A Conversation We Should Probably Be Having as Freelance Musicians, Investing.

Being a musician comes with the good and the bad. Now I don’t know where this next subject falls in relation to this. If planned it would fall into the good but if ignored it would definitely end up in the bad. This subject is investing in your future. As most musicians are working independently there is no systems in place regarding superannuation. It is all on the individual to work this out or not work this out by themselves. Personally this is a world I’ve only recently started thinking about and actively managing.

The thing is, while our peers are working at companies paying some of their pay into a consistent superannuation account we must actively manage all of our money. I have recently been reading a lot about investment options so that I can organise my own kind of super. This couples with other work I do as a freelancer as all this income is to be managed by myself.

After countless hours of research I decided that index funds in the form of Vanguard’s ETF’s were the best option for me. They can be traded like normal shares however they buy all the top shares of a given market so as to give you huge diversification in your portfolio. Annual fee’s are low (0.05-0.4%) and all you have to do is pay for brokerage, however as they are investment you shouldn’t need to sell them anytime soon! (I’m waiting till I’m 63!)

I think talking about this kind of thing is really important but is often not mentioned. I know it doesn’t directly relate to music but it could have an enormous impact on your life as a musician if you plan to invest properly. For example if you saved 1,000 a year to put into an index fund and let’s say the return is 7% (not unreasonable) due to compound interest your money would be worth $435,000 after 50 years! Investing just makes sense. Check out the image below for the impact that compounding interest can have.

investing

Whilst I’m no financial adviser, I think it’s pretty clear that investing is a good way to go and this is a pretty legitimate option for those looking to get started.

I’d be really interested in hearing how other musicians manage their money and future via investing. Please leave a comment if you have other views to share! let’s get the discussion happening!

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