Many people, especially young people, don’t realize that they can be investors just like wealthy people. Sally Outlaw of Worthy Financial, who sells Worthy Bonds, wants them to know they can.
According to Outlaw, people “need to think of themselves as investors, whether it’s $10, $100 or $1000. You are an investor the minute you take that risk and make that choice of where to put your money. We make it easy at $10 for people to participate and get a robust return.”
Worthy Bonds is an organization that sells $10 bonds with a 5% rate of return. Interest accrues weekly. Although the bonds have a 3-year term, people can withdraw their money at any time. The bonds are a way to save and invest easily either with an app or on the website. There are no broker fees, as people buy and sell them directly. There are no fees or penalties to cash in the bonds at any time. “It’s as liquid as a savings account and it’s as easy as a savings account,” says Sally.
Although the money is not in an actual savings account, it is in a relatively safe investment. The bonds often go toward giving “inventory loans” to small businesses that need to buy inventory for existing sales. The money is recourse to Worthy, so it is responsible for the purchaser. Worthy bonds are backed by the loaning company’s assets and inventory rather than a credit score. So far, no one has defaulted. However, if it does happen, Worthy will take possession of the company’s assets and liquidate them in 30 to 60 days. The liquidation value is determined by an outside entity before the loan takes place. Investors can, therefore, feel safe.
Outlaw was upset that only the wealthy were allowed to invest in higher-yielding investments and worked for about a year to get the bonds qualified with the Securities and Exchange Commission. “We wanted to level the financial playing field. We felt that every person should have the opportunity to have access to higher-yielding quality investments.” Outlaw is also a huge proponent of community capital and thinks people should invest in each others’ companies and the community. She likes the quote where someone asked, “How different would our world look if 50% of our investments were made within 50 miles of our house?”
Outlaw wants to help smaller companies that are local rather than give money to large banks that send money elsewhere. In the future, Outlaw would like to make some of the bands even more local. In this model, bond buyers would be able to support truly local companies. There are also unique aspects to Worthy Bonds that help people grow their accounts. They have a “roundup” feature that helps people accumulate spare change from purchases to save up for a bond purchase. Outlaw wants to integrate retail cash backs through their app. She wants to be able to give more to Worthy’s bondholders.
The company started based on Outlaw’s ten years of experience with crowdfunding. She is an advocate of community capital and has helped people raise money. Recently, laws changed to allow more people to invest in smaller companies via the Jobs Act in 2012. At that point, opportunities were opened to everyday investors. Before the Jobs Act, people had to be qualified investors to work with smaller, private companies. A qualified investor has to meet one of two criteria. The first is to have an earned income of at least $200,000 for the previous two years with a reasonable expectation of keeping that income for the next year. The other way to qualify is to have a net worth of at least $1 million (excluding the primary residence).
In closing, Outlaw says people should start early with investments, especially since the bonds are only $10 each. She also feels people should align their investments with their values when they are starting. She tries to make the product have both financial and social impact.
To learn more and to purchase bonds, go to https://worthybonds.com?r=xCgML.