Investments in Canada are rising, or so they say; the positive outlook for the Canadian market leads to more investments. However, these investments are well-concentrated in stocks, bonds, and equities.
Most investors invest on a global scale and tend to overlook investment opportunities found in their own backyard. However, when was the last time you visited the headquarters of Apple in California?
Have you met Tim Cook and his supporting staff to understand the future growth potential of the company and then try and deduce your findings down to the potential company performance and where the stock might be heading?
This is where your local expertise holds an advantage and comes into play. Knowing your own backyard and the businesses that exist in that realm provides you an added advantage that the globally minded investors simply won’t have.
Investing locally has a multitude of advantages beyond just knowing the physical space that they operate in. Let’s take a deeper dive into a term not commonly found—locavesting.
Local businesses are the essential backbone of a city’s economy. The income generated by these businesses locally is recycled back into the local community. Local investments grow tax base and build an expanding community of investors.
If we take a closer look, it creates a domino effect. When a community starts to sell ideas and open business opportunities, there will be job openings, demand for product and services, transportation, and the trickle-down effect continues from there. In the long run, domestic investments will expand to positively impact the national economy’s growth.
Canada is a dynamic country and in each city holds investment opportunities just waiting for the spotlight. Young and old businesses from different sectors have been actively seeking local investors that would help them grow and create more stable jobs.
There are plenty of local businesses that have great potential to stimulate growth and diversify the economy. There are investment cooperatives that help these businesses as well as equity crowdfunding and angel investors. Anyone can invest in local businesses through RRSP and TFSA eligible shares utilizing the right investment vehicle.
While many investors often tend to focus on major blue chip investment opportunities, there are many potential businesses that would thrive provided the opportunity to grow.
Although Canada has attracted a large amount of foreign direct investors (FDI) in recent history, as a Canadian investor you are positioned to take advantage of local investment opportunities that are likely to be overlooked by these foreign investors. Investment opportunities that might not surface to a global scale are typically poised to reap greater returns for investors.
By means of local investments, small to medium businesses are now changing the market scheme, giving more room for economic growth and trickling down the positive impact to local residents through:
Canadian investors often overlook local investments. There is a growing trend moving in the direction of funding local startups. Investors are expanding their awareness of local businesses that they can participate to improve the local business opportunities while reaping a healthier profit compared to investing in a company on the other side of the world.
Location, location, location is a phrase we commonly hear from the real estate community. Putting that lesson into practice in your investment objectives is a step forward in mitigating your risk and expanding your potential income.
By being aware of local real estate trends not only in your city but also in your province and perhaps even on a wider scale your country, an investor can be better positioned knowing their own backyard.