Raise your hand if you think the government knows what’s best for you. For the last 80-plus years, the government has decided you weren’t smart enough to determine how to spend your hard-earned money. They made laws that prohibited you from investing your money in a variety of private opportunities — whether that’s into your favorite food truck seeking to grow to a brick and mortar store, into a popular local donut shop, or even lending out your money where you can benefit from the interest paid. Until recently, only those people the government deemed were sophisticated and wealthy enough could invest in these private market ventures.

“We are most welcome to gamble our cash away at the local horse track or casino, but not allowed to invest it in private companies we believe in.”  

Why is this a problem? Because it means 99 percent of the population is being blocked from investing in the highest-yield opportunities, making it hard to grow our wealth and get ahead. We common folk, are then left with only the measly interest rate that banks pay or with buying into the public stock market, aka “Wall Street.” No high-growth home runs for us.

The good news is that the landscape is finally changing — and we at Worthy are part of this evolution. What changed is the JOBS Act. The JOBS Act stands for “Jumpstart Our Business Start-Ups Act” and is a law intended to encourage the funding of small businesses by easing many of the country’s securities regulations (signed into law by President Obama in 2012). Although the focus of the legislation was to help entrepreneurs gain access to investment by opening the possible pool of investors to the 99 percent, the result is that the passing of the act finally allowed the rest of us to get in on a variety of investments that can really build our nest eggs.

What are these investments? Things like buying stock in young, growing (private) companies; participating in real estate funds; and benefiting from debt offerings in which you put your money to work by lending to creditworthy consumers and businesses and you’re paid some of the interest that’s generated.

The best part is that not only can you make a strong financial return, but you can also make a social impact in the process because in many cases these investments are helping your fellow humans. Be aware, however, that you will have to wait a while to liquidate or cash in on the stock, until there is a place to sell it (what’s called a “secondary market”). This is one reason why investing in private credit (aka “debt”) opportunities may be more attractive, as investors usually receive regular payments of interest or interest and principal. This is also where Worthy fits in — we connect our members to a five-percent fixed-interest return based on investments made into secured business loans (meaning that the loans are secured by inventory that can be sold to recoup the capital if the borrower fails to pay the debt).

So the good news is that through the efforts of forward-thinking politicians and many of us in the alternative finance space, there have been recent changes made to the securities laws to help level the playing field and allow us all to be more profitable investors. But there is still a long way to go — such as lifting the income-based investment limits that the government still imposes on the 99 percent (which allow most of us to invest only $2,000 to $4,000 in these opportunities each year). The effort to democratize capital continues!