Investing

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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How To Make Money Off Small Town Home Investments

The objective of investments is to have a place to park some of your money, minimize your exposure, and make more money over time. In order to succeed at investing, you need to understand that it is part risk and part lucky planning. Risk is always associated with investing and is often the first significant barrier people have in deciding whether to get involved with investments or not.

But with proper research and planning, you can minimize the potential for catastrophic losses before you even invest a dime. People are often fearful of investing because they don’t understand the foundations and risks that can affect investment opportunities in the first place. One of the things people do is inflate their understanding of investments which leads to added risk, take on too many investments, which leads to added exposure, or act out of fear due to momentary market fluctuations.

So what is a person to do? First, you can hire a financial expert to help guide you. Then, you can take on risks by investing without really understanding the values and fluctuations of the market, or you can look for more long-term, more secure investment opportunities such as investing in real estate. No doubt, one of the safer, long-term strategies for investment is to buy real estate.

Types Of Income Opportunities In Real Estate

In order to make money in real estate, there are three primary ways.

  • Purchase to Sell: With a purchase to sell, you’re buying the property to sell whether you invest money for renovations or sell as-is. The benefit of purchasing a home to sell is that you can make some decent cash, especially in a seller’s market. The downside is that you can take a significant capital gains tax by doing so.
  • Purchase and Hold: With a buy and hold strategy, purchasers have a few different options. One is to buy the home, live in it, and sell it much later in time as you pay down the mortgage and increase equity. The second option is to buy the property with the intent to make rental income over time. The risk here is if you have any layovers between renters, something significant happens that causes loss of revenue, or you can’t charge enough rent to cover your mortgage.
  • Real Estate Investment Trusts: With a Real Estate Investment Trust, or REIT, you join forces with several other investors to purchase Real Estate. The bonus of this strategy is you can buy more Real Estate than you might as an individual and lower your risk along the way. The negative is that you only own a small share of the investment rather than entirely making your profits smaller.

As an individual looking to make money off small townhome investments, a good strategy may be the buy and hold method but with a tiny change. For example, instead of buying a single-detached home and renting it out, consider buying condos or apartments and renting those out instead.

The benefits of buying a condo or apartment versus a home are that the costs are typically lower. In addition, you have the Homeowners Association that will take on some of the day-to-day maintenance of the property outside the condo. As an entry to rental ownership, these may be an excellent first step to consider.

However, if buying to hold and rent out your property is the goal, then finding a centrally located place is ideal. Other considerations are that it has an excellent rental occupancy rate, access to major industries, and is affordable enough that you can charge more in rents than your mortgage are all factors to look for in your search.

For detached, single-family homes, you can look to the suburbs of major metropolitan areas that offer some of the keys we discussed earlier. For example, houses for sale in Moreno Valley provide you with an area of population growth outside of a central metropolitan area (Los Angeles) and stable occupancy rates.

By considering purchasing a rental property in a suburb surrounded by a large population density, such as Moreno Valley, you’re going to have increased demand for rental units while having lower inventory available, further driving the rental market upward and making you more income over time.

How To Earn While Supporting Your Local Business

How To Earn While Supporting Your Local Business

I value supporting local businesses. Additionally, I love to “shop small” whether that’s local or during my travels. This value has heightened during the COVID-19 pandemic. After all, so many local businesses are in danger of shutdown due to prolonged closures. Therefore, I was excited to learn about The Small Business Bond (SMBX). This is a way that I can earn money while also supporting small, local businesses. It’s right up my alley.

Why Shop Small and Support Local Businesses 

I’ve been a “shop small” person for almost as long as I can remember. My father is a custom woodworker who has always done local business. Local stores have charm, closeness, and unique items that you just can’t find in big box stores. Yes, the big bookstore will always have (or order) the book you want. However, the small bookstore has the best recommendations, the shelf of books by local authors, and staff that know your taste in reading and can recommend the perfect book at the perfect time. Local stores promote community.

One of the things that I loved about San Francisco when I first moved here was the limitations on large chain businesses. Although that’s changed some over the years, San Francisco is still a city vibrant with small local businesses of all kinds. I support them through purchases, social media promotion, and word of mouth. San Francisco shut down earlier and longer than most other cities during the COVID-19 pandemic. As a result, many small businesses have suffered. So, the opportunity to support them in a new way – while also earning money myself – really excites me. That’s what The Small Business Bond (SMBX) is all about.

What Is The Small Business Bond (SMBX)?

The Small Business Bond (SMBX) is a platform to invest in local small businesses. Small businesses borrow money through bonds that you invest in.

If you’re not familiar with bonds, then think of them as loans. However, instead of going to a big bank to get that loan, the small business owner gets it from everyday investors. You, should you choose to try a platform like The Small Business Bond, are one of those everyday investors.

How SMBX Works

The process is relatively simple:

  • Sign up as an investor on the SMBX platform. There’s no charge to create an account.
  • Browse through the available small businesses. Choose which ones you want to invest in. You can start investing with as little as $10.
  • The small business that you support will receive that loan money to help stabilize or grow their businesses.
  • Each month, you’ll receive a payment. The payment includes your monthly principal repayment as well as interest payments. Interest payments vary; they may be as high as 9%.

Here’s a closer look at what the experience of investing in local businesses through SMBX has been like for me so far:

Signing Up as a New SMBX Investor

I went to the website and clicked the “start investing” button. A new window opened up and showcased some of the most recent bonds along with the time remaining for funding and how much has been raised to date. On one hand, this seems like an extra page because I clicked “sign up.” However, the pause to glance over this page and see the businesses getting help right now was inspiring. It reminded me why I was doing this.

Upon clicking signup, a popup window opened. It asked me to choose whether I was investing as an individual or on behalf of an organization. I love that both options are available. I selected “individual.”

The next popup window let me know that there are three steps to investing in the local business through SMBX:

  1. Create a profile.
  2. Establish limits on investments.
  3. Link a bank account or credit card to the profile.

Step One: Create a Profile on SMBX

Easy peasy. So I did those things. I entered a username, email, and password. Next, I gave my legal name, birth date, and address. The site let me know that FINRA requires a U.S. address for all investors on the site.

Step Two: Set Investment Limits

This quick pop-up window asks four questions:

  • Approximate annual income
  • Approximate net worth
  • If you’re an accredited investor (which I am not)
  • Amount invested in crowdfunding in the past year

This established my investment limits. Next, I agreed to the various terms and risks. I received an email that I clicked on to confirm my email address. My account was all set up and ready for investing.

Step Three: Payment

After clicking on my email, I went to a new page of bonds. At the top of the page was a profile option, which I visited to set up my payment. I assume if I hadn’t done so then at some point I would have been prompted to add that.

The entire sign-up process took less than fifteen minutes.

Choosing Local Businesses to Support

On the bonds page, I chose from the available local businesses to support. SMBX is a new platform. Therefore, I only had a handful of options for supporting local businesses. I’m excited for more businesses to join. On the other hand, I’m also excited to be getting in on the ground floor of helping small businesses.

The Financials

When you click on a small business from the bonds page, it opens to that business’s page on the site. Here you see the financials on the right side of the screen. This shows the minimum and maximum amounts to raise, the bond duration, yield, unit par value, and total unit value. For example, clicking on ChildWise, I see that they’re raising between $50,000 and $100,000. The bond duration is 60 months, the yield is 8%, the unit par value is $10 and the total unit value is $12.17. In other words, if I invest in one unit at $10 and get repaid with 8% interest then I’ll receive $12.17.

The Businesses

Although there were only a handful of businesses to choose from, I still wanted to be discerning about where to invest my money. It’s important to me that the companies share my ethics. Therefore, although I appreciate the important financial information, I looked most carefully at “our story”. This, along with supporting documents, shows what the company is all about. It covers how they want to use their money. This is what matters to me.

I invested $50 to start. You’re allowed to invest in $10 increments. I chose to invest:

  • $10 in vegan cheese company Jule’s Foods
  • $10 in San Francisco ice cream shop Humphry Slocombe
  • $30 in childhood education business ChildWise

When I entered how much I wanted to invest in any given company, a pop-up window reminded me of the terms I saw on the company’s business page. Upon agreeing, a page pops up reminding me when my companies will fund. At that time, if their funding minimum has been met, my payment will get processed.

Risks and Rewards 

Should all three companies receive funding and successfully return their bond money, my $50 will become $60.69. Each transaction has a 4% transaction fee. So, I’ll only earn a little bit of money. But I’ve also only invested a small amount. I’m testing out the waters, and if it goes well then I’d love to invest more. It could be a great source of passive income. More importantly, either way, I’ve supported local businesses that I believe in, so the money isn’t wasted.