5 Reasons Why You Should Invest in Leisure

 

Why You Should Invest in Leisure

Along with making resolutions, many investors also look for emerging opportunities in the new year. However, one industry that has grabbed people’s attention is leisure and recreation services. Not only have businesses in this sector shown significant increases, but there are diverse investment options since it includes a wide array of interests such as sports, media, art, travel, etc. Although it’s had a history of rises and falls, the current trend has shown continual growth. Demand for new types of leisure and entertainment has grown during the pandemic, leading to new innovations, technology, and business models. And, it is attracting a lot of attention from important investors due to the ample business opportunities. If you have an innovative idea or have a business you would like to invest in, here are 5 reasons why you should invest in leisure.

What Does Leisure Include

The broad definition of “leisure” applies to any activity done when not working. When it comes to investing, the leisure industry is the market sector that focuses on entertainment, recreation, tourism, and sports. As you can probably guess, there are multitudes of businesses that fall under this category. And, there are more popping up every day as technology advances and the sector continues to evolve.

But, how does what you do in your free time apply to investing? All you have to do is look around your community. There are leisure and entertainment venues everywhere. Traditional leisure venues include retail stores, restaurants, bars, health clubs, sports complexes, movie theaters, amusement parks, casinos, and concert halls, just to name a few.

For conservative types, there are well-established stocks in airlines, hotels, and theme parks that have a strong performance history. However, there are also several gaming companies, streaming services, and social media platforms that also promise good returns on your investment. And, there are new entertainment options introduced to the market every day. Thanks to the internet and trading apps, the market is even more accessible to investors.

Reasons Why You Should Invest in Leisure

When choosing a sector, you’re probably asking yourself which ones are projected to see the most gains. There are endless strategies and theories out there. However, here are 5 tangible reasons why you should invest in leisure.

1. The Leisure and Recreational Services Industry currently ranks in the top 27% of all industries.

 

As any sound financial advisor will tell you, do your due diligence. You should always evaluate past and current market performance before you buy into any stock. Luckily for those who are short on time, online resources like Zacks compile and compare the most recent data for you.

According to their analysis, stocks in this sector are expected to outperform the market in the next 3-6 months. They also provide a convenient list of their top-ranked stocks. Resources like this make it easier to come to a decision, especially when picking individual stocks. It also shows which markets currently attract the most consumers for those interested in new ventures.

2. Analysts expect leisure stocks to see a significant rebound.

 

With the outbreak of Covid-19 and the ensuing pandemic, the entire stock market has taken a dive. Undoubtedly, the leisure travel industry was one of the hardest hit. As businesses closed and social distancing measures were enforced, stock prices continued to plummet. But, there is hope on the horizon as businesses re-open and adapt to the new normal. Although the spread of the latest variant threatens to cause another sharp decline, analysts expect leisure spending to double by 2030.

People have become restless being cooped up, and are looking for entertainment outlets. While we have been sitting at home, many of us have also managed to build our savings. The Bureau of Economics reported that the average personal savings hit a record high of 33.7% back in April 2020. Then, March 2021 showed an additional increase of 27.7%. This bodes well for the leisure and recreational services industry.

3. The world’s population is getting richer.

 

As Engel’s Law indicates, when a person’s income increases, they spend less on basic necessities and more money on other goods. Despite recent economic hardships, the world’s population has never been wealthier. Of course, there are large variations between different countries and individual households. But, people today have more expendable wealth than ever before.

The most difficult question to answer is how people are going to spend their discretionary funds. However, there will always be the human need for recreation and entertainment. Therefore, it isn’t unreasonable to assume that the more people earn, the more likely they are to spend their extra money on leisure.

4. The industry offers diverse investment options.

 

When you look at the entertainment industry, it includes a wide range of businesses and services. This diversity is one of the most attractive features of this sector. Not only does it encompass all the businesses who provide services, but also those which cater to the needs of the customers spending money on entertainment and recreation services. New businesses that can meet these needs the fastest and most efficiently will see the most success.

With the myriad of investment options, leisure-focused ETFs are a great way to help your portfolio gain exposure to this market. These ETFs offer baskets of leisure stocks, mitigating the risks of choosing individual stocks. Meanwhile, you also get a random sampling and can gauge which companies have the potential to yield a higher return.

5. Leisure businesses have been quicker to adapt.

 

Since fewer people are frequenting public places, leisure businesses have to adapt quickly in order to survive. Therefore, they had to fully embrace technological advances to keep up with people’s changing lifestyles. However, it has also set them as some of the most dynamic and innovative companies in the market. Their flexibility to meet the demands of all consumer groups and provide more mediums to connect with them provides a huge advantage and promising investment opportunities.

Trending Businesses Opportunities to Invest in Leisure

. Whether you are seeking to invest or start your own business, there are new niches being carved out. These areas have attracted focused attention:

  • Play Zones
  • Art Galleries
  • Advertising Agency
  • Sports Shop
  • Online Retail
  • Streaming Services
  • Media
  • Digital Marketing
  • Resorts and Hotels
  • Golf Courses
  • Multimedia Companies like Disney
  • Leisure-focused ETFs

The market is ripe with potential. However, the rising tide won’t lift all boats equally. Before making any major financial decisions, you should always consult with your financial advisor. But if you are looking for new opportunities, you should consider to invest in leisure.

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The Results of My End-of-Year Budget Review

End-of-Year Budget Review

Every December, I perform an end-of-year review of my finances. This habit has made a huge impact on my savings and investment accounts. Just as any business would do, I evaluate my expenses and earnings to determine my financial health going into the New Year. Although it was tedious in the beginning, I now look forward to the annual budget review. Not only does it give me the opportunity to assess my financial performance from the previous year, but also highlights ways I can improve going forward. After balancing the books, here are a few adjustments I’m making for 2022.

Conducting a Budget Review

Doing a yearly budget review is very similar to creating a monthly budget. The main difference is that you are dealing with 11 more months of expenses for which you have to account. So, it will probably take a little longer to get through it all. However, if you review your budget on a quarterly or monthly basis, it becomes much easier to manage.

First, I look at how much income I had for the year. This is also very helpful for tax purposes as well. With tax season just around the corner, this can also help you spot any discrepancies in the income statements.

Next, I calculate my expenses for the year. I start with recurring monthly payments such as my credit card, utilities, and loan payment. Then I move on to the smaller transactions. This is fairly simple since I only use two accounts: a personal checking account and a credit card. Once I log in to the website, I can review each statement, month by month.  My credit card even provides a spending report that does all the calculations for me. This portion of the budget review is usually the most telling. It highlights my spending habits and patterns, pinpointing unnecessary expenses.

Finally, I deduct my total expenses from my total income. The remainder tells me how much money I should have left for saving and investing. If your numbers aren’t adding up, then you’ll need to check for any other expenses that may not have been included.

3 Ways to Maximize the Budget for 2022

After looking at my finances for 2021, I feel like I’m in good financial health. But, there is always room for improvement. Here are three things I have identified that will help me get closer to my long-term goals.

1. Find Ways to Save More Money.

I’ve always been very budget-conscious and careful with my money. Even with the holiday shopping, I set a strict spending limit, started saving months before, and shopped around for the best deals. As the weather gets colder and Covid-19 concerns are still prevalent, I’m also not spending much on entertainment. All in all, I’m living well below my means and saving about 25% of my paycheck every month.

However, there are always ways to trim the fat and accelerate your savings. By looking at my monthly expenses, I discovered three ways that could help me save an additional $100 each month.

  • The first was to cancel my monthly subscription box from an online retailer. Although I was paying $20 a month, I rarely kept any of the merchandise. So, that was the first line item to go.
  • The next one was to reduce my gym membership fees. As more people are about to start hitting the gym as part of their New Year’s resolutions, local health clubs run great promotions. I found one that saved me 50% on the monthly fee.
  • Combining and sharing streaming services saved me the most money. After discussing it with a few family members, we decided to pool our resources and split the monthly fees. Bundling options gave us an even bigger discount as well. Rather than paying for each service, we now split the cost. For 2022, we are maintaining the three streaming services that we use the most, with each person paying for one. Instead of paying $60 a month, I’m now only responsible for the Netflix bill which costs $17.99 for the premium subscription.

While $100 may not seem like much at the end of the day, it’s more disposable income. And that is never a bad thing to have.

2. Increase Monthly Investment Contributions

Over the years, I’ve had various investment accounts, but never contributed much or managed them well. Therefore, I’m a relative newcomer to the investment game. In 2020, I finally paid off my student debt and become more serious about investment for the future. Once I found a financial advisor I trusted, I took a very aggressive investment strategy to help me catch up. So, I allocate about 25% of my earnings for investing.

A year and a half later, my gamble is paying off. Thanks to steady contributions and well-performing mutual funds, my portfolio saw a 22.5% growth this year. Spurred on by this success, I have decided to contribute even more in the coming year. I have a healthy emergency fund, and no need to maintain large balances. Rather than let my money sit idle in a low-interest savings account, I’m going to put it to work for me. And, with the additional money I will get by eliminating monthly membership fees, I’ll have even more to invest.

3. Look for New Investment Opportunities

Lastly, I want to seek out new investment opportunities for 2022. Although I already have a well-diversified portfolio with a Roth IRA, bonds, and mutual funds, I want to explore other options. One resource which I am not utilizing is my Health Savings Account. Therefore, I plan to max out my contributions next year. However, there are also a lot of other opportunities in real estate and other asset categories. Now that I’ve done my personal budget review, I will also be better prepared when I sit down with my broker to evaluate my investment strategy.

In addition to the self-awareness of personal habits I gain from this exercise, conducting a budget review reaffirms that I’m on the right track. And that gives me more confidence to continue working towards my long-term goals. It also makes me feel more prepared and informed when I review my portfolio with my broker. Having this knowledge gives me a greater understanding and control of my finances. Although you may not need to do as in-depth of a budget review as mine, taking a look at your finances will have a positive impact on your bank accounts.

Do any of you perform an end-of-year review of your finances? What tools help you? We want to hear from you!

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Top 8 Myths About Salary Raises

Top Myths About Salary Raises

Going after a pay raise can be an intimidating task. That’s probably why so many of us never ask for salary increases. However, when people buy into the many myths about salary raises, they are only holding themselves back. Here are some of the most common myths and the truth behind them.

Top 8 Myths About Salary Raises

1. Employees are entitled to annual raises.

Unfortunately, there are no labor laws that entitle employees to annual raises. While it may be customary to give annual increases or bonuses, there are no guarantees. The only instance in which an employer must increase wages is when mandated by minimum wage increases. If either the federal or state minimum wage increases on an annual basis, then an employee would be legally entitled to a salary raise every year. Although many states have been consistently increasing the minimum wage, the federal minimum rate hasn’t gone up since 2009.

2. If an employer says you are eligible for a promotion after 6 months, then by law it must happen.

During the interview process, many employees will discuss the timeline it takes to promote within the company. However, if your employer states that you will be eligible for a promotion after six months, they may simply be stating the company policy in which employees are eligible for promotions. This does not mean you will automatically receive a promotion as soon as you are eligible, unless it is explicitly written into your contract. If an employer offers quick promotions as an incentive, you should take it as something to aspire to, not an expectation.

3. Your superiors track when you are due for a raise/promotion.

Although you may play a crucial role in your work environment, that doesn’t mean your superiors track your raises and promotions. Unless you have a legal entitlement in an employment contract, some employers won’t always offer salary increases from year to year. It’s in the company’s best interest to keep labor costs down. However, that shouldn’t stop you from going after a raise.

By taking on more responsibility and demonstrating your value to the company can earn you a salary bump. But, if you never speak up, no one will ever know your intentions or desire for a raise. If your superiors see your potential and ambition to advance, most companies encourage promotion from within. And, they will gladly pay you more for filling leadership roles.

4. During a salary negotiation, your boss is your adversary.

One of the biggest myths about salary raises is that your boss is your adversary during negotiations. If you are a valuable employee, they will see you as an asset, not an adversary. Even though they represent corporate interests, that doesn’t mean you are automatically at odds. In fact, retaining and promoting valuable employees would put you on the same side.

Most companies are not as greedy or miserly as we would like to believe. If you can demonstrate that you deserve a raise, they will happily give it to you when it’s within reason. But like all business proposals, you should still prepare what you want to say and rehearse it before you make the actual request.

5. The best time to ask for a raise is during your annual review.

Contrary to what you might have heard, you shouldn’t wait for your annual review to ask for a raise. If you wait for your boss to announce your raise during your evaluation, it’s already too late. Budgets have already been allocated and salaries fixed for the next fiscal year. Therefore, you should try to do it earlier. If possible you should ask the quarter before your evaluation, after completing a major project, or solving a difficult issue. Timing is important, so use important professional moments and successes to your advantage.

6. Everyone is on the same playing field.

Another of the most common myths about salary raises is that everyone in the same position earns the same salary. It isn’t a level playing field, and employers pay each person what they feel they are worth to the company. Your qualifications and prior experience may entitle you to a higher salary.

The key to successful negotiations is knowing your worth. If you aren’t certain what the average salary for your position is, you can check online resources to get an idea of what other professionals with the same job title earn with other companies. Keep in mind that these are general guidelines for each position.

7. You should ask for a specific figure.

Another mistake people make when asking for a raise is giving an exact figure. If you ask for a specific amount, you pigeonhole yourself in it. Instead, give them a range of how much more money you are asking for. And, it’s always better to aim higher than your goal to leave room for negotiation.

8. If it doesn’t happen now, it never will.

Just because your boss denies your request now doesn’t mean that you will never get a raise in the future. Perhaps there are financial difficulties you aren’t aware of or it just isn’t in the budget. If it’s only an issue of money, you can also negotiate for better benefits that have value beyond your paycheck.

When you ask for a raise, remember to be patient. Your boss may need time to review the decision. And, you don’t want to put yourself at a disadvantage by presenting them with an ultimatum. Although you should prepare yourself for a negative response, don’t let it keep you from trying again when circumstances are more favorable.

Now that you are aware of the most common myths about salary raises, you can better avoid the pitfalls of salary negotiations. With a little preparation and awareness of your self-worth, you should have no trouble going after your professional ambitions. And, remember that even if you fail the first time, persistence pays off.

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