Perhaps you’re tired of watching the stock market go up and down like crazy. Or maybe you’re looking to invest in something that’s actually meaningful to you, especially during these tough times in 2020.
Community investing is a relatively new concept that’s taking off across the country, and it runs the gamut from supporting local businesses to buying municipal bonds issued by your city, township, or state.
Community investing typically involves putting money into local cities and towns with the goal of improving them and enhancing the quality of life for residents. Community investing often comes into play with underserved areas lacking in essential services, though it can really apply to any city or town in need of improvements—and the money to finance those improvements.
Funding Local Businesses
One form of community investing involves helping local businesses get off the ground. You could invest money into a local café, book shop, or hardware store to help it open or remain open. Your profit will depend on the terms of your investment. Your money might serve as a loan with a predefined interest rate that the business owner will repay over time.
Or, you may be able to get some equity in the business so that you receive not only your principal and interest payments, but an additional return if the business does well.
Investing in Municipal Bonds
Another type of community investing comes in the form of buying municipal bonds. Municipal bonds are bonds issued by localities to fund projects such as road repairs, hospital systems, and school district upgrades.
When you purchase a municipal bond, you’re essentially lending money to a city or town to finance its project in exchange for a preset amount of interest. You can collect interest payments over the life of the bond and then receive your principal payment back once the bond comes due.
Why Invest in Communities?
When you invest in a community, whether it’s yours or a random neighborhood in need of help, you get the opportunity to do a good thing while making money at the same time. Plus, if you put your money into your own community, you might also benefit from the projects your money is used to fund.
Let’s say you decide to invest in a municipal bond issued to improve your local school district. If the project is successful and your city is able to update your children’s school, you’ll benefit directly from the results of the project. At the same time, you’ll make some money by collecting your interest payments under the terms of the bond.
Now let’s say you decide to invest in a local restaurant that’s looking to open around the corner. If the restaurant opens and is successful, it can help drive additional businesses to your neighborhood, thus improving your quality of life.
Plus, the more thriving businesses you have in the area, the more the value of your own property is likely to climb. Community investing can be extremely beneficial on multiple levels. As an investor, you get a chance to make money while serving neighborhoods in need.
And as a resident, you get to benefit from the results of the projects your money is used to finance. It’s a win-win situation, and one worth pursuing if you’re looking for a more meaningful, albeit less conventional, way to invest your money.