Entertainers and entrepreneurs are known for their creativity, passion, and drive. Yet their distinct financial circumstances usually require a tailored wealth accumulation and preservation strategy. Actors had a median annual wage of $48,800 in May 2021, according to the U.S. Bureau of Labor Statistics (which also illustrated income volatility for many who work in entertainment). Many entrepreneurs walk a similar feast-or-famine cycle in the early stages of their businesses. From unpredictable income streams and shifting project-based work to the mean siren song of “lifestyle creep,” there is no shortage of enemies waiting in ambush. Sara Qazi, a seasoned financial advisor with a background in the entertainment industry, notes, I believe “The financial lives of those in the entertainment and music businesses are best served by a financial advisor who understands how these businesses tick.”
Having researched Qazi’s best investment moves, here is a list of ten strategic investment opportunities available to entertainers and entrepreneurs so they can reach their financial goals and confident future.
1. Diverse Investment Portfolio
Any investor should have a well-diversified portfolio, which is just as accurate for anybody with a fluctuating income. Diversifying into stocks, bonds, real estate, and commodities spreads risk over an asset class that may do well when another does not. If we could predict which will be the best-performing asset every year, then, by all means, concentrate everything in this area. According to Vanguard research, diversified portfolios have generally outperformed single-asset class portfolios over the long term.
2. Investment Direct: Retirement Accounts (IRAs, 401(k)s)
Retirement Planning is a must, as Qazi mentions, even if you think it is too far away. Retirement accounts come with substantial tax breaks that boost long-term savings. Entertainers and entrepreneurs, in particular, have several tools (like Traditional or Roth IRAs, Solo 401(k)s), which can all prove beneficial. While the contribution limits for these accounts can change annually, in 2023, individuals can contribute as much as $7,000 to an IRA (or up to $8,000 if they are 50 or older).
3. High-Yield Savings Accounts
Liquidity + Better Return (High Yield Savings Account) This strict reliance on cash can be vital for handling unexpected expenses or taking advantage of open opportunities. In August 2024, some high-yield savings accounts had rates over 4%, much more than the national average for general savings accounts.
4. Real Estate
Rental properties can provide stable income and possibly even appreciable value, which more than justifies real estate. Real estate home ownership for entertainers and entrepreneurs also offers peace of mind and something tangible other than their creative work. Over the past several years, the S&P CoreLogic Case-Shiller National Home Price Index illustrated a consistent rise, indicating real estate investments have legitimate long-term growth potential.
5. Index Funds and ETFs
Index funds and Exchange-Traded Funds (ETFs) offer inexpensive stock or bond market access. These are a straightforward, no-hassle way to get broad-based market exposure without much expertise and with minimal active management. According to a Morningstar study from 2021, the average actively managed U.S. stock fund has trailed its benchmark index by
annualized 0.66% over the last decade, and almost two-thirds of active funds have failed to outperform their benchmarks on an after-cost basis.
6. Individual Stocks
While investing in individual stocks can deliver a higher return potential, it also comes with the downside of greater risk. Stock picking can be a rewarding pursuit for entertainers and entrepreneurs with a particular interest or expertise in a specific company or industry. Nevertheless, make sure to do deep-dive research and get professional guidance before you invest.
7. Alternative Investments
Hedge funds, private equity, and venture capital are examples of alternative investments that can bring higher returns and more diversification. Yet these investments often carry higher minimums, less liquidity, and more complexity. It is important to speak with a financial advisor like Sara Qazi and refer to this article.
8. Impact Investments
Impact investments can enable you to match your values with what is written in the check. Through entertainment and mitigation, entertainers and entrepreneurs can offer upward potential returns by investing in companies or projects working to solve these social and environmental concerns. The market has the potential to grow over 25 times its current size and reach $1 trillion by 2025, according to The Global Impact Investing Network.
9. Intellectual Property
Matrices and the NFT Economy: Previously Unexplored Paths for IP/licenses Management of Creatives It can yield revenue through license, royalties, or selling of copyrights. It is crucial for your financial future in the entertainment industry to try to protect and monetize IP.
10. Business Ventures
Well… a lot of entertainers and entrepreneurs do have some serious hustle. Owning and sometimes investing in businesses of their own or for others can be an advantageous way to grow wealth and build additional income streams. One of the pitfalls that many new entrepreneurs fall into is not doing adequate market research and creating a business plan.
Entertainers and entrepreneurs can achieve financial success, but only via a uniquely personalized effort. Diversifying, using tax-advantaged accounts, and real estate or opportunity zone investing (amongst other options such as impact investments and IP monetization) are ways they should attempt to create generational wealth — reaching their financial goals. It should be remembered that you seek guidance from your financial advisor, especially someone like Sara Qazi, who knows how to help people working in creative fields.
Any opinions are those of Sara Qazi and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Real estate investments can be subject to different and greater risks than more diversified investments. Declines in the value of real estate, economic conditions, property taxes, tax laws and interest rates all present potential risks to real estate investments. ETF shareholders should be aware that the general level of stock or bond prices may decline, thus affecting the value of an exchange-traded fund. Although exchange-traded funds are designed to provide investment results that generally correspond to the price and yield performance of their respective underlying indexes, the funds may not be able to exactly replicate the performance of the indexes because of fund expenses and other factors. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. Raymond James & Associates, Inc., member New York Stock Exchange/SIPC.
- Sara Qazi
- Senior Vice President, Investments
- 310-285-4501
- 9595 Wilshire Blvd
- Suite 801 Beverly Hills, California 90212
