Entrust New Direction Blog

Locavore, the Oxford American Dictionary word of the year, 2007, and now in Webster's Dictionary, is defined as "one who eats foods grown locally whenever possible."  You, dear self-directed IRA holder, could become a locavestor, i.e. "one who invests retirement funds locally whenever possible".

Of course, a locavore's ideal location is amongst agriculture, while the locavestor would have more options in an urban evironment, but even New York City has farmer's markets, and even Idaho has investment opportunities.

Some ideas for locavesting:

1) Loan money locally                                                                           Your IRA can lend money to your church, your kid's soccer coach, your next-door neighbor.  Many people are paying 15-30% or more for credit card debt.  Your IRA could swoop in, earn 10% interest and save someone you know thousands of dollars.  Don't know anyone in need?  You could put an ad in the local paper.  Plus, the money your lender saves will likely be spent locally, further strengthening your town or city.

2) Buy shares in a local private company.                                                            

While this may not be the best time to start a company, many people who were laid off are doing just that.  They need start-up cash, and your IRA could contribute now, and look forward to a bug payout later.   There are likely local established companies which aren't ready to go public, and they may be looking for a cash infusion to help them along until the economy steadies.  Your IRA could buy into the next Microsoft or McDonald's, before they grow gargantuan. 

3) Buy a foreclosed home in your neighborhood.

Your IRA can vastly improve the neighborhood if you buy a foreclosed home and rent it.  Your IRA gets fat with rental income, and the neighborhood's home values improve.  Or if you don't want to deal with renters, your IRA could buy and hold the home, until the local real estate market improves. 

4)Buy the farm.                                                                                       To combine the best of eating and investing locally, you could find a small agricultural operation and your IRA could become a partner.  Not only could your IRA grow like the rutabagas, your retirement investment could contribute to the health of your community, literally.

If you see my new bumper sticker: "Think Globally, Invest Locally", please wave.  I'll wave back. 

Greenwashing is a new term in the American lexicon, sprouted up thanks to the relatively recent enviro-happy-environment. A mashup of the words green and whitewashing, greenwashing refers to the act of companies exaggerating or fabricating environmental or earth-friendly aspects of the business. This spin tactic is used in the automobile industry, the travel industry, with cleaning products - just about everywhere in the marketplace, including investments.

According to Time magazine, sales of organic food alone (no other green or greenwashed products or services) doubled to $20 billion from 1997 to 2007. $10 billion can buy a lot of green paint. Of course, using spin in marketing is not exactly a new phenomenon, but people who care about how their actions and inactions affect the earth want to know the truth.

And this is where the self-directed IRA pops up. The self-directed IRA leaves the investment decision up to you. If you contribute to a 401(k), you cannot choose which stocks your retirement funds buy. Same with a standard IRA. But with a self-directed IRA, you can be as green as you want to be, and still make money.

One example is the start-up alternative energy (or alternative packaging or alternative transportation) company. Your self-directed IRA can buy private stock in the company, but before you decide, you can visit the factory, meet the workers and learn about the processes. Verify the green-ness yourself.

Your IRA could loan money to individuals in third world nations via various microloan companies. Your IRA could buy an electric car and rent it out. The possibilities are self-limiting. That is the beauty of self-direction.

See some examples of truly green and socially responsible retirement investing.