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Now for the financial fun! Before opening these fun investments, read the first three parts in our four-part series: Accounts You Need Now, Accounts You Need Next, and Accounts You Want. Once your finances are organized, you have a sufficient retirement investment plan to reach retirement when you want, and you have short-term and mid-term accounts to address happiness spending goals between now and retirement, you have the financial stability to start having fun with some investments. The accounts or investment opportunities in this article help you enjoy more of your favorite purchases for free, diversify your portfolio, and invest in your passions.
1. Rewards Credit Card
A rewards credit card allows you to receive rewards for certain types of purchases, depending on the card you pick. However, these cards come with fees, so it is important to choose a card that concentrates in an area where you spend so your benefits outweigh the annual fee. When you choose a card in the right area, it will be apparent that the rewards exceed the costs.
Common types of rewards cards include travel rewards cards, dining rewards cards, and gas rewards cards. Rewards can come in various forms, from airline points to cash back. Cards in any of these categories may have deals with certain shopping retailers to offer cash back for any purchases with that retailer. This is a great perk, as long as you remind yourself to only spend what you normally would spend and then enjoy the cash back!
The best cards in each category can save you a ton of money or alter your lifestyle to allow more of your favorite purchase. Completely free round-trip airfare, a first-class transatlantic flight, or a free eight-night hotel stay are all possible with a travel rewards card. Dining rewards are also becoming more and more luxurious and can either save you a ton of money on groceries or allow you to try exclusive dining experiences that would otherwise fall outside your budget.
Why is a rewards credit card fun? With a rewards credit card, you receive rewards for spending on your intentionally picked happiness spending goal. What could be better? As you accumulate rewards, this can either offset your normal expenses or open up new opportunities to you altogether.
2. Real Estate
Real estate had to appear somewhere in here! Before you write off real estate because you lack the funds for a $50k down payment, we will discuss ways to invest in real estate for as little as $10 through platforms like Fundrise.* Real estate can be as inexpensive or expensive, hands-on or hands-off, as you want to make it. It can feel just like investing in an index fund or involve putting sweat equity into a property by fully renovating it and then managing the property for renters once the renovation is complete.
If you go bigger than passively investing, investing in real estate early in life can help offset housing costs by house-hacking or building a real estate empire to eventually provide you the passive income to retire early. If house-hacking interests you, reach Scott Trench’s Set for Life, or listen to the audiobook. If building a real estate empire is on your to-do list, read The Millionaire Real Estate Investor by Gary Keller. We will explore the different real estate investing options in a later in-depth article, but if you decide to make real estate a significant part of your portfolio, read widely on your area of interest.
Why is real estate fun? Investing in real estate can be as involved or passive as you want it to be, and it diversifies your portfolio either way. Real estate can lead to larger returns on investment, but it can also offer you a creative new investment strategy that teaches you about a new industry as you invest.
3. Small Businesses
Invest in your beliefs by investing in a small business. Similar to real estate investing, investing in small businesses can be as involved or hands-off as you prefer. You can become an angel investor or venture capitalist for a company that inspires you, or you can buy into a franchise and set up your favorite business down the road from your home.
Small business investment can be a way to give yourself cash flow, or it can just be a passion project that you want to support even if you never see returns. If you do want to dive into investing in small businesses to see returns, read and listen to Codie Sanchez to learn more about identifying the right businesses in which to invest. Otherwise, just think about investing in a cause that speaks to you. Maybe you will get returns along the way, but if not you made the world a better place.
Why is investing in small businesses fun? Investing in small businesses can involve hard work or allow you to sit on the side and just provide capital. Cash-flow businesses can diversify your portfolio, or taking a chance on an exciting new venture can just make you happy.
All of these accounts and investments are for fun, because you already have the financial plan for stability, so pick the ones that inspire you or give you joy, and have a little fun with your money.
*If you plan to invest in Fundrise, please let me know, because I can refer you and get a bonus of $50 in shares, and you will get bonus shares too!
About the Financial Accounts Series: The Financial Accounts Series is a four-part series discussing financial accounts that can improve the health of your finances. Over the next three weeks, the Phippen Tax & Financial Services team will provide a deep dive on each of the accounts listed above before releasing a bonus edition, Accounts Your Kids Need. If you would like to seek additional guidance about your personal finances or the specific organization and composition of your financial accounts, please contact Patrick Phippen or complete a new client form if you have not worked with Patrick in the past.
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