How to Invest Locally
Written By: Dan Stanley | Posted: Tuesday, May 11th, 2010
It would be in place to ask why I am giving advice on investing, whether locally or not. My lot in life has been preaching and pastoring for the past thirty five years.
While that is true, I have had two advantages gained over those years in regards to investing. The first was being raised in a home under a father who was an investor, and a very successful one at that. He was in the truest sense an old fashioned "horse trader." Dad would sell anything if he thought it would bring profit. From horse bells and sleds to land and malls, Dad bought and sold. And he did this, as I said, very successfully. Second, I personally have invested at various stages of my life, and that with a certain amount of success. Added to that can be my having worked in the area of finances with countless people over my years of pastoring, helping them get out of debt, save money and even invest, and that also successfully. You are left to judge the viability of what I am about to write that might help you. Without hesitation, I do recommend you at least give it your consideration.
In order to invest, whether locally or abroad, it is good to first understand the difference between saving and investing. Saving is merely storing up or keeping what you have earned. This can be done in various ways. Years ago you could put it in a jar or under the mattress. That does not work any more. Why? Because of government produced inflation. The printing of fiat or really fake money dilutes the true value of your dollars, resulting in less and less purchasing power. That is evident in the price of a car today versus fifty years or even twenty years ago. In order to save, you have to put your money into something that at least keeps up with inflation. Savings accounts rarely do that. They generally pay less than true inflation. My recommendation, if done consistently, is to put it for savings purposes into a commodity that does not deteriorate or lose value. Gold and silver have been staples for this over the years. I recall in 1964 when silver was last put in coins. Dad told me to keep all 1964 and prior dimes, quarters and half dollars. He knew. I did not, neither did I listen! Well, to day that same dollars worth of coins buys 14 times higher than that original dollar did in 1964. Do the math. If you bought a new car in 1964 (approximately $2, 000), then multiply that times 14 and you get $28, 000. Of course, you can buy a decent new car today for under $20, 000. Not only did silver save your money, it actually increased the value. What ever means you use, find a means to save your money in a way that it keeps at least abreast with inflation.
Investing is different. It is taking what you and I save, and putting it to work in order to make money from our savings. This can be done in many ways. My Dad bought stocks before I was born. He was always buying stocks And he was always promoting Wal Mart stock. Boy, was he ever right! Stocks are a way to invest your money. Investments can include everything from tocks and CD's to antiques and horses. The opportunities are vast. My purpose in writing at this time, though, is to show ways you can invest locally. It might go without saying that local investing has many advantages. One is you are very close to your investment. You can see it. It may be in your backyard! The disadvantage of investing not locally is the disconnect we have with that investment. We don't know the company or where the bank is investing what is put into savings by people. Some banks invest locally, but much of it can go beyond what is local into the world of large, corporate investments.
How, then, can you invest locally? I am going to narrow in on one local investment that is tried and proven over the years. Mind you, there are many. The Kool Aid stand on the corner the child has is a local investment.! One person starts up a little shop to make or sells their wares, and that is an investment. Another puts money into growing produce or animals for the market, and they are investing. Here is someone who buys, fixes up and sells used cars. They are investing. I lived with a fellow seminarian who did just that. He always had two or three cars near the curb. He did quite well at it, I might say. Quilts bring more money that you would expect. The list goes on. Investment of money is not you or I doing these things necessarily (although we can be involved in them), but rather using our money we have saved to enable others to do these things. That is the wisest investment. It is using your money to create product and producers of something.
But I told you I was going to narrow in on one investment that was tried and true. It is using your money to buy a rental property. I am not sure if that scares you or not. But don't let it scare you. You may have ran into a "slum landlord" or two, and that did it for you. By the way, slum landlords do quite well. The problem is they often don't fix what they promise to fix! When I was child, this was a common and very successful way to invest locally. It needs to be done with wisdom and counsel (especially when beginning). But in time it proves to be a sound and steady investment that keeps up with the times and inflation. Let me exemplify how this works. Take in Eau Claire, or any of the towns in our area, you buy a house. It may be a duplex. Single homes are better in some ways, but I will stick with the duplex for the sake of showing you the figures. In Eau Claire, you can buy a duplex for as cheap at $50, 000. It will need some work, but that is all right, if you get the right price. Lets say you end up having $75, 000 in the duplex. The rental income for it will be approximately $900 in the Eau Claire area (it could be as low as $600 or as high as $1200). That is $10, 900 per year of income. Deduct from the gross income form it for taxes, maintenance, insurance and empty apartments, and you will end up with approximately $8, 000 per year. I am rounding of the figures. If you want more detail, I can give it to you. What percentage are you now making on your $75, 000, if your net gain is $8, 000? A little over 10%. But that is not all. That property will keep abreast with inflation Using the figure of 5% per year increase for inflation, which is very reasonable in the realm of property, you are now making approx. 15% on your money. That is not a bad investment. Lower the figure to 10% if you want due to cheaper rents or hard economic times and you are still getting a decent return on your money. Are you worried about tenants? Then buy a home in a better area or one near you. Keep a good eye on it and pick your tenants. When you get a good one, keep the rent down so you can keep them there! And note this. Two duplexes near you will give you approximately $16, 000 per year of income. That is approximately $1333 per month income. Add that to your Social Security and any other pensions, and it is quite workable for most of us. It is local, you can see it, the check is monthly and further, as you get older, you can even work on them, keeping yourself in shape and cutting down on doctors! You see, like any good investment, it just keeps growing! For more information contact the writer at the Eau Claire Journal. For a copy of Becoming Debt Free by the author, likewise contact the Journal.
Dan Stanley is an owner and contributor to the Eau Claire Journal. He is the author of "Becoming Debt Free" and has pastored for thirty years. He and his wife Beth have ten children and live in Eau Claire.