple industries across different international financial exchanges. It’s a time-tested strategy, one that has beaten the odds again and again, despite numerous recessions and earth-shaking corrections.
However, you could be missing out on potential gains by focusing too much on a macro perspective of an ever-expanding and globalized portfolio. A bird’s eye view of the vast investment universe that exists beyond the American stock market juggernaut brings ample opportunities for growth and profit. That said, you shouldn’t overlook your local business environment. Investing locally doesn’t just create a stable foundation that absorbs financial risk; it’ll also create immediate benefits that you’ll notice in real-time.
Here are a few reasons why you should invest in your community:
1. There’s Less Risk When Investing Locally
Investing locally keeps money circulating through your community, allowing small and burgeoning businesses to grow exponentially. Because you’re more likely to know the politics and the daily interactions of the companies within your local sphere, it becomes easier to research and make informed stock-picking decisions. Why invest in a foreign conglomerate whose owners you’ll never meet when you could easily set up a lunch meeting with a local CEO? Making face-to-face deals may seem old-fashioned nowadays, but it does have its unique advantages.
2. Local Investments Create Allies Out of Competitors
The global stock market is a shark tank where businesses rise and fall faster than a glaring red line on an economic recession chart. Companies always try to outbid or bury the competition through innovation or cutthroat business practices. On a local scale, however, these competitive urges often give way to cooperative strategies because most community enterprises rely on each other’s services to stay afloat. This symbiotic financial ecosystem allows you to diversify your funds without fear of one business overshadowing another, thus doubling your chances to turn a profit.
3. Supply Chains Are Easier to Control
Having shorter supply chains cuts costs and generates more capital for both investors and business owners. Remember the blockage in the Suez Canal last year that took almost an entire week to solve? Because of a single, stranded shipping vessel, nearly 9.6 billion dollars worth of supplies were delayed from reaching their destinations. That amounted to an estimated 6 million dollars of lost revenue per minute. When investing locally, you can avoid these types of logistical nightmares since the materials needed for businesses in your community will often be found in one’s backyard.
4. Investing Locally Is Socially Responsible
Socially responsible investments (SRIs) have now become a staple even among well-known and established brokerages. A growing number of retail investors and asset managers demand more from their equities than just turning a profit; they also want to see how their investments impact the environment and their communities. After all, the economy is only as robust and healthy as the people who participate in it.
Investing locally means helping boost employment opportunities, build stable business relationships, and create sustainable practices that will last for decades. If you believe prompt customer service, relevant experience, timely solutions, and financial expertise are valuable assets, consider investing locally. It’s not just good for your pocketbooks – it’s good for your heart and soul, too.