As financial markets become increasingly diversified, so are investors’ portfolios. Alternative investments such as real estate, gold, private lending, crowd funding, etc., are replacing traditional avenues of building wealth for retirement by use of self-directed IRAs.
With alternative investments creating a foothold in up and coming markets, there exist a wide variety of assets to choose from. A unique sector of these assets involves benefactors in the music industry. Financial managers are now teaming up with artists and the music industry’s major players to start investment funds geared towards financing tours, album production, videos, and even music festivals.
Major Lazer, for example, a popular electronic band, produced an album funded by alternative investing. The album’s first single, “Lean On,” was the #1 most streamed song on Spotify last year.
Another well-known example is Lollapalooza, a multi-million-dollar franchise that just wrapped up in Chicago last month. I had the opportunity to attend one of the four days of this amazing music festival. Upon entering the premises, I was instantly hit with the gravity of the amount of money that goes into a production of that size. Of the $155 million pumped into the city’s economy last year, a whopping $35 million was procured directly from Lollapalooza in the form of taxes, fees, jobs, and other revenue. This festival just celebrated its 25th anniversary, and is expected to continue growing for years to come.
The risk involved when dealing in music may create hesitation, given its subjective nature. When pursuing a venture such as a music festival, however, the potential risk is mitigated by a lineup of musicians who cater to almost every style of music fans enjoy. As an investor, you are also providing the opportunity to introduce potential fans to new artists and genres of music that they may not have otherwise been exposed to. This translates to an increased potential of further album sales and more concert and music festival revenue, resulting in the desired positive returns on your investment.
By setting up an LLC with your self-directed IRA, you will be able to invest in these types of ventures with your retirement dollars, while simultaneously lowering your tax liability and increasing your income-earning potential for retirement.
Learn more about how a self-directed retirement plan works by contacting Midland Trust today. Our team of experts can explain the ins and outs of using alternative investments, as well as the wealth-building potential that can be yours when you allow yourself the freedom to choose your own assets for your portfolio.