Invest Like a Rapper: Alternative Assets Explained
Pull up in a foreign car, or retire in one? Here’s everything you can invest in besides stocks.
Jul 27, 2021
The richest rapper in the world is none other than Kanye West—yes, the same Kanye who announced on Twitter that he was $53 million in debt back in 2016.
Five years later, he’s worth $6.6 billion according to a Bloomberg report. That’s not because The Life of Pablo was flying off the shelves either. Kanye’s music catalog is worth about $110 million.
Instead of cashing in on his flow, Ye managed to turn it all around making smart investments, but not the kind you might think. Apparently he’s only got $122 million in cash and stocks.
That means over 98% of the Yeezy fortune is coming from alternative assets (like Yeezys). So what are alternative assets, and how can you snag some? We break it down.
Hold up: What are alternative assets?
Alternative assets are anything that produces value that isn’t the mainstream stuff: stocks, bonds, and cash. Investing in alternative assets can mean buying up anything from real estate and startups to foreign cars, luxury watches, rare sneakers, Birkin bags, fine art, gold, crypto, and even sports cards.
Ye’s portfolio of investments, which includes the Yeezy label (worth over $3 billion), isn’t uncommon. Nearly every rich rapper out there holds a lot of their money in alternative assets.
Diddy’s got a streetwear brand and a line of vodka. Jay-Z has Tidal, Rocawear, Roc Nation Sports, and a $4.5 million Basquiat painting. 50 Cent put his money in a luxury car collection and a champagne brand. While the stock market is a smart strategy for consistent long-term growth, these alternative investments have the potential to produce more profit in less time.
Wait a minute: You’re telling me I can make more cash off a pair of Air Jordans than the stock market?
It’s possible. Alternative assets don’t always outperform the stock market, and they can be risky.
Cryptocurrency, for example, is notoriously volatile. The value of one bitcoin can drop thousands of dollars in a matter of hours—which also means it can gain a few Gs during your lunch break.
That being said, there are alternative assets that are more stable, like investing in real estate. And if you look at historical data, many of these assets have done better than the stock market.
For example, Roofstock—an app that lets you buy a house and start earning rental income all from your smartphone—boasts a 13.22% target return. That’s much better than the average long-term stock market return of 10%. If you were to invest the $20,000 minimum in a Roofstock home today and do nothing else, you’d have over half a million dollars in 25 years. Put it in the stock market, and you’d only have about $241,000.
Jay-Z’s Basquiats and Picassos also stand a chance at beating out stocks. According to Masterworks, an app that lets you buy small shares in famous masterpieces, the contemporary art market has outdone the stock market for the past 15 years. Investing in the masters gets aesthetes an extra 5.5% in returns.
And while investing in startups can be risky (9 in 10 fail), you only need one zero-to-a-billion unicorn to 100x your money. Peter Thiel famously turned $1,664 into $5 billion starting with an investment in PayPal back in 1999. He had the inside scoop, but now apps like Republic vet startups for you and let you invest with as little as $100.