STRATEGY 1 Investing Close to Home: Strengthening Our Foundations

Home is where the heart is. And the hearth, and the art, and where the health of the whole earth is tended. Eco, the root of the words economics and ecology, comes from oikos, the Greek word for “home.” The close-to-home strategy brings economics back to its roots, to the household, community, and systems that support our most fundamental well-being. Close-to-home investing recognizes that much of what we already spend time, money, and attention on are rightly considered investments. Our personal health and skills, family and home, community organizations, and intimate, professional, and community relationships—all are addressed in this strategy. (Today many of us have nourishing family and community ties both where we live and in other places as well; these more distant relationships may be part of your close-to-home strategy, though we focus on the local in this narrative.)

If this strategy seems familiar, it may be because it's in our bones, as this is what all investing was for most of human history. Although it is common in the modern age to not even consider investing in one's hometown, in the past this was the only place that most people spent, loaned, and invested their money; even our time at work was usually at a local business rather than as part of the global economy. Now, as then, the lion's share of our time (at least away from work) is spent close to home, and a big chunk of investment wealth may be here, as well: our literal home—a house and land—is the largest (and often only) asset many people own.

Beyond this, remember that we all begin close to home. When you are young and just starting out—or if you are recovering from a setback or don’t have many financial resources—focusing your attention here is likely your best strategy. By close to home in this context, we mean very close! We think of Warren Buffett's comment: “Investing in yourself is the best thing you can do.…If you have true talent yourself, and you have maximized your talent, you have a terrific asset.” Invest in yourself, in your knowledge and skills; use your time and focus your attention toward improving your own ability to create value for other people. Because the return from such activities can be significant, this personal initiative can be your biggest source of wealth—and it is almost always your first.

A simple guideline for the close-to-home strategy is to invest in what you know, in what you can see and touch, and in who and what is around you. As famed Fidelity investor Peter Lynch liked to say, “Never invest in any idea you can’t illustrate with a crayon.” (We imagine close-to-home Lynch pointing to a child's drawing of a house with a big apple tree, a smiling neighbor, and yellow sun rays reaching down to some solar panels.) Local investments that are close at hand are easier to track and influence; when you are close to what you are invested in, you can intervene if there is a problem and weigh in on positive change. Try that with a mutual fund!

Close-to-home investing is fundamentally about relationships, asking us to enter into more intimate, face-to-face engagements. Returning more of our focus to this time-tested strategy represents a rebalancing as we step back from our immersion in a global system, which Don Shaffer of RSF Social Finance describes as “complex, opaque, and anonymous, based on short-term outcomes,” and we begin to embrace the virtues of local engagement, which is “more direct, transparent, and personal, based on long-term relationships.” Shopping at the farmers market, you exchange cash for carrots. You can see exactly how orange and crisp they are and talk with the farmer who grew them—if the carrots are sweet, you’ll be back for more. The close-to-home strategy seeks to apply the same immediacy and connection to its other investment activities.

In Local Dollars, Local Sense, a thorough survey of the local investment movement, Michael Shuman makes a compelling case that small businesses constitute about half the gross domestic product (GDP) of the United States, but most investors are completely missing out. Over-investing in Wall Street and underinvesting in Main Street (and other close-to-home strategies) is a diversification problem that this book, and especially this strategy, intends to help you overcome. As mentioned earlier, while this type of financial investment has been difficult at best for most of us, there are encouraging developments under way.

While everyone is involved with at least some, and usually many, close-to-home activities, there are two groups for whom this has become the main focus of their resilient investing practice. The first works to enliven local economies, primarily because of the positive effects that enhanced community resilience would offer in any possible future, and secondarily as a hedge against systemic economic shocks. They bank local, buy local, and invest in local businesses. Transition Towns and many other local and regional initiatives are engaged in such proactive “going local” efforts.

Others choose investments close to home to prepare for systemic breakdown, with an emphasis on personal and family survival, and in some cases to strengthen regional resilience. Their goal is to increase their odds of surviving “the end of the world as we know it.” Some are “preppers,” caching food, water, and ammunition on the edge of civilization, while others are deep ecologists who believe we have passed irreversible ecological tipping points and that their energy is best used in personal and regional preparedness.

We might playfully label folks from these two perspectives “bloomers” and “doomers.” For the bloomers, with the intention of building community resilience, the paramount goals are diverse local ownership, sustainability, and helping “dollars stay in the local economy to improve quality of life for all.” Doomers, who aim to ride out “the big reset” through personal resilience, see self-sufficiency and protection against threats as primary; some also stress moral integrity and charity. Both perspectives put a premium on good soil, heirloom skills, personal health, and freedom from dependency. The close-to-home strategy includes both of these camps and more, including small actions taken as modest hedges against the possibility of systemic shocks and all the ways that engagement in community fosters cherished human values. As long-standing community activists, we are motivated more by the desire to be proactive, but we also resonate with the wisdom of being prepared.

True to its name, the close-to-home strategy shines brightest when we make investment decisions about our home itself: choosing a region, community, and specific location we feel good about and making our home and yard a reflection of who we are.

One example of how deeply engaging this process can be is perma-culture, a form of ecological design that integrates a host of close-to-home strategies, including home-scale gardening and agroforestry, renewable energy systems, community planning, and much, much more. A marriage of the old and the new, permaculture systems are a tangible expression of the close-to-home investing impulse. As permaculture co-founder David Holmgren reminds us, “In pre-industrial society, the nonmonetary economies of the household and community, based on love, reciprocity, gift and barter, were the bulk of the economy.” Regardless of what camp you might be in or how the future plays out, who wouldn’t like more love, reciprocity, and gifts in their life?