The 5 Most Money-Savvy Rap Stars

By Damian Davila on 30 June 2015 0 comments

Easy comes, easy goes.

Nobody knows that better that rapper MC Hammer. At the top of his game back in 1991, Hammer had a net worth estimated at more than $33 million. However, only five years later he had debt that had ballooned to about $13 million.

Many rappers take this cautionary tale very seriously and want to make sure that their wealth keeps growing, even after their records fall from the top of the charts. Take notes from the five most money-savvy rap stars.

1. Diddy

Sean Combs, known as Puff Daddy in the 90s and nowadays as Diddy, may be the closest one in the rap game to becoming the first billionaire. In 2015 Forbes estimates Diddy's fortune at $735 million, up $35 million from 2014.

The main lesson that you can learn from Diddy is the importance of creating multiple sources of income. Besides his music career (latest release, MMM, was scheduled to drop on June 29, 2015), Diddy makes money through his:

  • Sean John men's clothing and apparel line;
     
  • Investment in alkaline water brand, Aquahydrate (over $20 million in funding), and tequila DeLeon (prices ranging from $60 to $850 per bottle);
     
  • Major equity ownership in music TV network, Revolt; and
     
  • Portfolio of business partnerships, such as the one with Diageo's Ciroc Vodka.

2. Dr. Dre

Born Andre Romelie Young, Dr. Dre has proven his talent as a producer again and again by overseeing the careers of many rappers, including Snoop Dogg, Eminem, The Game, and Kendrick Lamar.

However, Dre's biggest stroke of genius came in the form of his brand of headphones, speakers, and software, Beats by Dr. Dre. First released in July 2008, Beats by Dr. Dre became such a retail hit that Dre secured business partnerships with several musicians, including Diddy, and manufacturers, such as HP. The success of Dre's enterprise was cemented with an acquisition from Apple for a total of $3 billion.

Despite his gigantic payday, Dre isn't a billionaire... yet. According to numbers from Forbes, Dre's payout after calculating his actual stake and taking away taxes was $500 million. The main lesson here is that one day you're going to receive a major windfall, so you need to know in advance the right moves to maximize that lucky break. By making the right money moves, Dr. Dre could beat Diddy in the race to the $1 billion net worth. (See also: 6 Smart Things to Do With Your Bonus)

3. Jay Z

"I'm not a businessman, I'm a business, man!" raps Jay Z in "Diamonds From Sierra Leone."

And for good reason. Shawn Carter (Jay Z's real name) founded a record label (1995), started a clothing line (1999), sold that clothing line for $204 million in cash (2007), tied in sneakers and cell phones to the release of Black Album (2003), invested in a basketball team (2005), and, more recently, launched a streaming service with some of the biggest names in the music industry, including Madonna, Jack White, and Rihanna (2015).

To the untrained eye, it may seem that Jay Z's efforts aren't coordinated. Actually, it's quite the opposite. Take a lesson from Jay Z's playbook about pursuing business interests: "My brands are an extension of me. They're close to me. It's not like running GM, where there's no emotional attachment."

Money doesn't determine job satisfaction. "Interest in work" and "people at work" were chosen by 59% and 60.6% of U.S. workers, respectively, as the top criteria that make people happiest at at job.

4. Drake

It's very easy to dismiss Drake due to his nice guy nature, but Drake's numbers tell a completely different story about his business savvy.

  • Drake's earnings for 2013 were $10.5 million.
     
  • Tying a record set by The Beatles, Drake has 14 hits in the Hot 100 Billboard chart.
     
  • His fourth album, If You're Reading This It's Too Late, moved 535,000 copies in its first week. He achieved this without any traditional promotion and despite dropping the album as a surprise.
     
  • Jay Z was counting on Drake to join his streaming service, but Apple secured Drake as one of the main spokespersons for the launch of Apple Connect.

The "Started From the Bottom" rapper owes his rise to stardom to building savvy business relationships. From having Lil Wayne as a mentor to counting on manager Oliver El-Khatib for expert advice, Drake understands that you need to surround yourself with people much more successful and smarter than you to make it to the top. That's also why he has collaborated with heavy hitters such as Rihanna, Eminem, Mary J. Blige, Jay Z, and Nicki Minaj. (See also: Mick Jagger Rarely Buys New and 4 Other Smart Money Lessons From Thrifty Musicians)

5. 50 Cent

Last but not least, Curtis Jackson (a.k.a. 50 Cent) stands out from other rappers because of his net worth ($150 million as of 2015) and his skill at identifying trends.

He has proven his business knowledge by building up the Vitaminwater brand and then selling it to Coca Cola for a $100 million payday in 2007. He explains how he noticed the potential of the water business in the early 2000s in his own words: "I walked into a grocery store and I saw a bottle of water for 59 [cents] and another right next to it priced at $2.59." Currently, 50 Cent hopes to repeat his fortunetelling act with Frigo Revolutionwear, a luxury underwear brand with prices ranging from $30 to $100 per boxer. Other current investments for 50 Cent are SMS headphones and Effen vodka.

From the way 50 Cent decides his investments, you can see that he follows two key investment mantras from famous investor Peter Lynch: "Know what you own, and know why you own it" and "Never invest in any idea you can't illustrate with a crayon." You should apply these same rules of thumb when evaluating potential investments. (See also: 5 Investors With Better Returns Than Warren Buffett)

Any money-savvy rap stars I've missed? Please share in comments!

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