Saving and investing are critical activities on the road to building wealth. I can’t tell you how often I hear people say that they “just don’t have enough money to invest” or “I’ll start investing when I get more money”. If you have a Netflix membership, you do have (or at least you did have) money to invest. You just allocated the money to your membership instead of purchasing the stock.
Variety reports that as of 2017, approximately 54% of adults in the United States say they have Netflix in their household. A National Financial Capability study released by FINRA in 2015 showed that 33% of U. S. households own investment accounts such as stocks, bonds, or mutual funds.
Stocks prices are hitting all time highs and Netflix, traded under ticker symbol NFLX, is no different. On September 5, 2017, the stock price for Netflix was $174.52. That was the price for one individual share of the company’s stock just over a year ago. You may look at that and say, “where am I going to get $174.52”. Keep reading and I’ll show you.
Netflix offers three levels of membership for the subscription service:
- Basic for an annual cost of $95.88 ($7.99 per month)
- Standard for an annual cost of $155.88 ($10.99 per month)
- Platinum for an annual cost of $167.88 ($13.99 per month)
A year ago, a subscriber could have eliminated their subscription and added anywhere from $6.64 to $78.64 to the annual cost of the membership to purchase one share of Netflix stock. As of August 31, 2018, Netflix was trading at $367.68. Given that appreciation in value, the owner of one share of Netflix stock would have seen a return of $$193.16. That’s over a 100% appreciation of the money invested.
The following paragraph is pulled verbatim from the September 2015 FINRA Insights: Financial Capability report.
Households that own taxable accounts are more likely to be older, affluent, college educated and white relative to households with only retirement accounts or households without investment accounts. They also have much higher levels of financial literacy and moderately higher risk-tolerance levels. Certain demographic groups are significantly under-represented among investor households, including blacks and Hispanics—although these differences narrow after controlling for factors such as income, education and age.
As of September 4, 2018, the S&P 500 Index was up 8.34% and the NASDAQ was up 17.21%. These numbers are far from the 100% return of Netflix, but they denote positive returns. The market is also made up of bonds and mutual funds as well for those who are seeking investments with less risk. In order to participate in those returns, you have to be in the market.
Both Gallup and CNBC report that as of 2017, U. S. stock ownership was down roughly 8%. If you do not currently maintain a brokerage account, set one up. Fund it with each paycheck that you receive. You don’t have to invest it immediately, but start funding it. I set up my first brokerage account up 15 years ago with $100 and waited until I had $1,000 to make my first purchase. Research both the financial institution and the company that you would like to investment in. I recommend starting with companies that you use. Listen to the financial reports on CNBC and Bloomberg. Read or listen to (via Audible) what is being reported by the Wall Street Journal.
There are many financial institutions that offer low or no commission trading with no balance requirements. Robinhood, Merrill Edge, Charles Schwab, to name a few. In minimizing fees, you as the investor will have more money to reinvest.
Shift your mindset from consumer to saver, investor, and wealth builder.
Disclosure: This article is not intended to be a recommendation to purchase a specific stock. Research any investment prior to making it.