There’s an old saying, “If you’re going to put all of your eggs in one basket…you better watch the basket”. Those are wise words that epitomize the lives of many entrepreneurs and small business people. Like having a child, they’ve committed to living with and cultivating their enterprise. It wakes them up in the middle of the night, demands to be fed and does poorly without consistent direction. On the flipside, it provides excitement, joy, and reward in the midst of all the growing pains.

But when it comes to “investing”, conventional wisdom takes us in a different direction. As an investor it says, “Don’t put all of your eggs in one basket”. This too is wise. Talk to any investment advisor and you are guaranteed to hear one word: Diversification.

But what if we zoomed-out a bit on this traditional wisdom?  What if we aren’t as diversified as we think we are when it comes to our investments? “Wait a minute”, you say. “My investments are spread far and wide inside of my 401K and IRA”. In one sense yes, but let’s take a look at where all of that money is going. How much do I know about those companies? How much do I care about them? Where do they do business? And…how many of my investments are actually with companies that reside in and around where I live?

Here’s the insight: When it comes to investing, diversification may mean more than you think it means. We need to color outside the conventional lines and tighten the geographic boundaries around at least some of our investments. To drive the point home with a little more context, allow me to quote from our friend Michael Shuman, author of Put Your Money Where Your Life Is.

“According to regular reports put out by the Federal Reserve, Americans now have about $13.8 trillion sitting in banks and $56.5 trillion in stocks, bonds, pension funds, mutual funds and insurance funds. If the investment marketplace were operating properly, between 60 and 80 percent of these investment dollars (again depending on how we define ‘local’) would be going into 60 to 80 percent of the economy comprised of local businesses. Somewhere between $34 and $45 trillion would be shifted from global companies to local ones. In fact, a small fraction of short-term banking deposits is being lent to local businesses, and almost all of the $56.5 trillion in long-term investment is going into big businesses.

What would be the impact if Americans shifted 60 percent of their investment into local businesses? A shift of this magnitude would mean that every community in the United States would have at least $100,000 more capital to invest in local businesses for every resident living in it. If you live in a small town with 10,000 people, that could mean a billion dollars more of capital to regenerate your economy. If you lived in a small city with 10,000 people, you would have $10 billion more. It is hard to imagine any policy or governmental program that could deliver even a tiny fraction of the potential impact of residents changing their investment choices.”*

If you think you’re picking up on a subtle moral imperative here, you’re right. Now that grassroots investors can place their money where their life is…shouldn’t they? Should at least a small percentage of those proverbial investment eggs be local? 

The businesses in your community need funding. A multi-billion dollar shift could create countless opportunities and impact the lives of your neighbors in a way only time can tell.


Michael Shuman, Put Your Money Where Your Life Is (Berrett-Koehler Publishers, 2020), 43-44.