Wary of Stocks? Try Slow Money.

Jul 18, 2013 by

Slow Money logoI’ve written quite a lot (some easily irritated readers might say ad nauseum) about my “hate affair” with stock investing. For a sampling, see Why I’m Wary of Stocks, Stock Huckster at Work, Financial Adviser or Huckster?, Roller Coasters and Retirement, Stock Bandwagon Rolling Again, and Fund Fees: Nest Egg Killer. If you don’t have the time or interest to read these past posts (I know I don’t!), I’ll try to put my rationale in a simplified nutshell:

I’m less than enthusiastic about stock investing for essentially the same reasons I’m less than enthusiastic about casino gambling: in both cases “the “game’s” rules are totally out of my control, a super-powered marketing machine successfully obscures reality and drives play and players, and the game exists solely to enrich its owners at the game’s participants’ expense.

But there’s a big difference which causes me to respect casino owners more than Wall Street money managers: no casino owner argues that you must gamble regularly to have a hope of saving enough for a secure retirement.

With that little vent released, let’s move on to Slow Money!

Are There Alternatives to Stock Investing?

Wall Street’s marketing message reduces to: turn the lion’s share of your savings over to us or plan to retire on a cat food diet. To that I say, in my usual sophisticated, intellectual manner: bullshit.

But whenever I impugn the object of retail investors’ affection, I rightly get this sort of question: “I’m earning zip on cash, and bonds are in a bubble. If not stocks, in what exactly do you suggest I invest my savings to stay ahead of inflation, Mr. Smartypants?” Very fair question.

I’ve picked up this gauntlet thrown down by shrewd Money Counselor readers and my critics. (See for example Invest in You! and Self-Directed IRA.) Today I offer another alternative to the conventional wisdom that you must invest in stocks or die poor: Slow Money.

What is Slow Money?

First, disclosures: I have none. Money Counselor has no affiliate or other relationship with Slow Money. I just happened to hear a guy on the radio talking about it. (You have permission to snicker about my ongoing use of radio to get information.)

To get started, here’s a short video to give you a sense of what Slow Money is about.

Okay, that’s cool, but a bit vague. How about some details?

  • The Slow Money Alliance is a national network and a family of local networks, organized around slow money principles, regional events, national gatherings, and financial products & services.
  • Slow Money is decentralized, with more than a dozen chapters formed since mid-2010, including a newly formed group in France!
  • Focused (for now) on food businesses, Slow Money aims to match entrepreneurs with investors at the chapter level. Over $30 million has so far been invested in 220 small food enterprises.
  • According to its website, Slow Money members include “experienced investors, leading food entrepreneurs, social investment pioneers, organic farmers and just plain old regular folks who…believe that putting some of our money to work in local food enterprises makes tremendous sense—in terms of financial diversification, in terms of biological diversity, in terms of security, in terms of local resilience, in terms of addressing many of today’s most pressing health and environmental challenges.”
  • Slow Money is developing a crowdfunding tool called Gatheround™. When it’s up and running, you can invest in Slow Money enterprises even if participating through a Slow Money chapter isn’t convenient.

Chatham Market - Slow Money InvestmentSlow Money vs. Wall Street Investing

I’m not suggesting that you should invest your entire nest egg in Slow Money enterprises. Please don’t! Small business investment is risky, whether made through Slow Money or not. But then I’d argue that conventional stock investing is far riskier than you think. (But don’t take my word for it.)

Personally I wouldn’t put more than 5% of my savings into Slow Money enterprises, and probably less. And if you have no experience with or knowledge of business, it’s probably best to stay away from Slow Money.

With the disclaimers thus handled, here’s my take on Slow Money vs. Wall Street investing:

  • If you believe in Slow Money principles, here’s an opportunity to put your money where your head is. If “greed is good” summarizes your principles, Wall Street’s a better place for you.
  • If you’d appreciate seeing your savings help your neighbors and community prosper and improve your quality of life, Slow Money is worth investigating. If you’d get satisfaction from further enriching America’s wealthy elite, stocks are the way to go.
  • If you want to take little risk with part or all of your nest egg, stick with FDIC insured accounts. Neither Slow Money or stocks offer guarantees of positive returns.
  • If you’d like the opportunity to visit the businesses in which you consider investing and meet the owners and employees, Slow Money works for that. If you like to get your information about potential investments from CNBC shills, stock analysts with skin in the game, and corporate public relations garbage-talkers, Wall Street should work well for you.
  • Do you want to participate in Monsanto’s world food conquest? You can become a part owner of the company through Wall Street. But if you’d like to encourage quality, local, independent food businesses, Slow Money’s probably a better bet.
  • If you think investing should be fun, try Slow Money! If not, 4,600 lifeless equity mutual funds—each charging an annual fee independent of performance—would welcome your money.

Would You Try Slow Money?

What do you think? If there were a Slow Money group near you, would you take the time to check it out? Or might you consider investing through Slow Money’s crowdfunding tool Gatheround once it’s in place?

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  • I’ve never heard of slow money before right now, when I read this post. I have to look a bit more into it. I have made some good returns on my retirement accounts through stocks, but I’m always open to new ideas and things.

  • This sounds interesting, but aren’t you gambling just as much with this? Food production is variable each year and that is why large farmers have crop insurance. If they don’t produce enough for the necessary amount, then the insurance kicks in. Once bad season and you have wiped out anything that comes from the farm. I do like diversification though and will look into this more. Everything has their risks and investing money in anything is technically gambling.

    • No question investing through Slow Money entails risk, possibly a lot of risk depending on the business. One of the things I like about Slow Money though and that in my mind lowers risk is the opportunity to talk directly to the owners and managers of the business in which I’d be investing, to visit the business and ask questions, etc. (This applies if you have a Slow Money chapter near you and get directly involved. If you invest through the future Gatheround crowdfunding tool, I’m not sure what sort of opportunity you’d have to learn about the biz.) If I buy GE (for example) stock, I’m 100% dependent on others–many or all of whom have vested interests–for any and all information about the company. With Slow Money, if you have some business acumen, I think you could really control your risk by learning as much as you can about the businesses in which you’re considering investing before committing any money. If you have no business acumen, personally I’d suggest staying away from Slow Money investments.

  • Thanks for the insights, It is first time I am hearing about Slow Money. I have no idea about the food business so I will take a look and it will be my new research. Yes diversification is good but need to do a good amount of research after all it is money business

  • Greg

    Seems interesting, like your own personal version of the show “Shark Tank”. It seems like the research would be more fun than Wall St. research at least. I’ll have to do some more investigating. Could be a nice way to diversify.

  • Dave Longboat

    Totally agree with you. I work in compliance with a major stock brokerage, and I can’t believe the junk that some of the advisors put their clients in just to generate commissions. And the worst part is that they rarely beat the returns of a good index fund (or a model based on their investment objectives). Forget playing the market…give me a good old index fund with a low expense ratio any day!

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