Taylor Swift is one of the most popular megastars performing today. Not only does she write catchy songs, but she is also a savvy businesswoman and the first musician to ever earn a billion dollars solely on their songwriting and performances. Here are five financial lessons you can learn from her, along with those memorable lyrics and musical hooks.
Diversification
Swift started writing country music, but she saw where the music industry was going and the advantages of dipping her guitar into other genres. She has a diversified musical portfolio to help her preserve and grow her wealth.
Investing
Along with an interest in music, Swift is also an investor. Her interests include:
- Real estate – Swift has a real estate portfolio north of $150 million, holding interests in Los Angeles, New York City, Nashville, and Rhode Island.
- Closed-end funds (CEFs) – According to the founder of a New York-based investment advisor firm, Swift invests in discounted closed-end funds. Called the cousin of the mutual fund, CEFs are pooled investment vehicles that hold portfolios of stocks, bonds, and other assets.
Re-investing money into a business
Swift puts a significant amount of her earnings back into her brand and business which includes buying new instruments, recording equipment and recording space, organizing live shows with all the pyrotechnics and other bells and whistles, costumes, and planning for tours in the future. She also takes into account the human capital and gives raises to her staff. Recently she gave her road crew $55 million in raises.
Utilizing tax deductions
Swift can deduct many of her expenses on the road. For example, musicians can deduct hotel stays, the cost of musical instruments, equipment, and other gear, and the cost of transportation. Having these available tax deductions ensures artists are being taxed on their profits and not the heavy expenses that come with being a big-time performer. Taking these deductions lowers the tax burden, allowing her to spend more money on her business and tours, which means she can offer more to her fans. It also helps to boost local economies wherever she goes.
Optimizing earning potential with side hustles – As is common in today’s world, people often don’t just work one job. Many people have taken on side hustles to supplement their incomes. Taylor Swift is no different. Over the years she has inked endorsement deals and partnerships with a variety of brands including: American Express, Capital One, Apple, Walmart, Diet Coke, Stella McCartney, Elizabeth Arden perfume and others. A side hustle is a great way to earn extra income to save, invest, or pay down debts.
Evolving with a changing world – As the world continues to evolve and technology improves, so too does the listening experience for music fans. Swift has learned not only to evolve with her musical style attracting fans across all different genres but she was willing to take the risk to re-record her older records. Her fans embraced the new recordings and the strategy was a hit. Being willing to evolve with the changing world around you and modify your financial strategy may benefit you in the long run.
Willingness to listen – Swift is an astute manager of her money and financial interests but she probably wasn’t born with this skill. It was most likely learned over the years. It is no secret that her father is a financial professional and even invested $120,000 for partnership interests in the first record label that recorded her music. It appears that she was willing to listen and learn from those around her, including her father and make her money work for her. Finance is complicated and you have to learn about it. Be the star of your own show and consider consulting a financial professional to help you review your financial situation, and create or modify a strategy that aligns with your financial goals.
Important Disclosures:
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risks including possible loss of principal. No investment strategy or risk management technique can guarantee return or eliminate risk in all market environments.
All information is believed to be from reliable sources; however, LPL Financial makes no representation as to its completeness or accuracy.
Sources:
What Does Taylor Swift Invest In? CEFs Explained - CB (canadianbusiness.com)
Taylor Swift Eras Tour: Tax Revenue Impact | Tax Foundation
Taylor Swift's Net Worth: How She Spends Her $1.1 Billion Fortune (insider.com)
This article was prepared by LPL Marketing Solutions
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