…Ready For It? Today is anything but a cruel summer if you're a Swiftie, with mother playing her first of seven shows in Australia tonight.
If you're lucky enough to have a ticket to the Eras Tour (like I am), then you will no doubt be preoccupied over the next 10 days.
But when the dust settles and Taylor jets off to Singapore, it could be a good time to look at following in her footsteps with investing.
Taylor's parents, Andrea and Scott, used to work in the finance industry before becoming full-time supportive parents. Her dad was a stockbroker and a vice president for Merrill Lynch, whereas her mother Andrea was a marketing manager.
In light of her parent's background, it may not come as a surprise to learn that Taylor reportedly invests the hard-earned money she is making from her albums and tours.
Image source: Getty Images
Where does Taylor Swift invest?
According to Forbes, billionaire investor Boaz Weinstein from Saba Capital Management has been told by Scott Swift that his daughter invests in closed-end funds (CEFs).
Weinstein tweeted:
Did you know that @taylorswift13 invests in discounted closed end funds? You think I'm kidding, but her father, Scott, told me so!
A CEF invests in a portfolio of shares and is usually managed by an investment management firm.
They are classed as closed because they are effectively shut to new money once launched. This means that if you want in, you will need to buy a share from someone who already holds the CEF.
In Australia, we have listed investment companies (LICs) that do the same job. This includes Australian Foundation Investment Co Ltd (ASX: AFI) and MFF Capital Investments Ltd (ASX: MFF).
As Weinstein said, the Folklore singer is savvy and looks to buy these funds at a discount to their net asset value. This is the equivalent of buying an Eras ticket that you know to be worth $200 for $180.
This is very smart for a number of reasons. One is that we love getting value for money with our investments. It provides us with a better risk/reward. If something is already trading at a discount, it gives us a greater margin for safety if things don't go to plan.
In addition, if things do go to plan, your potential gains are even greater because you bought on the cheap. It would be like reselling that Eras ticket for $250.
Why should you invest?
It's been over five years since Taylor Swift last toured in Australia. Let's hope it won't be another five years until she hits our shores again.
But let's imagine that it will be. If you are in a position to invest in ASX shares between now and then, you could build up a nice little nest egg.
For example, if you were able to put $250 into the share market each month and earned a 10% per annum return (in line with historical averages), you would have a portfolio worth approximately $20,000 after 5 years thanks to compounding.
That would be more than enough to buy A Reserve Floor tickets if you can bear to see the Ticketek queue page again.
Alternatively, you could find the money for the tickets from somewhere else and keep going with your investment journey.
After all, if you were to keep investing $250 for another 5 years and earn the same return, you would have grown your investment portfolio to a cool $50,000.
I think we can all learn many things from Taylor Swift. And investing is one of them.
