Dear Disney Lovers: Here’s Why You Should Buy Disney for Your Family’s Future
Nothing says America like going to Disney World and basking in the magical glow of capitalism. Walt Disney came up with the “Mickey Mouse Park” concept in the 1930s, and now more than 100 million people visit Disney parks around the world every year. Chances are you take your family there, and they love it. If that is indeed the case, you might seriously want to consider buying Disney stock. Let’s take a look at seven specific reasons why.
1. Introduces your children to tangible money topics
Money is a difficult concept for children to understand. To them, money appears to be scarce pieces of paper only grown-ups use. Or worse, they don’t even see actual money because you always use plastic and avoid money discussions because you’ve been taught it’s a taboo topic. Luckily, your family vacations to Disney World can not only teach them the basics, but also help set them up for long-term financial success.
Attending Disney World as a shareholder can provide key money lessons your children can see and touch. Instead of merely swiping a credit card for admission use cash, and have your children also contribute from money they earned doing side jobs. This helps teach them the value of money and work. Once they’re ready for more advanced lessons, you can explain how buying shares of Disney makes them a part owner, which entitles them to a share of the profits being earned from the very rides they love.
Much like a grown-up is never too old to have fun at Disney World, children are never really too young to learn about money. Research by Cambridge University reveals by the age of 4 or 5, children already understand they need to pay for merchandise. By age 7, most children recognize the value of money and have developed several basic concepts relating broadly to later financial behaviors.
Next: Don’t let these two things ruin the Disney experience.
2. Lessens the pain of Disney admission prices and crowds
If anything ruins the Disney experience, it’s those ever-rising admission prices and mobs of tourists. Due to its remarkable competitive advantage, Disney is able to raise prices like clockwork. With prices at their most expensive level ever, Disney finished 2016 with its highest revenue, net income, and earnings per share in company history. Fiscal 2016 was Disney’s sixth consecutive year of record results. Currently, you can expect to pay $124 for tickets at peak times, and that doesn’t even include taxes.
Instead of grumbling about price hikes like most consumers and not doing anything about them, becoming a shareholder lets your family benefit from the increases. And every person you run into at Disney World turns into a reminder that you made the right choice to invest in such of a popular brand. You want to be on the right side of inflation, and that means owning assets, such a stocks.
Next: Mickey Mouse doesn’t even scratch the surface of Disney.
3. Disney owns other things your children love
Visiting amusement parks is hardly the only way to teach your children about money. Disney’s reach grows stronger than Gaston every year. In addition to having the most popular parks and resorts in the world, Disney owns media properties, such as The Disney Channel, ESPN, ABC, A&E, and several more. When it comes to production, Disney owns the biggest names, including Pixar, Marvel Studios, and Lucasfilm. In fiscal 2016, The Walt Disney Studios raked in $7.5 billion at the box office, with another $5.5 billion coming from Disney merchandise.
The blockbusters will keep coming. In 2017, Thor Ragnarok and Star Wars VIII will be released. In 2018, your children will be begging you to take them to Avengers: Infinity War, Star Wars: Han Solo, The Incredibles 2, and probably a few others. And just when you think you’ll be able to catch your breath on all things related to Star Wars, Disney will open its Star Wars-themed park in 2019, which will reportedly be the largest single-themed land expansion at Disneyland and Walt Disney World Resorts.
Next: Children know more than you think about investing.
4. Your children might be better investors than you
Investing is one of the few areas of life where amateurs can out perform seasoned professionals. It doesn’t take muscles or a fancy office to perform well. In fact, youth is one of the biggest advantages an investor can have in the stock market, thanks to compounding returns. The earlier your children start, the greater success they’ll likely have investing.
Children are also better at spotting trends than you. Let’s face it, your children knew about fidget spinners long before you saw them on the local news. Some trends turn into massive product lines. Mad Money host Jim Cramer discusses how years ago his youngest daughter made him take notice of Apple’s iPod and how personal tech gadgets were becoming popular. She once came to the energetic television personality for a second iPod, not because she lost the first one, but because she wanted a different color. He realized Apple just might be on to something.
Sure enough, Apple is now one of the most valuable brands in the world, and the iPhone is a must-have daily device for millions of people. Picking stocks isn’t always that easy, but Disney also has a great expanding brand, which we’ll discuss later.
Next: Disney is a gateway stock to more money lessons.
5. Gateway to more advanced topics
Once your children understand the basics of money, you can use Disney stock as an excuse to further their financial literacy. For example, Disney has paid a dividend since 1957. What better way to teach them how stocks can make them money and how compounding returns work than with a company they are truly interested and invested in?
Because Disney is a member of the Dow Jones Industrial Average and S&P 500, it paves the way to have a conversation with your children about indexes. In case you didn’t know, indexes are a great way for the average American to invest in the stock market. In fact, Warren Buffett recommends investing in them, and his will instructs a trustee to simply put 90% of the money he leaves behind for his wife in a very low-cost S&P 500 fund, with the other 10% in short-term government bonds.
Next: Disney’s brand is more valuable than Coca-Cola.
6. Likely to be around for at least another couple decades
Investors don’t have to worry much about the clock striking midnight on Disney anytime soon. The company was founded in 1923 and went public in 1957 at $13.88 per share. After six stock splits, shares now trade near $100. In 2017, Brand Finance ranked Disney as the 24th most valuable brand in the world, ahead of Coca-Cola, Nike, and Starbucks.
Disney continues to expand its audience. In 2016, the company opened Shanghai Disney Resort, the first Disney park resort in mainland China. The park has already welcomed more than 10 million guests and has exceeded attendance projections. The Shanghai Disney Resort also features the only Toy Story-themed hotel in the world. With Toy Story Land, a park expansion in Orlando and Shanghai coming soon, along with Toy Story 4 set for June 2019, you can already hear your children begging for another trip to Disney.
Next: Stocks are becoming bigger, stronger, and fewer.
7. Honey, corporations shrunk the stock market
As bizarre as that might sound at first, the stock market really is shrinking. Between 1996 and 2016, the number of publicly traded companies in the United States declined from 7,322 to 3,671, according to a recent report from Credit Suisse. That’s a fall of almost 50% in only 20 years. A rise in mergers and acquisitions while new listings languish is the leading reason. Regulatory red tape also plays a role. More importantly, it means the remaining companies are becoming bigger and more profitable. That’s good news to shareholders.
Buying Disney shares or an index that holds Disney gives you and your family skin in the game — a very lucrative game. Although stocks do experience ups and downs in the short term, the general trend is higher, thanks to America’s resilient economy and workforce. Disney is a company that caters to our everlasting need for family fun, and buying stock gives your family a ticket to participate in the profits for years to come.
Follow Eric on Twitter @Mr_Eric_WSCS.