OT: I have just finished reading Benjamin Graham's, "The Intelligent Investor" (most current edition, with recent commentaries added) and now I'm totally informed and confused.
Making money has very little to do at all with photography. In fact, it's proven for most people to be a very efficient way of loosing money, over time. As a former ASMP chapter co-president, a reader of professional forums, and an adviser for a large community college commercial arts program, I can say that the number one cause of failure I've seen for nearly every imaging business, over time, is not the inability of the photographer who owns it to make salable photographs, and it's not the photographer's inability to charge for their work, rather it is what the photographer does with the money they make which becomes the critical factor in their financial failure or success.
Sadly, a spot where even the most savvy photography business owner usually comes up short is in saving for a rainy day; and even more important, saving for retirement. Or saving for the point at which he or she becomes fed up or discouraged and wants to leave the "field of battle" for nicer surroundings.
I have a number of friends and plenty of acquaintances who maintained "successful" careers for twenty or so years only to come to the realization, near the end, that there would be no real continuing income from stock photography sales, that it's incredibly difficult to get profitable gallery representation, and that they've mostly invested every cent back into their businesses instead of into sound, financial investments. Their lifestyles take a dive and their outlook becomes a bit grim. It's especially hard to value and sell a single proprietor business based on one person's craft knowledge.
Some, who worked and lived in Markets like Boston, Austin, Seattle and various spots around the country to which new industry flocked, have built up enormous equity in the homes they live in. Not by rigorous planning but sheer, dumb luck. But many more have had the opposite experience of watching a lifetime worth of mortgage payments result in property ownership, the value of which is just treading water. At least the photographers in the growing markets can sell their homes and harvest the equity but they'll also have to consider moving somewhere cheaper...
Every once in a while I'll meet a photographer who was quite disciplined and took the advice of the person who wrote, "The Automatic Millionaire" ( David Bach) and invested month by month and year by year into an investment account and ended up taking advantage of compound interest. These few generally end up with more than enough money to allow them to travel and pursue what had been drudgery but is now a fun hobby - photography.
I know several Austin photographers who decided early on in their careers that they wanted to own the studios they worked in, own the houses they lived in and also own rental properties in town. They made a bet on the housing and real estate markets here and ended up doing well through good economic times and bad. Most will retire well just on the sale or long term lease of their studio properties. The additional rental properties are icing on the cake.
By way of disclaimer, I know just enough about investing to be a danger to myself and others. I seem to have the reverse "Midas Touch" when it comes to picking individual stocks. But I am smart enough to listen to good advice and not dabble in things I don't understand. Anything I discuss here is just residual fallout from having read Benjamin Graham's book.
First off let me say who it was that recommended the book to me in the first place. It was none other than Ultra-billionaire, Warren Buffett. If Buffett had a mentor in his early years it was certainly Mr. Graham. Buffett suggests this book in order to provide the reader with a foundational understanding of the history and mechanisms of not just the stock markets but also bonds of all kinds and other, more obscure instruments of investment.
Graham does a great job of laying out a history of financial market booms and busts, and growth and decay. The first take away of the book for me is that I would have lost everything I ever earned if I had convinced myself that I could make a fortune as a day trader.... Or that "everything is different this time."
After having read the book I'll probably recommend it to my friends who: Read fast with good comprehension. Have the stamina to get through 623 pages of financial/economic history and the discussion of investment theory. Understand basic math. Want to be financially secure. Obdurately still believe in the Easter Bunny, and the "hot stock tip."
As a photographer I've made every financial mistake I can think of. I've done jobs without getting a written agreement and been burned almost every time, in one way or another. I've taken big, unexpected profits and rather than putting all, or even some, of the money into an investment or retirement account I've blown it on "re-investing in the business" which is mostly photographer code for: I bought a really cool camera system that I've convinced myself will make me money somehow, somewhere down the road. I've routinely fallen into the Dunning-Krueger trap of believing I know "better" than the rest of the investing market. I've bought stocks and then sold them quickly, sometimes after loosing a bit of money but usually for just a bit more than the friction of trade minus the regular tax that triggers when holding a stock for less than a year. Only to watch the stock revive and rocket up just after I've sold it. I've sold too soon and bought too late.
I can only imagine how different the financial outcome for my business, and the businesses of so many other photographers, would have been if we'd read more books like this one in our twenties and put into practice even just some of the things we could have learned.
If you are interested to read one point of view about markets and investments while cooling your heals during the pandemic I think this one is interesting. Graham certainly goes in depth.
My takeaway? A smart friend's advice many years ago led me to invest in a well known balanced index fund. It's done well enough that I'm entering this phase of life without abject panic and without throwing the mother of all photographic garage sales.
I do regret all the ways I've wasted money over the years. But on the other hand I'm happy to have been married (and continue to be married) to a fun but frugal partner who did read books like these even back in our early 20's and who has provided a set of guard rails for my occasional, unfounded episodes of irrational extravagance. (I'll never live down buying a 5 series BMW near the end of the 1990's. I can still hear the quiet advice to consider a Honda Accord ringing in my ear...).
I won't give you much advice here. Most of our readers are people who are smart; smart enough to keep their hobbies and their jobs separated. Smart enough to get employer matches to their 401K's, and smart enough not to rush out and buy Hasselblad systems the minute you get your first big job from a major company.
But here's the advice I would give to Ben, or anyone silly enough to want to be a freelance photographer:
1. Don't buy a single piece of new gear until you have a year's worth of living expenses tucked into the bank and waiting for some sort of disaster. The disaster will come. And probably not just once...
2. Invest in financial instruments that have been demonstrated to have a decent return, are low enough in risk and which have very low costs or fees.
3. Make investing automatic. Do it every month. At least every quarter. Believe in "dollar cost averaging" and understand that few, if any, people can successfully time the markets with any reliability. Most who try end up losing money. Lots of money.
4. Unless you have lots and lots of time on your hands to research and pore over statistics and annual reports consider making most of your investments in a well regarded index fund administered by a very large and stable investment company.
5. Consider nice restaurant meals and trendy vacations to be luxury extravagances and not routine purchases. I have an acquaintance who feels that his family "deserves" regular, pricy vacations and he hustles them onto planes and drops upwards of $8K -10K more than once a year. He also buys new cars as if they have the same kinds of sell by dates as eggs and milk. The rest of the time he bemoans how broke he is and how far in debt he's become --- ostensibly through no fault of his own. Learn to cook. Learn to shop. Learn to vacation on the cheap.
6. And, finally: Never take financial advice from other photographers. Think about it. They are photographers, for God's sake!
But the book is nothing if not an interesting and deep look at investor psychology. The understanding of which is almost always handy.