Practical Advice From The Famous And Wealthy

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Practical Advice From The Famous And Wealthy simple money man

When I was younger I would read about celebrities and their lifestyle in the entertainment section of MSN. It was fun to see where they were vacationing, what restaurants they would visit, and the cars they would drive. But, after a while it got old and I thought to myself, well how is this improving my own life?

 

So then I took a deeper dive to see how exactly celebrities acquired their wealth. Since I can’t act, and am not skilled or young enough to play sports at least professionally, those two career moves are out.

 

That leaves celebrities like investors, business people, and entrepreneurs. How did they accumulate their wealth and more important to me, what practical advice can they provide?

 

 

Warren Buffett

 

We all know Warren Buffett is in the investment game for the long-run and has proven to be tremendously successful. His philosophy is simple: to buy and hold. He usually focuses on buying businesses at what he refers to as value prices. The problem is that many of us don’t have that kind of capital to acquire a whole or a majority stake in a business.

 

That’s fine though. A friend of mine recently pointed me towards advice Mr. Buffett gave concerning retirement. He said to simply buy and hold low-cost index funds. This is a philosophy that I’ve been actively transitioning into. It’s easy and affordable for many of us to do. Mr. Buffett has the Vanguard 500 Index Fund in his personal retirement account.

 

Mr. Buffett even says that following his death he’d like 90% of his cash, to be left for his wife, to be invested in a low-cost S&P 500 index fund. It provides comfort that passive investing and following a proven benchmark, which over time delivers positive performance can yield results and ultimately wealth.

 

Practical application: buy low-cost index funds or ETFs. And when you buy them, hold them for a long long time.

 

Jay-Z

 

With a net worth of over $800 million, Jay-Z is among the highest in the music industry. He has and continues to make a lot of money through various outlets such as producing and distributing music, sports ventures, real estate investments, clothing lines, beverages, and funding for start-up businesses.

 

Heck, he even invested in Uber back in 2011 which is worth 200 times more. Jay-Z has since launched his own venture capital firm. Jay-Z’s advice is to invest in businesses that will continue to provide income. We can translate this into investments such as high-dividend-paying stocks, funds or REITs.

 

He’s on track to become the first billionaire rapper due to his money mindset. In his song, The Story of O.J., he even says “Financial freedom my only hope” and raps about the idea of buying assets to hold them so that they may increase in value.

 

Jay-Z’s investment advice is the classic formula for building wealth. Again, it’s not about short-term gains and profits, but planting seeds and reaping the long-term benefits.

 

A point he makes specifically at 1:15 of this video is how music is similar to stocks in that there may be new trends in music that may be attractive, and it can result in emotional decisions. It may “not be for you” and we should be disciplined to stick with what we know. But that doesn’t mean we should stop learning about new investment methods and opportunities. We can always learn more and research into specific investments or interests and see if they fit in with our long-term financial goals.

 

Practical application: don’t make emotional decisions. That is, if the market has dropped 700 points, don’t sell off your assets. Determine the causes and how you may be able to take advantage of such a situation. Protect your investments in a way that you may be able to withstand losses through proper diversification.

 

 

Mark Zuckerberg

 

The Facebook CEO is not afraid to take risks. One of his quotes is that “in a world that’s changing really quickly the only strategy that is <guaranteed to fail> is not taking risks.” He’s a young CEO and has a long career ahead of him. The upside of more risk = more reward, AKA stronger returns from an investment standpoint. Lower risk results in consistent smaller returns with less volatility.

 

And for a while now, Facebook has earned millions in ad revenue, but recently Mark Zuckerberg took another risk. He revealed plans to change news feeds for users that are more geared towards family and friends; Facebook’s original vision. How this will affect revenue is yet to be seen, but after the announcement, the stock did drop by almost 5%.

 

Practical application: make sure your portfolio contains growth assets. We are all living longer and need longer, and unless you have accumulated enough to generate a sizeable passive income stream, growth assets, which do come with some risk, are appropriate for long-term investors.

 

 

Shahid Khan

 

Finally, we have the owner of NFL football team Jacksonville Jaguars and Fulham Football Club in London. He has a net worth of about $7.5 billion. An immigrant from Lahore Pakistan, Mr. Khan moved to the United States when he was 16 years old. He worked at a manufacturing company producing car bumpers.

 

Mr. Khan ended up buying the company he started working for and it became a mass producer of car bumpers and other plastic parts. His advice to a group of engineers was to “make sure you make money”.

 

Mr. Khan’s advice was geared more towards business operations, but it can be applied to investors as well. His advice is simple yet overlooked. We may think we are doing fine by investing on a regular basis in our retirement or brokerage accounts. But we should be rebalancing our accounts to reduce risk and monitoring our performance, to ultimately make sure we’re not just earning a return, but an appropriate one at least in comparison to the overall market.

 

Practical application: monitor your investments to ensure they are meeting your goals and objectives. Ensure that your dividends are paid and reinvested in the manner which you have designated. If and when opportunities arise, don’t be afraid to sell your assets and lock gains in order to rebalance your portfolio.

 

 

Your thoughts:

  1. Have you come across investment advice from celebrities I haven’t mentioned?
  2. What piece of advice has stuck with you the most?
  3. Has even a retiree provided investment advice that you may hold valuable?

 

 

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I use Personal Capital because (1) it’s free, (2) it tracks all of my accounts and overall net worth, (3) my account balances automatically update, (4) it shows how my investments are diversified and allocated in various sectors, and (5) can use built-in tools like “Investment Checkup” to get….wait for it…free personalized advice!

 

 


 

 

 

 

16 thoughts on “Practical Advice From The Famous And Wealthy

  1. Hey SMM,

    Wise advice! I’ve think Buffet’s index investing advice is the cornerstone of a portfolio. I have some money that I put into riskier investments, but most of my portfolio is in broad-market stock index funds.

    I also like Jay-Z’s advice. I’ve lost money before by panic-selling, and have learned my lesson.

    Cheers,
    Miguel

    1. Same here. I can use myself as an example from all four of these great personalities. And now I’m working on training my brain into thinking of a market correction or crash as purely an investment opportunity 🙂

  2. SMM, I don’t have advice from a celebrity that I can recall, but your last practical point is one of the simplest things that many people miss…
    Reinvest your dividends.
    Over enough time they will most likely produce the biggest gains in your wealth.
    Reinvest the dividends.

  3. Great advice from successful people. Here’s one of my favorites.
    Best advice or quote from my idol MJ.
    “Sometimes you need to get hit in the head to realize that you’re in a fight”.
    Michael Jordan

  4. Since becoming a fan of John Bogle, index investing has been the way to go for me, and Warren Buffet utilizing that same investing style, gives it even more credence.

    Shahid Khan’s advice that “make sure you make money,” sounds very much like Warren Buffet’s two rules of investing:
    Rule No. 1: Never lose money.
    Rule No. 2: Never forget rule No. 1.
    Enoch recently posted…How to Spring Clean Your Finances in 2018My Profile

  5. Hey SMM!
    Wow, what a power couple Jay-Z and Beyonce combined….I definitely chose the wrong career path ha! JK. I can’t rap. In public. Only in my car.

    I think the advice that resonates most just from the group of people you have listed is don’t make emotional decisions. The same tried and true method is also applied in the workplace…never send an email angry. Write it, put it in the drafts folder, then come back the next day and edit it if you still feel like sending it, or trashcan it.

    I also always remember Warren Buffett’s quote, “It takes 20 years to build a reputation and 5 minutes to ruin it.” Indeed, he’s built a solid reputation on his financial decisions…one can only aspire to keep that mindset steady for so long!

    Great compilation!

    1. Thank you. It seems like as their careers progress, wisdom continues to flow. And we get to receive this information. It is what we do with these tidbits that will make the difference. I’ve made emotional decisions in the past and am glad I learned from them. 🙂

  6. Great post! I didn’t know that Jay-Z was on track to be the first billionaire rapper. Does Jay-Z and Beyonce together make them a billionaire household?

    I know that Jay Leno always has multiple jobs and he saves all the earnings from his main gig and only funds his lifestyle with one of his side jobs.

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