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Learning from Jay-Z’s Massive Financial Success


By David Goodboy

In hot pursuit of the billion-dollar crown, Shawn “Jay-Z” Carter posted an astounding net worth of over $800 million in 2017. Second only to the iconic Sean “P. Diddy” Combs in Forbes’ “Richest in Hip-Hop” list, Jay-Z will likely break through the $1 billion net worth barrier and take the No. 1 spot later this year.

While most of us are not musically gifted, we all can learn lessons from Jay-Z’s massive financial success.

He made his money in music, but his true lasting wealth comes from savvy investment choices. Following Jay-Z’s lead is just smart business no matter your life’s current station.

Having studied Jay-Z’s rise to fame and fortune, there are investment themes that emerge. This article will explore five of the primary Jay-Z investment themes to assist you in applying his investing wisdom.

Investment Theme #1: Mortgage Real Estate

Jay-Z has made several high-profile home purchases over the last several years. These include a $90 million Bel-Air mansion and a $26 million home in the Hamptons. The music mogul also has homes in New Orleans and Manhattan’s Tribeca.

While most of us cannot afford such trophy residential real estate, the theme of investing in real estate is the same no matter your economic status.

Owning physical real estate provides a host of benefits, not the least of which is mortgage tax benefits. Even Jay-Z, who could easily afford to pay cash for his properties, decided to take out mortgages. One example is a nearly $53 million mortgage on his Bel-Air property.

With a close to $150k per month payment, this mortgage is no small-time loan. The lesson here is that cash is king and financing your properties to conserve your cash is smart business. The rule is the same no matter how much money you have.

The reason is that liquid cash enables you to take advantage of investments that can quickly earn more interest than you will pay on the mortgage. This is particularly true today with mortgage interest rates still at historically low levels.

Investment Theme #2: Live Nation Entertainment

Jay-Z’s success is implicitly tied with the music tour giant Live Nation. He recently renewed a decade-long, $200 million deal with the company. Jay- Z also co-owns Roc Nation with Live Nation as a joint venture.

Forbes reported “Jay Z is one of the world’s preeminent touring artists,” said Michael Rapino, Live Nation’s president and the chief executive officer stated. He went on to add, “This strengthens the creative and business partnership of someone that continues to expand his touring base and reach.”

Jay-Z bullishly commented to Forbes, “Live Nation and I entered unchartered territory in 2008. Over the last ten years, we have traveled the world producing historical music experiences. Michael Rapino is an industry visionary, and this renewed partnership is a testament to our longstanding relationship and the talented individuals at Live Nation. For the next ten years, we will continue redefining the live event landscape.”

The lesson here is to invest in Live Nation shares. The stock has recently pulled back setting up an ideal buy opportunity.

Investment Theme #3: Sports Management

Jay-Z formed Roc Nation Sports in 2013 to manage professional athletes. The company represents top sports talent and has partnered with CAA Sports to expand its roster.

Jay-Z told Variety, “Because of my love of sports, it was a natural progression to form a company where we can help top athletes in various sports the same way we have been helping artists in the music industry for years.”

The lesson learned from Roc Nation Sports is to follow your heart when it comes to investments. If you truly love something, like Jay-Z loves sports, look for investment opportunities within that field. Your passion for the subject will make research easy when determining the best places to invest.

Remember, no matter how much passion you have for a particular investment, always look at it objectively and with a critical eye before investing your hard-earned money.

Investment Theme #4: Streaming Music

In 2015, Jay-Z invested $56 million to purchase the streaming music company Tidal. His goal with the company is to protect artists from getting ripped off by other streaming services.
“I’m just saying the producers and people who work on music are getting left out—that’s when it starts getting criminal,” Jay-Z explained to Billboard in 2015. “It’s like you’re working hard and you’re not receiving.”

It looks like this venture is paying off handsomely. In 2017, Tidal sold a 33% stake to Sprint for $200 million. This deal valued the company at $600 million. A considerable gain in anyone’s book!

Investment Theme #5: Fashion

Rocawear was hugely profitable for Jay-Z. He sold the company with reported $700 million in annual sales to Iconix Group in 2007 for $204 million. He is rumored to be launching a new clothing line called “AKA Shawn Carter.”

Risks To ConsiderAlways keep in mind that just because a famous, successful person invests a certain way, there is no guarantee the same method will work for you.

 

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