6 Saving

For many professionals starting in the arts industry, income is project-based and does not funnel through one employer; artists, entrepreneurs, and other small business owners and freelancers are responsible for meeting their own needs today and planning ahead to retirement.  Without the cushion of security from an employer-sponsored retirement account or a pension, self-employed professionals bear the responsibility for ensuring that their own retirement needs are met—savvy investing maneuvers can help combat the rising cost of standard-of-life through one’s career, but the most powerful tools are time and compounding interest.

Note: general principles and best practices are introduced here for conceptual purposes; no portion of this book is intended as investment advice. For personal guidance, consult a certified financial professional.

When considering vehicles for storing or growing assets, the investment’s time horizon should be identified: short-term assets may need to be liquidated quickly or immediately to cover known or unplanned emergency expenses—in other words, money that might be needed within the next year or couple years.  Mid-range assets refer to investment vehicles that do not require immediate access for liquidation—in personal finance, this usually means saving ahead for a new car in 5 to ten years.  For a company, mid-range investments might be an effective place to store assets ear-marked for a new equipment purchase in several years at the end of current equipment’s life.  Long-term assets serve goals like retirement, for which quick access to cash is a lower priority than capturing more powerful interest rates.

By identifying an investment time horizon, the investor can seek an investment vehicle suited for the needs of the individual; as such, each range should be reflected upon and tailored to the specific needs of the investment, but the ranges below serve as a generic benchmark.

Short-term assets: needed within the next year or couple years.

Mid-range assets: needed for goals 5 to ten years from now.

Long-term assets: held for goals ten or more years from now.