Baiting the Hook: How to Bring Excitement to the Investing Process
March 1, 2018
Creativity is a driving force for artists and many other freelance professionals. Curiosity and the ability to see things around them from a different perspective feeds their creative nature and allows them to express common experiences in new and innovative ways. This thirst for the undiscovered and unusual, however, can dissuade them from engaging in essential financial-planning efforts, such as building a financial safety net around them, which would ultimately support their creative endeavors. Finding ways to appeal to an artist’s curiosity as a means of drawing them into the financial world is crucial. Injecting excitement into the process can help ensure that the more mundane elements are put in place and can be the key to success.
When it comes to investing, the benefits of having diversified assets forming the core of a portfolio—such as mutual funds and ETFs—are well known. A diversified approach reduces risk by investing in a wide variety of underlying stocks and bonds with relatively small amounts of money. But rarely do you hear anyone talking excitedly about the large-cap mutual fund or total bond market ETF they hold—at least not in the arts world. Discovering ways to connect with investing on a personal and visceral level can be challenging if the act of doing so seems boring and ordinary.
Artists understand that achieving a fulfilling level of expression in their craft requires them to invest a lot of time doing repetitive, often unexciting exercises. Whether it is the seemingly endless practicing of scales for musicians, producing innumerable studies for painters, or enduring consistent exercises and class work for dancers, artists persevere knowing that a thrilling performance or showing is the ultimate goal of their labor. Throughout this often grueling regimen, they rely on their curiosity and creativity to find ways of maximizing the effort and benefit while minimizing the boredom and lack of intrigue.
Owning mutual funds and other diversified assets can also seem like a boring routine, despite their importance. However, owning shares of individual companies—even if it is just a few—can serve as the much-needed hook to draw many artists into building a more secure financial portfolio for themselves. The thrill of owning a piece of a company that makes their favorite product, provides an often-used service, or in other ways meaningfully touches their life, can open the door to further investing. Once interest has been sparked by share ownership, it is easier to then add some ordinary yet stabilizing assets—in the form of mutual funds or ETFs—to the mix. An artist's intrigue can be assuaged as they follow the stock of their individual companies while their core portfolio of assets chugs along.
The political element of owning individual shares can also be appealing to artists. Shareholder activism—the desire for input in the running of a company by its stock owners—is becoming increasingly common place and influential. Often this takes the form of suggestions by shareholders being voted on at a company's annual shareholder’s meeting. These shareholder proposals can involve a wide range of subjects including social and environmental issues as well as issues regarding management diversification. Voting their shares to show support or dissent—even if they only own a few—for these annual meeting proposals that can impact the governance of a corporation often speaks to an artist's sense of civic duty.
A simple way to both invest in companies that appeal to their social and/or political issues and their sense of curiosity is through mutual funds or ETFs that meet those requirements. Thanks to the wide variety of specialized assets available, there is most likely one focused on a particular interest. One common type—often referred to as 'green' funds—invest in companies with ecological ideals while 'socially conscious' funds tend to focus on shares of companies that support current social issues. An added benefit is that while these funds or ETFs tend to be narrowly focused in their holdings—which can lead to greater volatility and higher risk—they are still investing in a collection of assets. This provides at least some measure of diversification—certainly more than buying shares of only a few companies.
A word of caution when artists are following their interests to find springboards into investing—beware of the latest 'hot' fad or something that is described as easy money. If it sounds too good to be true it probably is. Remember that the point of finding investments that peak a specific interest is to pave the way for building the less flashy work-horses of a well-rounded financial portfolio. Putting a small percentage of assets at higher risk in something exciting may be a way to remain involved. Putting a large percentage of assets at great risk could lead to greater risk, which works against long-term financial well-being.
Building a diversified portfolio of investments is a wonderful path to help provide artists and other new investors with the support they deserve from their assets. If acquiring a few shares of companies that makes their heart pound with excitement, or a mutual fund that appeals to their social conscience, provides the catalyst to successfully create that portfolio it can be useful bait for the hook. Forming an emotional connection to investing and their financial well-being can launch them on a successful and supportive journey into the investing world.