Francis Koster: Deploying Our Investment Capital Locally Yields Better Returns for All

News & Current Events Public News & Current Events
,
1

If you took $1,000 and invested it in a certificate of deposit in any of the three largest banks in America today, you would earn 1% or less on your money and have to pay income tax on that gain. Take that same $1,000 and put it in a secured government issued bond or mutual fund, and your rate of return might get as high as 2% in today's market. But if you invest it in your own community, you could earn an after-tax rate of return of between 5-7%. Three times as much.

We are conditioned to think that financial "investing" means sending your capital to Wall Street. There it will be put into paper securities (stocks, bonds, etc.), and hopefully when your next statement arrives, the dollar total is higher than you put in.

There's no connection between the investor and the investment. And in today's market, where safer investments offer nearly no return, investment capital is increasingly paying to chase risk it has little understanding of. And all the while, the middlemen -- with their 100% perfect trading quarters and record bonus payouts -- demonstrate that the system really exists to siphon off money from this 'dumb capital'.

Wouldn't it be much better to invest your capital where you live? Where you actually know how it is being used, and can actually see whether it's creating tangible value? Where, if productive, your investment is making your local community stronger?

Francis Koster knows this is possible. In fact, he knows first-hand that there are many such opportunities, and they often offer higher returns on investment than many traditional Wall Street options  Francis returns to the program to share his growing catalog of practical examples, collected from entrepreneurs and investors across the country and profiled in his new book Discovering the New America: Where Local Communities Are Solving National Problems.

Every week, Chris and I are approached by people who are uncomfortable keeping their money "in the system." They don't trust today's markets and/or they don't want to enable the parasitical Wall Street machine any further. They all share the same question: Where can I put my money where it will earn a return while doing good?

Koster's mission is finding acceptable answers to this question. He is one of the few pioneers exploring the emerging frontier of local, sustainable investing and cataloging his findings for all to consider and replicate.

Like many of the personal resilience practices we advocate on this site, Francis is revealing how tomorrow's "investing" will be much more hands on and direct than today's disembodied online brokerage experience -- but it will be much authentic, local, and economically healthy.

Click the play button below to listen to Chris' interview with Francis Koster (34m:00s):

This is a companion discussion topic for the original entry at https://peakprosperity.com/francis-koster-deploying-our-investment-capital-locally-yields-better-returns-for-all/

2

I totally agree with his premise, but our culture is sociopathically short sighted, I am frusted beyond end with this issue.  As principal in an architectural design and engineering firm, I constantly beat on, diplamatically of course, clients to think longer term about their investments in the built environment.  But generally once they discover that fact that the up front costs are say 5, 10, 20% for a particularly system, regardless of the payback period, there is no interest. None!  The worst parties are "investors".  It appears that the upfornt costs is the only concern.  
I hope this model catches on, we as designers are at the mercy of our clients, but it seems to still be a long time out.  I keep waiting for that hundreth monkey.  I know that Cathrine Austin Fitts has worked on local investor circles, I don't know where she has gotten with that.  I never became a paid subscriber on her site to see where that went.  Any thoughts of organizing something like that through this site?

3

I learned a lot. There is a lot more to this iceberg than meets the eye. There are several projects that spring to mind. Yet another book to read.
I look forward to seeing Mr Koster on TED. (He is not there. I looked.)

He should be getting an email from TED just about now. I am like that. Isn't the internet wonderful?

4

Great interview. I'll be learning more about Mr. Kostner.
I'm trying to figure out how this could work in my small community perhaps at my church or in the school.

Just went to a meeting yesterday at our local utility coop. Our rates are going up. They are changing the billing structure to a demand level system based on highest peak usage. If you suck lots of watts from the utility for even one hour that will be noted and used to set your billing rate. It becomes important to keep your usage even to stay in a lower rate tier. 

Solar systems will help take the edge off high demand. They typically generate at times of the day when grid demand is the highest. This is a way to mitigate the rate increases on an individual level.  People who work at conservation will pay slightly less per watt, and those who guzzle watts will pay more on a per watt basis.

Also energy audits will become more important with the need to understand surge power consumption, and where the high draw items are, like strip heaters that backup heat pumps.

Energy efficiency and local generation is a great way to invest. 

5

Wonderful interview! The social distance between our federal politicians and their constituents is too great, and is one of the main problems, if not the problem. We have acquiesced to putting only wealthy "experts" in these positions whos experiential knowledge of the average citizen is limited. I can only imagine that our federal representatives and senators see their constituents as an abstract "mass" of people. Their way of getting a read on their constituents is through the indirect process of polls and surveys and then interpreting the data. So, at least for me, it's not surprising that local solutions are becoming the examples. It's great to hear how Koster is documenting and facilitating this.  When the political decisions directly effect your immediate neighbors, friends, and community, more thought and care is given…at least that's been my experience.
Treebeard, the sociopathic nature of the financial system (I'm not sure I would call it culture) will probably have to get worse before you see people expand their view of the horizon. When money via printing is literally being dropped at your feet, you don't see much farther than your toes. That system is still the driving force of people's economic thought patterns. Another big downturn and I would guess you'll see substantial uptick.

Chris, I know the high school you mention. The schematics show a lot of forward thinking…solar panels, a lot more windows giving natural light, energy efficiency, but of course, the devil is in the details. We shall see.

This gives me more hope for our communities, as well as  ideas to explore as I consider putting my name in to sit on our local school board (not sure I can logistically do it yet)…what am I crazy?

 

6

[quote=treebeard]I totally agree with his premise, but our culture is sociopathically short sighted, I am frusted beyond end with this issue.  As principal in an architectural design and engineering firm, I constantly beat on, diplamatically of course, clients to think longer term about their investments in the built environment.  But generally once they discover that fact that the up front costs are say 5, 10, 20% for a particularly system, regardless of the payback period, there is no interest. None!  The worst parties are "investors".  It appears that the upfornt costs is the only concern.  
[/quote]
My clients are quite different. They almost always choose higher SEER AC systems with variable speeds. On windows we go with high quality Pella or Marvin for looks,  but mostly for efficiency. We insulate homes to the max, use thermal barrier roof decking etc.  Maybe it's Texas, or maybe my local area, but folks around here understand frugality and long term investment. We don't sell our homes as "green". We sell efficiency as a "no-brainer" cause the payback is so obvious. 
Last home had 30,000 gallons of rain collection, a 8kw solar system, and an underground storage room. I love building for smart people. The best clients are the ones who have worked hard for a living. They get it right away. 

7

I'm seeing increased awareness among both engineers/designers and owners/clients about the importance of reducing long term costs by building with quality and efficient materials today.  It happens through local intitiative and commitment by all parties involved.  For example, in my office, we've been seeking waivers to old State rules and codes on things like excessive ventilation rates so that heating costs can be reduced, and the regulators have been accomodating. 

8

My son is paying as he goes to college ( no loans) for a drgeee in business, while he works, He's seen the crash course, ad I knew he'd love this. He knows exactly the sorts of people who would invest in this. He, and my cousin–a venture capitalist–may follow the model with the public buildings getting retrofitted for energy savings via private company tax advantages. Thank you!
On a more general note, I simply loved the optimistic, outside-the-box approach Mr. Koster advocates. Kdos for a great interview, Chris.

9

I think things are happening faster at smaller scale, single family level,  where people are building for themselves.  Investors and developers working at a larger scale have their proforma based on conventional income streams and expenses, they tend to be very risk adervse.  Not that investing in sustainable design is remotely risky, it's just not in part of the convention wisdom yet.  There are notable exceptions of course.
Things are changing, but it's all coming from the ground up, not the top down.  Seems the more you have the less you are, the less you have, the more you are.  They kid me, if things get bad, I'm coming to your house, but they don't do a thing with their projects!

10

Way to go Wendy - that is exactly how we will get things done from the ground up. Tapping into the people like your son and his venture capital connections to take these ideas and run with them.With your son in business school perhaps he (amongst others) can also rub shoulders with the accounting majors to get them on board with trying to help effect changes on the taxation policy side of things. Every person that we can get trying to effect change will be a part of the overall solution.
Thanks!
Jan

11

[quote=treebeard]They kid me, if things get bad, I'm coming to your house, but they don't do a thing with their projects!
[/quote]
"I'm coming to your house if TSHTF" is something I here a lot of.  I've promised each of them a job delivering night soil to the farm fields.

12

One of life frustration is we never get around to doing it. There are always great ideas out there given by "they". You know, "They say… (fill in the blank)". I live NE outside of Philadelphia, and I am ready to start doing something, If there are any reading this and want to partner with me, let me know. I am interested in Aquaponics, rising fish and vegetables year round. I need investors and/or people to help in the many areas of running a small local farm.