By : : Phillip Washington | www.stonehillwm.com
“The burden of poverty isn’t just that you don’t always have the things you need, it’s the feeling of being embarrassed every day of your life, and you’d do anything to lift that burden.” -Jay-Z
Who really is the greatest rapper of all time? Some say, Biggie, some say Tupac (you can probably tell by my quote at the top who my vote goes to). However, what’s undisputed is who gets the title of the most financially successful rapper of all time: Jay-Z of course.
Jay-Z’s net-worth is estimated at $600 million dollars (not including Beyonce’s $450 million dollars). How did he build such a huge net-worth from rapping? He didn’t. Jay Z invested the money he made early on wisely by spreading his money out in many different places. He created a diversified portfolio of businesses. From music to perfume and beauty products (See business insiders article). If one or two businesses aren’t doing well, it doesn’t really effect his overall plan too much.
This is one of the basic principles of successful investing: Diversification. When you diversify your money, you make sure you don’t bet your entire financial security on idea, business or industry. You want to create multiple income streams from many different businesses. Now, you may be thinking, “Sure, but I don’t have money like Jay-Z, I can’t be as diversified as him.” Sure you can. There’s a way you can create an investment portfolio that allows you to have a partial ownership in more than 10,000 businesses that operate all around the world by investing using a pretty old Wall-street invention called mutual funds.
Now just because you may own a few mutual funds (or stocks), doesn’t mean you are fully diversified. Unless you have an analysis done on your investment portfolio that show you the businesses (stocks) you own, the industries, and the countries you’re invested in, it’s hard to know whether you are properly diversified.