During the summer of 2021, it sure seems quiet when you go out and about here in San Francisco. It really seems like everybody is either traveling or taking it easy now that summer is here. Being on a collective work strike is nice.
In the past, I used to always try and work harder between June – August to benefit from the inevitable snapback post-Labor Day. But not this time.
This time, I'm gearing up for my sabbatical which starts on July 1 and ends on August 25. My goals during this time will be to recharge and rethink about a better way of living.
There is a very good chance that after my sabbatical is over that I may want to sell Financial Samurai and do something completely different. After operating Financial Samurai since 2009, I'm tired of writing so much and so often. Life is short and I'm looking for something fun to do next.
The Enjoyment Boom Is Here
Below is an interesting chart by the BLS and The Washington Post highlighting how much more the highest 20% income earners are spending on travel. But the reality is, every income bracket is spending more on getting out of town.
Everybody is looking to revenge spend after being locked down for so long during the pandemic. It is clear that people went to spend more money on experiences as well as on houses.
Massive Wealth Creation By The Rich During The Pandemic
Below is another great chart by the Federal Reserve and The Washington Post that shows how each wealth class has gotten wealthier since 2018. I drew a horizontal blue line in each of the wealth classes to demonstrate our potential Boot.
Our Boot is the amount of extra wealth we've made over the historical rate of growth that we can spend on anything we want. I came up with the concept of The Boot to help prodigious savers spend more of their money.
If there had been no pandemic, aggregate net worth for each wealth percentile would likely be around where the blue lines are today. But due to the pandemic, we've unexpectedly made a whole lot more.
Therefore, if you've been a regular FS reader and steady investor for years, we now have the greenest of green lights to spend on whatever we want. Just try not to spend all of your gains given downturns do happen. I'm personally going to start off spending 10 percent of my Boot and see if that satiates my spending desires.
Working Less Is Another Good Option
One of the things you might want to spend money on is winning back time and reducing stress. Given our investments have worked so hard for us, it's no longer as necessary for us to work so hard to make money. Therefore, you may want to reduce your workload or change to a less demanding roll post-pandemic.
But I must admit, walking away or reducing your income potential is very difficult. Therefore, I wrote a post on how to overcome the downer of no longer making maximum money anymore.
Even though I gave up millions of dollars after leaving finance in 2012, I don't regret my decision. To me, so long as you have enough to cover your basic living expenses, having freedom is worth so much more.
The YOLO Economy is going to last for many years. Millions of people have quit their jobs already to do something more meaningful. Millions more have realized that life is short and anything can happen. Therefore, we must make the most out of each day.
The Enjoyment Boom Should On Grow
With such a massive Boot to spend by so many Americans, I believe there will be a boom in “Enjoyment Capital,” a new term I've coined. Enjoyment Capital is capital that is allocated towards luxury goods that have the potential to go up in value.
The most common asset people think about when discussing Enjoyment Capital is housing. A nice house that appreciates in value is one of the best Enjoyment Capital investments. It's no wonder why the housing market is so hot as the U.S. reaches herd immunity. Luxury housing is also extremely common among the wealthiest people in the world.
The Growing Art Market
In addition to housing, art is another beneficiary of the enjoyment boom. Most people don’t think of investing in art, but it has done well over the years. From 1995–2020, contemporary art prices beat S&P returns by 174% (according to publicly compiled data). Art is a classic beneficiary of Enjoyment Capital.
One of my distant friends owns a ~$50 million home which spans a full block on the Gold Coast in San Francisco. What I didn't realize until after I visited his home several times was the art in his home is worth even more than the home itself!
According to Deloitte, the total wealth held in art and collectives is expected to grow by another $1 trillion over the next five years as prices continue to rise. However, historically, this market has been out of reach for average investors.
That’s why Masterworks created the first platform for investing in contemporary art. Now you can invest in $1M–$12M paintings (by artists like Bansky, Basquiat, and more).
With over $150M in total assets and 165,000+ members, Masterworks has a long waitlist. However, you can skip the line with this link to check out all they have to offer.
Invest In Real Estate For The Enjoyment Boom
Real estate is a tried and true asset class. Vacation properties, second homes, and multiple homes are all going to be in high demand. Therefore, I suggest investing in real estate to build wealth and earn more passive income.
Take a look at my favorite real estate crowdfunding platform, Fundrise. It is free to sign up and explore.
Fundrise is a way for accredited and unaccredited investors to diversify into real estate through private eREITs. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. For most people, investing in a diversified eREIT is the way to go.
I've personally invested $810,000 in real estate crowdfunding since the end of 2016 to diversify my holdings and income 100% passively.
Sam – Financial freedom sooner, rather than later. If you'd like to sign up for my free newsletter, you can click here.