3c hapter - Index of

40 Locavesting
A Grassroots Movement
Don’t expect to hear any of that from your mainstream broker.
Local investing, for now, is a purely grassroots movement, fl ourishing
in the cracks of the fi nancial system. When I inquired with
Charles Schwab, where I have a retirement account, about investing
some of my savings locally, the pleasant advisor handling my call
was stumped. Domestic or international funds she could do. But
Brooklyn? She suggested that perhaps I could invest in a New York
state municipal bond. ( Self- directed IRAs, which are available from
many banks and brokerages, offer investors a greater degree of
fl exibility. While conventional IRAs stick to mainly stocks, bonds,
and CDs, a self- directed IRA may be invested in alternative assets
such as real estate and private equity—including many of the types
of investments we will discuss in coming chapters).
Nor will your broker point out the broader benefi ts of investing
locally. As vital links in a local web, these enterprises benefi t
their communities in myriad ways. So when you invest in a local or
regional company, the “returns” are much more than monetary.
For one, local business owners are more than business managers;
they are residents and neighbors who have a reputation and
stake in the community. Their kids go to the same schools as the
children of their customers and employees, and they rely on
the same municipal and state services. With that connection comes
an implicit responsibility and accountability. While a national or
multinational corporation owned by absentee shareholders is driven
solely by a mandate to maximize profi ts, a local business owner is
likely to take a broader range of factors into consideration when, say,
closing a plant, voting on tax issues that might affect local services or
schools, or taking action that could potentially damage the environment.
In a study funded by the Environmental Protection Agency of
more than 2,000 chemical plants, absentee- owned plants released
three times more toxins than those based in the area. 6
Independent, local companies are also good for local business.
They patronize neighboring establishments and carry each other’s
goods. When they need supplies or services—whether construction,
web design, accounting and legal services, cleaning, or catering—
they typically use local providers, thereby creating or supporting