We Asked a Financial Expert If Jay-Z's Money Advice Is Actually Good

NEW YORK, NY - DECEMBER 12:  Jay Z speaks onstage during the Sports Illustrated Sportsperson of the Year Ceremony 2016 at Barclays Center of Brooklyn on December 12, 2016 in New York City.  (Photo by Slaven Vlasic/Getty Images for Sports Illustrated)

We Asked a Financial Expert If Jay-Z's Money Advice Is Actually Good

"The Story of O.J." is a guide to life.

Published July 18, 2017

Jay-Z's 4:44 album has revealed a lot to us: a lot of stuff about his relationship with Bey, that Blue has inherited his rapping talents and also, randomly, his financial philosophies. Amidst admitting that he regrets cheating on his wife, Hov also admits that he hasn't always been responsible with those stacks. In “The Story of O.J.,” he’s extolling the benefits of saving over spending for posterity and presenting some ideas that suggest money is a thing and if your only focus is on stunting on Instagram in your Gucci belt, you’ll be tightening your proverbial belt faster than you know. He's a father of three now, after all, so money matters.

So we had to find out for ourselves how much sense all of his advice makes. After all, 50 Cent was confused. So we decided to call in an expert. Tonya Rapley, a financial educator and founder of “My Fab Finance,” gave it to us straight, letting us know what message you should take away from 4:44 if you’d rather build a legacy than live rich and die broke.

Are cars ever a good investment?

"It depends on what you’re using that car for. For some people, it’s an “investment” to get them to where they need to be so they can make a living. For other people who could buy something less expensive to satisfy their needs but choose not to, it’s definitely not an investment or an investment in your long-term success."

Mr. Carter says: “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 2 million / That same building today is worth 25 million / Guess how I'm feelin'? Dumbo”

"There are collector cars that eventually appreciate in value. But for the most part, no, a car isn’t an investment. A car is a depreciating asset because unless you buy a classic car, or a collector’s car, it’s going to depreciate in value."

OK, it looks like in this case, he's right. 

On smart investments if you’ve just come into some money or if you’re just starting out:

"Mutual funds are a good way for people to kind of soften the blow of the volatility of the stock market, but it allows them to invest and allows their money to grow. I would honestly say the second best [investment] is an investment in yourself, in a skill that allows you to earn more money. It is important to find a way to add to your income or a way to be able to support yourself if something were to happen to your 9-5 position. So, investing in a skill that you can do on the side that brings in side income or allows you to fall back on it should something happen to your primary source of employment.

"And then… it’s not really an investment but if you [come into money], you should pay off consumer debt because any rate of return* that you’re going to get is not going to be more significant than the interest you’re paying in debt and how much that will cost you over an extended period of time. It would serve someone to pay that off so that they can start investing in earning a return instead of, like, that return being eaten up by the interest you’re paying on your credit card now. The debt is costing you more than you would earn back from your investments."

(*Rate of return = percentage at which the money you’ve invested is returned to you.) In other words, pay off your credit cards. 

Is art a good investment?

Jay says,“I bought some artwork for 1 million / 2 years later, that s**t worth 2 million / Few years later, that s**t worth 8 million / I can’t wait to give this s**t to my children”

"Art can be an investment but I wouldn’t recommend that as an investment strategy to someone who isn’t already financially secure. Unless you have a background in art or know someone who does, you never know which artists’ work is going to become valuable."

OK, stay away from art — unless you're Jay Z or a Japanese billionare with money to burn

On some ways to ensure you’ll be able to pass on your wealth to your kids

"Life insurance is one thing that’s available to working class people. Some people say, “Don’t invest in life insurance, just save your money while you’re alive,” but we know everybody doesn’t necessarily do that. So for people who don’t feel like they’re good savers but want to leave something behind, life insurance is a good way to pay into something monthly. Of course, you would want whole term life insurance because that doesn’t expire [as opposed to “term” life insurance, which is cheaper because you buy it for a set amount of years] and it’s more likely to be available for your kids."

It sounds morbid, especially if you have any scammers in your life, but life insurance is a pretty sure way to make sure that your legacy is safe, it seems. 

Tonya emphasizes the importance of establishing stable spending habits. "Leading by example of how to live financially responsible lives and instilling proper financial behaviors in your children while you’re here is one of the most valuable things you can do because even if you do put money aside for life insurance, if [your kids] just see you spend, spend, spend, when you leave, that’s what they’re going to do because they haven’t been given proper financial guidance."

This brings us to the next point. Jay called out a lot of the rappers of the younger generation that are simply doing things to flex for the 'gram. 

On “cool” investments, something smart to put your money in that can give you a little street cred in return

Even Tonya is stumped about the advantages or disadvantages of this. "Ooh… Hmmm… That depends. One could argue that investing in collector’s items [is smart]… I’ve seen people who have massive, rare sneaker collections that are worth a decent amount of money… But if you are going to invest in something pop culture related, you have to understand the market and what items on that market command and what items are worth collecting. I don’t encourage [investing in trends] but if someone were to do it, they should make sure they’re doing their due diligence to preserve whatever collector’s items they’re collecting and that they understand the market of the item."

We all know "Becky" caused some major trouble in paradise, but the Tidal mogul wants you to think twice before you get a lap dance. He says, "[you] wanna know what’s more important than throwin’ away money at a strip club? Credit”

So we asked Tonya.

What is more important? Throwing away money at a strip club…or credit?

"It’s important to understand that credit is your relationship to debt. Credit does not necessarily reflect your money behavior, it reflects your relationship to debt, how timely you pay back debt and how responsible you are with debt. Period. And so for some people, it makes sense. For people who are disciplined, yes, credit is great. But for people who are not disciplined, credit can lead to debt, which can lead to financial bondage, which is the complete opposite of financial freedom. And so, that line in particular, I felt like it needed more context because when someone has the resources that Jay-Z has to pay off all his bills in one pay check versus someone who’s already living paycheck to paycheck, it doesn’t have the same effect."

So hypothetically, we are not balling like Jay-Z, we guess. We need to learn how to build good credit. Tonya says, "One good way to build credit is to get a 'secured card.' It’s essentially a credit card backed by your own money, so you can put as little as $300 down and you use it like a regular credit card. It builds your credit like a regular credit card, it’s treated as a credit card on your credit report and so that’s one of the less risky ways to build credit. It is important to note that it takes credit to build credit and just because you don’t take out a credit card doesn’t mean you have good credit. Being well informed about what’s on your credit report and understanding how credit works [is vital] because when you understand how it works, you can make it work in your favor. Do your research, use Google. If there’s a secured card you’re considering, look up the reviews of that card online because there’s always a chance that you might find something that's predatory or that sounds good but actually puts you in a worse position."

OK, fine, its not like we need another reminder that we are mere mortals compared to Bey and Jay. But honestly, it would be nice to get to be billionaires. So, as if it's that's simple, we asked. "I think that one of the lessons that people can learn from Beyoncé and Jay-Z isn’t necessarily based on money, but on opportunity. One of the things I respect the most about Beyoncé and Jay-Z is their ability to control their narrative, the way they appear to the world." Ugh, Tonya, we don't exactly have the "opportunity" to be worldwide popstars. 

She continued, "Jay-Z and Beyoncé have made fantastic decisions with how they are perceived, which has allowed them certain opportunities and access to certain networks. The biggest takeaway is really to control your reputation because if you disregard how important it is to always show up in a certain light online, it can impede business relationships, deals can fall through or opportunities for jobs can fall through. Not everybody has the same starting place. I think it’s important when people hear 4:44 to understand that everybody does not start off from the same launching pad. [Some people] have to find different ways to get the money they’d use to invest, so you have to put things into perspective and not use [4:44] as a reason to feel you’re not doing enough but to understand that everybody’s journey isn’t the same and to realize what can you do to get where you want to be." 

So...should we maybe not give them even more money buy buying their music and merch because, you know, we need coins too. Tonya says, "You know your pockets. People know their financial situations. By all means, if you want to see Jay-Z and it’s not going to affect your financial goals, go see him, enjoy the show. But, there comes a point when you have to ask yourself, 'Are you investing in someone else’s dream or your own?' And if you go to that show, is it taking away from something you said you wanted to do for your life or for someone in your family or a financial goal you have in the near or long term?"

So, as always, it looks like Jay-Z is onto something. Tonya says goodbye with the message, "I hope this isn’t the end of the conversation about creating wealth in minority communities."

It looks like we all have some homework to do and it doesn't seem that hard, 50. Look out Forbes, we just might be a Black Bill Gates in the making. 

Written by Mercedes Tahir

(Photo: Slaven Vlasic/Getty Images for Sports Illustrated)


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