Can You Buy and Sell Air Rights?

Can You Buy and Sell Air Rights?

When people purchase real estate, most buyers are only interested in the land and buildings. However, many never consider the value of empty space. In large cities where space is limited, the air space above the property may be just as valuable as the lot itself. If you are looking to pull money from thin air, there are potential opportunities for huge profits to buy and sell air rights.

What Are Air Rights?

Since air rights may add value to your property, it’s beneficial to know what they are and how they work. The term “air rights” refers to the legal right to use or develop the space over or near a property. These rights apply to both vacant lots and those with existing structures. The definition is a vague guideline that varies by location, but it can incorporate upper stories of tall buildings, power lines, or coveted views.

Most cities severely restricted air rights, especially in residential zoning areas. However, in places where ground space is limited, the ability to build up becomes more important. Companies and real estate developers pay big bucks for the unused and transferrable development rights for air space.

Unfortunately, calculating air space can be complicated and often requires professional input to “true-up” the numbers. But to give you a basic idea, you have to find the floor area ratio (FAR). To get this number, you take the maximum floor area permitted for the zoning lot and subtract the floor space of the existing structure (if there is one). The remainder is your total amount of air space for a given lot. Once you have a quantifiable amount of space, you can put a value on it to buy and sell.

What Laws Regulate Air Rights?

Like all valuable assets, there are laws that establish and regulate air rights. Generally speaking, you can utilize the air space on your property however you see fit. That is, as long as new development complies with height restrictions, zoning laws, and the city’s building codes. For those who are just learning about them, here are a few of the most important regulations you should be aware of when you buy and sell air rights.

Elevation Restrictions

In most cases, when you buy real estate, you are also purchasing the air rights, unless otherwise specified. However, your air rights aren’t endless. For example, they don’t extend into navigable space. Your air rights include a maximum of 1,000 ft above the highest obstacle. Beyond that, you enter into FAA federally regulated space.

Municipal Zoning Laws

Additionally, air rights depend on the local zoning laws. Cities strictly regulate land use and development. Therefore, all buildings must comply with municipal codes and regulations which determine the reasonable amount of vertical space suitable for development on a given lot. Zoning laws vary by location and district within a municipality as well. 

Furthermore, different zoning laws exist for commercial, industrial, and residential spaces within the same city. Ignorance of the laws could lead to expensive complications. Therefore, it’s best to do your research and seek legal counsel before making any purchases.

Encroachment

Lastly, the boundaries of all structures and new development must remain within the specified property lines. While lots can be strung together to increase the amount of usable air space, it cannot encroach upon the space of properties you do not own.

If any new construction extends into the air space of a neighboring property, you may have to remove it at your own expense.

Can You Buy and Sell Air Rights?

The Cost

While the legalities are important, the most pressing question is “How much will it cost?” Unfortunately, there are no standardized answers. The pricing for air space depends on where you are looking.

Like real estate pricing, air space is more expensive in densely populated urban areas. And people will pay even more for desirable locations with great views or highly sought-after zip codes. So, it’s going to be much more expensive to buy air space in larger cities like New York, Los Angeles, and San Francisco.

Furthermore, you may face additional challenges and fees if you are looking at historical buildings or cities with high taxes. However, you can expect anywhere from $200-$400 per sq. ft. for available air space.

The Gains

Once you understand what they are, you may be asking yourself why people buy and sell air rights. The simple answer is that it can be lucrative for both parties. Property owners who need an influx of cash for repairs, maintenance, or other development get the capital they need. And if they had no plans for the air space, it is pure profit.

On the other hand, the buyer gains more options when they buy air rights. Obviously, they get more space which they can use to build larger structures. However, many developers purchase air rights of surrounding lots to protect views from their building or increase the property value.

The Fine Print

Air rights can get complicated, especially when there are several interested parties. Obtaining them often involves negotiations, legal fees, and an official contract.

In most cases, air rights transfer with a sale agreement. However, you can also gain more air rights through a zoning lot merger as well. Either way, you must purchase the space and secure the Transferable Development Rights from the current owner.

Although it is possible to buy and sell air rights, there are strict limitations. Local zoning laws dictate many of them. However, you should also be aware of any light and air easement provisions that prevent future development as well.

Before you make a financial commitment, you can hire a consultant to review the development rights and city zoning codes. Having an expert on hand can help you identify good investment opportunities and avoid paying more than you should. Not only can you avoid costly mistakes, but you can also ensure you are getting the best value for your money.

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Oddest Collectibles to Invest in 2022

The Oddest Collectibles to Invest in 2021

When it comes to investment strategies, there is no single prescribed way to maximize your returns. While most investors choose to put their money into stocks, bonds, or real estate, they are not the only options out there. Some people seek out more unconventional assets such as collectibles. Although many of us are still holding on to childhood memorabilia in the hopes that someday it may be worth a fortune, chances are slim that you will see five-figure returns. However, some of these may net you better returns than traditional portfolio assets. Here are some of the oddest collectibles to invest in 2022.

The Best Collectibles to Invest in 2022

1. Stamps

As the king of all hobbies, most people know that rare stamps are worth a small fortune. With a quick Google search, you will find dozens of news stories of stamps that sold for millions of dollars. Although experts estimate that only 1% of stamps worldwide will appreciate over time, it is one of the safer options on the list of oddest collectibles to invest in 2021.

If you are lucky enough to have one of these in your collection, it could earn a yield between 5% and 20%. However, they also advise that you will need to hold these assets for up to 15 years before you see significant returns.

2. Coins

Collecting coins is a popular pastime that has huge rewards to the most persistent collectors. In fact, rare coins can bring in thousands or even millions of dollars at auction. While your wheat pennies will only sell for a few bucks, coins made from precious metals or featuring mistakes are the most valuable ones. Unfortunately, investing in coins doesn’t earn you any dividends. Therefore, the value depends entirely upon how much someone is willing to pay.

However, gold coins provide a more tangible return for investors. Even after nearly 600% growth in the last two decades, gold prices continue to rise. So, even if these coins hold no value among coin collectors, they will always be worth their weight in gold.

3. Comic Books

In recent years, Hollywood has brought our favorite childhood superheroes back to life. But, it has also made many super-fans rich. With the recent surge in popularity, original comics in mint condition now fetch top dollar at auctions. For example, a 1938 comic featuring Superman’s first appearance sold for over $2.1 million.

If your comic books have been well-loved and show their age, they won’t be worth nearly this much. However, it is possible to find rare issues at conventions that you can sell or trade for a profit. Comic-Con events are a great place to build your comic book collection as well as find some of the oddest collectibles to invest in 2021.

PFadvice.com has a very good series of which comic books are the most valuable, by decade.  The site also provides a useful discussion about what makes comics valuable. Hint: when the comic’s characters get adopted by popular culture, the value of the comic book increases.  Here are the lists of the most valuable comic books of the 1960s, 1970s, 1980s, and 199os.

4. Trading Cards

While this is a broad category, trading cards are a solid choice if you want to invest in collectibles. The most attractive thing about trading cards is that you can personalize them to your own passions or interests. Whether you are into baseball, Pokémon, Yugioh, or Magic the Gathering, rare cards are worth millions.

If you had any trading cards as a child, dust off your collection and check their value. Even if you don’t have a Topps 1952 Mickey Mantle card, your trading cards could still be worth money.

5. Toys

Vintage toys are another good option for collectors. As with comics, vintage toys from the 80s and 90s have seen a huge resurgence in popularity. If you held onto your favorite toys after the various toy crazes subsided, they could fetch a good price, given they are in good condition. Action figures, Beanie Babies, Legos, Barbie dolls, and Hot Wheels are all hot-ticket items right now.

When you are ransacking your home for valuable collectibles, look for items still in the original packaging. However, if you don’t have any toys from your own childhood, you can always begin a new collection.

The Oddest Collectibles to Invest in 2022

Now that we’ve covered the most common and valuable ones, here are some of the oddest trends and collectibles that people are investing in.

1. Sneakers

Any vintage item in good condition will generally bring a good price. However, sneakers are quickly becoming one of the most valuable vintage items on the market. There is a huge demand for first and limited-edition sneakers. In particular, Nike and Adidas sneakers in mint condition regularly sell for thousands of dollars on eBay.

A recent article from the Huffington Post uncovered that vintage sneakers provided better returns than gold. However, be warned that prices and demand are unpredictable. So, it’s a bit of a gamble knowing which shoes to invest in.

2. Electronics

It’s not surprising to learn that vintage electronics fetch high prices at auction. Original Apple products and first-generation devices not only make great conversation pieces, but also sell for millions online.

While you probably don’t have an original Macintosh computer lying around, early generation iPods, Alexas, and Nintendo DS gaming systems are likely to appreciate in value over time. Since most of this technology is still relevant, early editions are relatively easy to find. So, if you have any vintage electronics still in the box, it would be worth your while to hold on to them to see if they increase in value over the next few years.

3. Anthropomorphic Taxidermy

This is by far the oddest collectible to make the list. For those who don’t know what it is, anthropomorphic taxidermy is the art of preserving dead animals and displaying them in human situations. For example, specimens are usually dressed in human clothing or posed into human roles and settings. Although it may seem odd to many people, this type of art is extremely valuable to the right collector.

Investing in Collectibles

If you are looking to invest in less traditional assets, collectibles are a fun and interesting way to diversify your portfolio. However, it always includes greater risk than more traditional options like stocks and bonds. While there are no guarantees that your collectibles will bring high returns, patience is a virtue. Although most collectibles won’t earn a fortune in your lifetime, you never know…your favorite collectibles could bring you more than enjoyment in the years to come.

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7 Passive Income Streams from a $1000 Investment

Passive Income Streams From a $1000 Investment

One of the best ways to generate income and supplement your salary is through passive income streams. Sure, you could make more money by working longer hours, getting a second job, or trying to advance your career. But, there are only so many hours in a day which severely limits your earning potential. Investing your money in passive income streams allows you to put your money to work for you. And, you don’t need a ton of money to get started. Here are 7 ways you can create passive income streams with a $1000 investment.

7 Passive Income Streams from a $1000 Investment

1. Buy Stocks

Many investors will tell you that buying dividend stocks is the simplest and most profitable passive income stream. You can purchase stocks from well-established companies with a history of good returns. Or, you could try your hand at picking your own stocks. While this comes with greater risk, it could also have greater financial rewards.

Those who are more risk-averse can invest in mutual or index funds. These offer you more market exposure and a percentage of the dividends from multiple companies. Another benefit is that the built-in diversification helps protect your assets during market fluctuations.

However, if the idea of choosing your own stocks has you panicking, you can always hire a robo-advisor. Having an automated investment manager that uses your preferences and input to customize your portfolio takes the guesswork out of the equation. It also takes a hands-off approach and avoids the predatory sales tactics of human financial advisors. And, the low fees and lack of account minimums are great for beginning investors.

2. Invest in REITs

Investing in REITs is another great option for those with a specific interest in real estate. These trusts pool money to buy and manage residential, commercial, and industrial properties, then pass a percentage of the earnings to their shareholders.

You have over 200 publicly-traded REITs to choose from. But, a handful stand out from the competition. The ones that are making the most recent headlines include AvalonBay Communities, Realty Income, W.P. Carey, and SL Green Realty.

There are also new crowdsourcing platforms such as Fundrise, CrowdStreet, and DiversyFund where you can buy a percentage of properties. These are great options for people with little cash since you only need $10 to buy-in. And, most earn an average of 8-12% returns on their investments. If you were to reinvest your dividends, it could turn into one of the most lucrative passive income streams from only a $1000 investment.

3. Purchase Bonds

Now that the stock market isn’t performing as well, there is more focus on purchasing bonds. There are various types to choose from including bonds issued by a company, the state, or the federal government.

When you purchase bonds, you are essentially loaning money with the expectation that they repay the loan plus interest. And, you can choose terms and timelines that best suit your goals. In general, bonds are a low-risk investment that helps offset the equity in your portfolio. Furthermore, since their value is indirectly correlated to the stock market, they perform better when stock prices are down. So if you want to hedge against inflation and market fluctuations, bonds are a safe bet.

4. Open a High-Yield Savings Account

If you aren’t looking for ways to expand your portfolio, there are smaller changes you can make to generate passive income streams. For example, choosing accounts that offer better interest rates will earn you money. Rather than letting your money accrue minimal interest in your checking or savings account, you can transfer it to a high-yield savings account.

It’s easy to set up and transfer funds, especially if you already hold other accounts with the bank. However, you can earn even better rates if you choose an online bank. By opening a high-yield savings account with interest rates of around 0.6%, you earn more money with minimal effort.

5. Rent Out Your Spare Room

Another trend that has gained popularity is renting out personal property for travel accommodations. If you have an extra room in your house or a vacation rental that you don’t use, why not make some extra cash?

With all the different sites out there, there are endless ways to attract potential guests. And when you cross-list the rental space on the most popular sites such as Airbnb, VRBO, Flipkey, and Homestay, you’re more likely to get bookings. By using your money to spruce up the place to make it more appealing, you could create passive income streams with only a $1000 investment.

6. Sell Your Spare Bandwidth

If you don’t want to use your home to generate more income, you could consider selling your bandwidth instead. Many people pay for unlimited data. However, you could sell what you aren’t using to earn money.

Although they function in different ways, you can start generating passive income by installing an app on your phone or PC that runs in the background. People pay to utilize your bandwidth, bringing you more monthly income. Packetstream pays you $0.10 for every GB shared while others such as EarnApp can give you about 30$ a month selling 1GB of bandwidth a day.

Your location, network speed, and the number of IP addresses affect how much you can earn. The more traffic, devices, and IP address you use, the more you earn. However, safety is always a consideration since there are no guarantees of who will be using your bandwidth.

7. Own Royalties

Another alternative asset that is gaining traction among alternative investors is owning royalties. With partial shares and online marketplaces, it’s becoming easier to invest in creative assets. Although you wouldn’t own the copyrights, you could earn a portion of future revenue. When you buy royalties, you earn money every time your intellectual property gets used.

To attract new types of investors, sites such as Royalty Exchange package them into familiar investment vehicles with term-based yields. They perform independently from the stock and bond markets, have a history of strong returns, and have the potential to outperform traditional assets. And now you don’t need to be an industry insider to get in on the ground floor.

Using Time to Your Advantage

Even if you feel you don’t have enough money to start investing, it doesn’t require a fortune to get started. Additionally, the sooner you start investing, the greater advantage you gain. Time and compounding interest are your greatest assets if you’re low on capital. So, you can start making small, steady contributions now that will exponentially increase your initial investment.

There is no “right time” to start investing, so don’t use a low bank balance as an excuse to get started today. Rather than letting your money sit idle, you can use it to help build your retirement savings, protect your family against income loss, and reach your financial goals faster.

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10 Things to Know When Investing in a Gumball Machine

Things to Know Before Investing in a Gumball Machine

Nowadays, everyone is looking for new ways to earn passive income. For those looking for new opportunities, have you ever considered vending or gumball machines? With low overhead costs and maintenance, they can provide easy side income each month. However, before you jump in, here are a few things you should know when investing in a gumball machine.

The Financial Benefits of Investing in a Gumball Machine

While it may seem unconventional to some, there are several financial benefits to consider when investing in a gumball machine.

Passive Income

First and foremost, buying a gumball machine is an easy way to generate passive income to supplement your monthly earnings. Some owners report that they earn up to $350 a month for a single machine. However, Vending Times magazine gives a more reasonable expectation with the national average of about $1 a day.

Steady Demand

Another reason that a gumball machine is a good investment is due to the steady demand. According to this Statista survey, 173.4 Americans responded that they chew gum. And, 23 million indicated they were habitual chewers (more than 16 pieces a week).

You should also consider that people will always need food and snacks. Therefore, gumball machines offer a cheap option when you need something small.

Low Maintenance and Overhead Costs

Lastly, gumball machines have low maintenance and overhead costs. Once you purchase the machine and products, you only need to refill it. Depending on sales, it could be once a week or once a month. Be sure to track your quarters so you can set a consistent schedule.

The Initial Cost of Investing in a Gumball Machine

So, the big question…how much does it cost to get started? As with most things in life, the answer varies.

The initial cost largely depends on the machine you choose. While basic gumball machines start around $100, they can run well over $1,000. However, this should be the largest expense and a one-time fee since these machines are built to last.

Then, you have to factor in the cost to fill the machine. Candy is relatively cheap, especially when you can buy it in bulk. And, it has a long shelf life (about a year) which gives you more breathing room to sell your inventory.

The price for your inventory varies as well by size, brand, and supplier. But to give you an idea of these costs when investing in a gumball machine, let’s look at traditional gumballs.

One of the most common selections is Dubble Bubble one-inch gumballs. You can purchase 850 of them through Amazon for $40-$50. This gives you a profit of $0.17 per gumball, for a total of $212.50 per box sold. With this profit margin, the machine should pay for itself after selling approximately 600 gumballs.

Even if you don’t choose the most profitable location, you should at least cover the investment costs with enough time. And, the more machines you have, the more you can make.

10 Tips to Maximize Your Gumball Game

If you think that investing in a gumball machine is the right move for you, here are 10 tips to help you maximize your profits and success.

1. Don’t skimp on the machine.

When investing in a gumball machine, don’t be cheap. If you buy a cheaper model or second-hand machine, there’s no way to verify its maintenance history. If they are more prone to jam or break, you may have to invest more money to fix them.

2. The amount you can make all comes down to location.

Remember…location, location, location! If you want to make money, you need visibility. High-traffic locations can bring up to $350 a month while others may not even break $3. But, you are bound to have some level of success as long as it is well placed and people pass by it frequently.

3. Pick a location where people are likely to have change.

Besides location, you need to think like your customers. Which places give coins as change? They need coins to operate the machine, so think of locations where people are more likely to have change on them. Scope out local gas stations, arcades, laundromats, and retail stores for potential placement.

4. Choose the placement based on foot traffic.

Once you have a location, look for places people spend the most time. Try to place your machine near doors, lines, and other places people wait. On the other hand, your inventory is less likely to sell if you put it near restrooms or in a remote corner.

5. Keep the machine well-stocked.

You will also want to make sure your machine is well-stocked. A full machine is much more appealing than one that looks half-empty.

6. Use plastic capsules.

If you use plastic capsules, you can expand your offerings to sell candy as well as small toys. Did you know that some toys are cheaper per unit than gumballs or candy? Not only will it help you capture more profits, but it also gives customers more options and broader appeal.

7. Choose the right product.

You should also pick products people like. If the employees at the location use the machine, get their opinions too. You want to choose things that people want to buy. Don’t waste money ordering products that don’t sell.

8. Partner with a charity.

Partnering with a charity is a great way to garner greater support from location owners. In addition to attracting more business from people who want to support the cause, it could help cover overhead costs.

9. Put your profits back into the business.

If you have one gumball machine that is successful, why not purchase a second one? If you put your profits back into your business, you increase your earning potential. Buying more machines will increase revenue and allow you to scale your business.

10. Hire a locating service.

If all else fails and you are struggling to find a location, you can use a locating service. However, make sure it is a reputable provider. Go online and check customer reviews or ask other business owners for references.

Do you own a vending or gumball machine? What challenges have you come across? Share in the comments below!

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What Are the Downsides of Investing in Collectibles?

The Downsides of Investing in Collectibles

Fans of TV shows like Antiques Roadshow or American Pickers may talk about getting rich from their collectibles. But if we’re being honest, you’re probably not going to make a million bucks from the junk you have been holding onto in your attic. While there are a few people who have gotten lucky and made a small fortune, it isn’t the typical outcome. Investing in collectibles requires a considerable amount of time, knowledge, and money before you ever see returns. There are several downsides of investing in collectibles that people overlook. And as with all investments, you should be aware of the inherent risks of alternative assets before buying anything.

What Are Collectibles?

If you are thinking about investing in collectibles, it’s best to start with an understanding of what they are and are not. Collectibles are an alternative type of investment that does not include stocks, bonds, cash, or real estate. It refers to any item that is far more valuable than the initial sale price because of its popularity or rarity.

The word “antique” and “collectible” are often used interchangeably. However, there is a distinct difference. While antiques can be collectibles, not all collectibles are old. A collectible could include just about anything from antiques and coins to toys and comic books. Because of the detailed knowledge and wide variation, it makes it much more difficult to assess the value of these types of assets.

Why Are People Investing in Collectibles?

Many investors choose to put their money into collectibles because they already do it as a hobby. Ambitious collectors hope to turn their interests into income by investing in super-rare and valuable items. These items offer greater diversification in your portfolio and generational wealth that can be passed on.

There are also tons of people who hear news reports of yard sale treasures and thrift store finds that turn out to be worth a fortune. These stories cause people to flood the market and drive up prices. While this can be great if you are already collecting, it also makes it difficult to find items worth investing in. Those who are looking at saturated markets aren’t likely to find rare collectibles that will fetch a high price at auction. However, it doesn’t stop opportunists from trying.

What Are the Downsides of Investing in Collectibles?

Although many tout the benefits, there are several downsides of investing in collectibles you should consider before you do anything.

1. The Financial Investment

First, there is the initial cost to buy the collectibles. You will rarely find cheap deals. True collectors know you must spend money for quality items. Then, there are the costs of handling, storage, maintenance, restoration, insurance, shipping…the list goes on. You may actually lose money in the beginning.

And, let’s not forget you also have to pay 28% in capital gains tax for the sale of collectibles you have owned for more than a year. That alone could undercut any returns on your collectibles.

2. The Time Investment

From my experiences, the greatest deterrent is the time factor. Unlike other investments, there are no returns until you sell the item. And, you may have to wait several years for it to appreciate in value.

It also takes time to research and become an expert on your collectibles. You’ll need to learn how to recognize them, assess their rarity and condition, and locate buyers willing to pay top dollar. This adds up to a considerable amount of time. If you aren’t seeing high returns, it may not be worth your time.

3. The Learning Curve

In the same vein, there is also the learning curve to consider. Unfortunately. you’ll have to educate yourself. While there is a wealth of information for investors trading in stocks, bonds, and more common commodities, it’s harder to find similar resources for collectibles.

You can still find tons of information. But, you have to cultivate an intimate and detailed knowledge about your collectibles. And, you must also understand how their condition and rarity affect their value. For extremely scarce items, it is also difficult to find comps and make a fair assessment.

It takes longer for some to learn these things. However, experience is the best teacher. Many people who become successful collectors simply learn through trial and error.

4. Counterfeits

Another of the downsides of investing in collectibles is the risk of buying counterfeits. There will always be people out there trying to scam people out of their money. Unfortunately, collectibles are no exception. There are many convincing counterfeits that could cost you a lot of money.

5. No Guarantees

Although some become more valuable over time, there is no sure-fire guarantee with collectibles. Furthermore, many items are marketed as collectibles, but that doesn’t necessarily mean they will appreciate in value. It’s possible that you may spend a lot of money for no return on your investment. Or, if the assets are damaged or destroyed, they become worthless.

The truth is that no one can guess what the next high-dollar collectible will be. And, collectibles are notoriously volatile since it is a highly specialized market. Demands change, causing some markets to crash as quickly as they rose. While some types are more stable than others, you never really know.

Tips for Investing in Collectibles

There are many downsides of investing in collectibles. But if it’s something you love, it can still bring you joy even if it doesn’t bring you profits.

  • Learn as much as you can. It will serve you well to know what’s worth buying and what’s not. And, it will also make it harder for people to take advantage of you.
  • Be cautious. There’s no regulating body for this type of asset and many sales are private. So, there’s no one to complain to or help you seek justice if you get the raw end of a bad deal.
  • Be patient. Collectibles are illiquid assets. It takes time to connect with someone who knows their value and is willing to pay it.
  • Take care of your collectibles. The condition is a huge factor in an item’s value. So, you’ll want to insure them against damage, properly store them, and do what you can to repair/restore them to their original condition.
  • Know your limits. Collecting can quickly turn into hoarding if you are trying to collect anything that might hold value someday. These items will overrun your home, so choose something to narrow your focus.

Do you invest in collectibles? Share your experiences with us!

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Should You Invest in the Manufacturing Industry This Year?

Where are you investing your money in 2022? A lot of people are making decisions about where they should invest their money this year, and some are wondering if manufacturing is a place they should be considering investing some cash. The answer is not quite as simple as a yes or no answer. Learn more about investing in manufacturing below.

The Good News

The COVID-19 pandemic certainly has taken a toll on the world. However, things are revving back up nicely, including the manufacturing industry. The manufacturing industry in the United States is expected to meet record growth between 2022 and 2023. As a matter of fact, it is not one specific manufacturing industry that is expected to see tremendous growth; it is all sectors of manufacturing expected to enjoy some growth.

The Bureau of Labor Statistics projected that metal fabrication manufacturing will grow at least 9% by 2026. Other industries are also expected to enjoy between 10% and 25% growth over the next five years. Manufacturing is making its way back to the United States, and the orders are coming. The left and right, and the outlook is sunny that manufacturing will continue to blossom. However, it is not all good news.

Labor Shortages

Some experts are concerned over the positive predictions when it comes to manufacturing investments because of the labor shortage. There was already a labor shortage before the pandemic and now that shortage has reached crisis levels. Some sectors have been crippled by the labor shortage, while others seem to not feel the pinch at all. What can you do as an investor to ensure that you are choosing the latter business to invest your money in? Do your research.

Whenever you are investing money, you should do your due diligence and get to know the company. Read the news that is relevant to the industry, do a deep dive into what is happening in the business as far as employee retention. See if you can dig up information about how many employees the company has and whether that has increased or decreased over the last couple of years. A little information can go a long way in helping you to make the right choice.

Supply Chain Issues

There are still some bumps in the supply chain because of the pandemic. Some of the bumps are simple obstacles that most manufacturers are able to deal with, but some of the bumps are gaping holes that are not easy to deal with. As an investor, you have to be able to look afield sometimes to see the long-term picture. For example, if you are considering an electrochemical fatigue crack sensor manufacturer (they are used in detecting cracks as minimal as .01 inches in a structure) and that manufacturer is having issues getting the chips they need, you might want to pass. Electronic chips typically come from China, and it may take quite a few months for backorders to be filled, which of course will affect revenue.

Again, do your due diligence to ensure you make an informed decision. The supply chain issues will not go on indefinitely. There is an end in sight. When investing your money in manufacturing, you should ask yourself how long you want to park that money before you see some real growth. If you can go for the long haul, then the supply issues right now will not be a long-term problem.

Automation Is a Big Deal

Manufacturing companies that invest in their business by keeping up with state-of-the-art automation are the companies that are going to see the most growth. Automation is here to stay and it is the future of manufacturing. Consider investing your money in manufacturers that are already ahead of the automation power curve. Those manufacturers that have largely automated have been unscathed by the labor shortage.

Is manufacturing a good place to put some money this year? Yes, as long as you take the time to do the research. There is always risk in investing money, but it feels good to take that risk for something you believe in. Invest in American manufacturing and feel good about your investment.

What Russian Oil Really Means for Global Energy

The Effects of a Russian Oil Embargo

After more than two weeks, Russian troops continue their assault on Kyiv and the Ukrainian people. And, international leaders and organizations continue to lay sanctions against them. Some have gone as far as banning Russian ships from their ports and ostracizing them from the global community. However, many people fear this will send the economy into a tailspin. No one can be certain what lies ahead or how the markets will react to unforeseen political events. But, here are the facts on Russian oil and energy production, and what it really means for the entire sector.

Fear of War and Market Turmoil

A trip to the local gas station will paint a pretty clear picture of how Russia’s invasion of Ukraine is affecting global markets. Crude oil prices are the highest they’ve been since 2008. On March 7, they reached almost $140 per barrel before closing at $123.70. As of today, it’s down slightly. But, the national average price for gas is $4.33 a gallon, and well above $5 in some areas of the country. And with no end in sight, the hike in energy prices will go even higher as the conflict continues.

Many conspiracy theorists say it’s just a ploy by the oil companies to drive up profits or to push the liberal agenda on climate change. While both may hold some truth, energy costs already were already elevated from Covid-19 shutdowns and disruptions in the supply chain. However, further sanctions and an embargo on Russian oil and gas imports could cause fuel prices to spike even higher. NATO has already revoked its trading status and international ports are refusing Russian ships entry. But, its members hope to avoid further escalation through an economic stranglehold.

However, if Putin is backed into a corner, he may cut the supply lines completely. This move would cause prices to skyrocket. A Russian economic blackout could wreak havoc on the global community, driving up the price of fuel, food, and other commodities. It also forces NATO members to reconsider their foreign policy with other oil-producing nations and lift sanctions to meet global energy demands.

European Dependence on Russian Oil

In recent years, many European countries have enacted plans to decrease dependence on Russian fossil fuels. But, many are still reliant on Russia for coal, oil, and natural gas. Once a major supplier, Europe now receives 41% of its natural gas from Russia. Due to their dependency, German Chancellor, Olaf Scholz, confirmed that Europe had deliberately exempted Russian fuel from sanctions until now.

Simply stated, there isn’t enough supply to fill the void left by cutting off trade with Russia. As Scholz said, there isn’t “any other way” to secure the country’s energy needs right now. If Germany enacts a trade embargo, he assured the “lights will go out.”

Boycotting Russian oil and gas could be a crushing economic both for both Russia and Europe. While the EU is transitioning to more renewable energy sources like wind, solar, and hydro, it will take time. Renewables only account for less than a fifth of Europe’s energy demands. The EU unveiled its plan for complete energy independence, but it is still a long way from its goal.

Current U.S. Energy Production

The other factor to consider is what’s going on across the Atlantic. The U.S. is one of the world’s leading oil producers. But, it’s also the largest consumer. What’s more, is that our energy consumption outpaces domestic production. While the U.S. does import a significant amount of fossil fuels from other countries, only 3% comes from Russia.

To keep up with current demands, the U.S. either needs to produce more, turn to alternative energy resources, or rely more heavily on other oil-rich countries like Saudi Arabia, Iran, and Venezuela. However, each of these options causes issues:

  1.  While President Biden’s climate policies have limited oil production, so have the big energy companies’ reluctance to produce more because they are seeing record-breaking profits.
  2. Many politicians have resisted legislation to explore and utilize alternative energy options.
  3. Finding more trading partners means lifting sanctions against Venezuela and Iran, overlooking important foreign policy issues including human rights violations and nuclear deals. There are also strained relations with Saudi Arabia right now over the death of journalist Jamal Khashoggi.

While none of these are ideal, it will likely require a combination of all three solutions to help curb rising energy costs.

Global Demands for Energy

The world is more interconnected today than at any other time in human history. Therefore, the invasion of Ukraine has had rippling effects across the global economy and within the energy sector.

Although NATO and the western world hope it will stop Russian aggression, there is no doubt that an economic blackout will exacerbate supply shortages. Revenue from crude oil, natural gas, and petroleum products accounts for half of Russia’s federal budget. Blocking trade would cripple their economy, but also global supply.

The only way to completely eliminate foreign reliance is for each country to strive for energy independence. This is achieved when countries produce enough fuel to meet their own needs. Not only does it create a more sustainable economy, but also eliminates trade considerations with less-than-desirable partners during times of political upheaval. Having secure energy sources allows nations greater autonomy and a stronger bargaining position in global markets.

If we have learned nothing else over the last two years, it’s that crisis accelerates change. The pandemic unveiled deep flaws in our healthcare and economic systems. Now, we are seeing how tenuous our global supply chains are.

Although it will further delay any hopes for some return to normalcy, Russia’s military aggression has forced every government to assess its energy demands and policies. Some are deciding that energy independence is imperative to their national security and the highest priority. If more governments adopt this same stance, it will likely accelerate the energy revolution. Even with recent advancements, were are still years away from breaking our dependency on fossil fuels

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7 Reasons Why Investing in LEGO is Lucrative

Why Investing in Lego is Lucrative

Iconic and collectible toys have become much more valuable in recent years. If you search through online marketplaces and auction sites, you could probably find all your favorite childhood toys. However, LEGO sets have become one of the most sought-after toys and provide an interesting new investment opportunity. Nostalgic fans and avid collectors seek out the rarest sets for very high prices. So much so that analysis conducted by a Russian research team suggests that LEGO sets yield higher returns than traditional assets. So, if you are considering new investments, here are 5 reasons why investing in LEGO is lucrative.

The Results of the Research

A Russian research team from the Higher School of Economics in Moscow recently published their analysis on the value of LEGOs. Looking for factors that have been driving up their value in recent years, the team compared the current prices of 2,322 sets that were released between 1987 and 2015. However, they only included unopened sets that were in perfect condition.

What they discovered has led some investors to rethink their position on less traditional types of assets. Sets that are 20 to 30 years old have skyrocketed in value. In fact, LEGO investments outperformed large stocks, bonds, gold, and alternative investments, receiving an average of 11% in returns to only 8% from traditional assets. Instead of investing in collectibles such as art, jewelry, antiques, cars, or wine, the study may have uncovered a new market for investors to make significant gains.

7 Reasons Why Investing in LEGO is Lucrative

1. There is a huge demand for rare and collectible toys.

Many investors who have put money into collectibles have seen good returns in recent years. There is a huge market for collectible toys from the 1980s and 1990s. People who grew up with these toys are now in their prime investing years, so there is a resurgence in popularity. International expansion and the popularity of the LEGO movies only fueled the demand.

2. Limited and mint condition items fetch a high price.

One reason investing in LEGO is lucrative right now is that this type of investment is not well-known or utilized by traditional investors. And, the diminishing supply means increasing value to collectors. So, the chances of finding a valuable set are much better if fewer people are looking.

However, you have to know what to invest in if you want to yield high returns. Some LEGO sets generated 700% returns; others had a negative ROI. When choosing which ones to buy, the condition is important. The value drops once the box is opened.

If you look at price guides, you will see that the most valuable sets are worth thousands of dollars. Sets from LEGO City, LEGO Star Wars, and LEGO Harry Potter are consistently at the top of these lists. If you find pieces like the Millenium Falcon, the Death Star II, and the Imperial Star Destroyer, you could get a good price for it at auction.

3. LEGO is celebrating a year of bumper revenues.

Last year brought huge profits to the company. In fact, it was performing so well that it rewarded its employees with an additional three days of holiday time. After the first half of 2021, LEGO reported a net profit of $954 million. That was 140% more than the same period from the previous year.

Rapid expansion in the Chinese market also spurred profits. LEGO opened 40 new stores in China, bringing the total to 291 stores in-country and 737 worldwide. Even if they don’t maintain the same acceleration of profits, LEGO is still likely to be a solid investment for 2022.

4. LEGO is a well-established brand.

Companies that have a long history and good reputation are low-risk investment options. Lego has been around for nearly a century and doesn’t appear to be going anywhere either. Furthermore, they have built a loyal customer base and a cult following around the world.

5. LEGO appeals to all ages.

LEGO offers something for every age group. There are simple sets for beginners and more advanced ones for aspiring architects. With the mass appeal and branded sets, there truly is something for everyone.

People who played with them as kids are helping LEGO gain even more popularity as adults. Not only do people buy them for nostalgia, but also to share them with the next generation.

6. Social trends changing due to the pandemic.

Another reason why investing in LEGO is lucrative is because social trends are changing. Social distancing and health concerns mean more people are spending time at home. However, people need something to do when they are stuck inside for long periods of time.

So, I’m sure you can see why there has been an increased demand during the pandemic. Not only is it one way to reduce your kids’ screentime, but building sets is a fun activity to do with your friends or the entire family.

7. If you have a good design, you could earn royalties.

Besides the obvious ways to capitalize on LEGO, there are other ways to make money.  If you think you’ve got a million-dollar idea, you can try your hand at making money with your designs.

In 2008, the company began a collaborative project called LEGO Ideas, and openly invited anyone to submit their ideas for production. If your design is chosen, you will receive 1% of the royalties. So far, winning submissions have included inspiration from Seinfeld, Friends, and Ghostbusters.

Before You Invest in LEGO…

First and foremost, do your research and learn which sets are worth investing in. Not all LEGO sets will bring returns or prove to be a good investment. In fact, choosing the wrong sets could actually cost you negative returns.

Before you make any major financial decisions, you should also evaluate your portfolio and discuss it with your financial advisor. Any investment comes with risks. And, returns on these kinds of investments are not well-studied. Therefore, it’s better to make informed decisions even when a good opportunity comes knocking.

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4 Investing Strategies To Keep In Mind In 2022

Before you begin investing your money, consider a few things. The majority of these selections are highly personal, including your financial ambitions, the amount of money you can afford to invest, the types of investments you will make, and your comprehension of investing tactics.

The greatest tactics should assist you in achieving your financial goals and growing your wealth while keeping a level of risk that allows you to sleep well at night. This article outlines the top investment strategies for 2022. Continue reading