FINANCIAL LITERACY AND POP CULTURE: WHAT JAY-Z IS TEACHING US ABOUT INVESTING

It has been well documented that Jay-Z is hip hop’s first billionaire. Understanding how he made it to this point provides a great education about investing and financial literacy.

And just to be clear, a lot can be learned from Jay-Z in terms of business and career success. Being resilient and marrying well (an understatement) are great lessons which, to a large extent, go hand in hand with his business acumen. This piece will, however, focus primarily Jay-Z’s growth mindset in investing.

The Financial Literacy Lesson – Put Your Money Where It Can Grow

Among Jay-Z’s investments are art collections, liquor brands, a percentage ownership in Uber and ownership of the master recordings for his music among other things. An examination of his investments shows that the current value of his investments far exceeds the amounts he initially invested. In other words, his money grew where he put it.

Consider one of his more well known investments, UBER where his initial investment of $2 million is now reportedly worth $70 million. Whatever your views on Uber, this is a substantial appreciation in value. An examination of his investment behavior reveals that he largely invested in companies and products in the early stages. His investment and wealth then grew as the companies became more profitable.

The Lesson From Jay-Z Himself – “The Story Of OJ“

As if this point wasn’t already made clear from reports on his wealth or his interviews, Jay-Z gives the lesson himself in his song , “The Story of OJ”. Racial commentary and money laundering advice aside, this song gives the listener valuable and proven financial advice. Consider the excerpt below from the song:

“I bought every V12 engine,
Wish I could take it back to the beginnin’
I coulda bought a place in Dumbo before it was Dumbo
For like two million
That same building today is worth twenty-five million
Guess how I’m feelin’? Dumbo”

It is important to understand this excerpt in context. Dumbo in Brooklyn, New York was once primarily an industrial and manufacturing area and not the fancy art deco, tech hub that it is now. The transformation came as Dumbo was gentrified by developers around the turn of the century, resulting in an influx of new residents and surges in property prices. It now houses numerous art galleries, high end housing and technology businesses. Had Jay-Z taken advantage of that $2 million purchase prior to the development and gentrification of Dumbo, he would have made back his investment more than 12 times over. But he’s still a billionaire, so try not to feel bad for him.

So what was his message above? Aside from not passing up on good deals, he was saying to put money where it can grow – in appreciable assets (assets with the potential to grow in value). In the same song, Jay-Z also discusses investing in artwork and the importance of good credit. He was essentially telling his listeners to invest for future wealth; to play the long game. He was telling the listener to re-examine what is “cool” and to assess the profitability of their purchases. He was espousing the merits of wise investments over instant gratification and buying expensive token items to look rich to others.

Investing For Growth Takes Patience And Effort

This isn’t to say that identifying great investments is a simple exercise. Many start up companies pop up everyday claiming to be the next big thing; and they aren’t. There is much work that goes into examining the viability of potential investments. For instance, one thing Jay-Z, as well as other successful investors, have said is that they invest only in what they understand. If they don’t understand how something works and how it makes money, they do the research or stay away from it altogether. Warren Buffet, a multi-billionaire investor and one of Jay’Z’s mentors, spends hours a day reading the financial statements of companies in order to examine his potential investments.

You’re Not a Billionaire Like Jay-Z and Buffet – You Can Still Strive For Growth!

Truth be told, Jay-z has certainly made enough money to have lost some of it on a few failed investments or fancy cars and still be ok. Many people won’t have $2 million on hand to purchase real estate. But you can still apply the lesson above. Maybe you have $500 to invest in Government Registered Stock or a mutual fund. Maybe you can provide capital to somebody reliable with a great business idea that is full of potential and satisfies a high demand. Maybe you have enough funds to purchase a fixer upper home in a developing neighborhood. Maybe you have a few hundred dollars to purchase seeds and soil to grow organic fruits and vegetables for resale. Put your money where it can grow.

And know this, investing isn’t only in the form of money but also comes in the form of time and effort. Want to invest in crypto? Take time to fully read up on it first. Want to invest in companies? Take time to learn about what they do, how they’re managed and what their financial health is like. Read the Business section of the newspaper. Educate yourself on budgeting. Educate yourself on stock and bonds (this article by Tammi Miller-Butler is a good read). Participate in a workshop at The Financial Academy. Learn a new language that can be used in business. Learn a new valuable skill that people will be willing to pay for. Cultivate a good network of friends and colleagues.

Whatever your situation, the lesson from Jay-Z above can be applied. But again, be sure to research and understand your potential investments and the risks involved before parting with your money; otherwise the results may have you feeling how Jay-Z felt in the excerpt above – Dumbo.