Three Things Your Favorite Celebrities Look For In A Great Investment – Forbes

There’s sometimes a misconception that celebrities are constantly shelling out cash on expensive things, sprawling homes, yachts, expensive liquor, and parties. Actually, some of America’s most brilliant investors are Hollywood celebrities. For many celebrities, the smart investments they have made afford them the resources to fund the luxuries we are often wooed by.

The most famous celebrity investor that comes to mind is P. Diddy, who has since seen his reputation rise far above the title of Hip-Hop star, with his massive stakes in Ciroc Vodka, DeLeón Tequila, Sean John, and The Revolt TV Network taking him very close to the $1 billion evaluation.

Music stars like Jay Z and 50 cent join an extensive list of movie stars and entertainers like Ellen DeGeneres, Robert DeNiro, Ashton Kutcher, Nas, Jessica Simpson, George Clooney, and Reese Witherspoon, amongst many others, to form Hollywood’s elite investors.

According to the prominent investor and fund manager Sami Rusani, “Investments are the most common sense use of great liquidity,” Rusani explains his position further; “Celebrities are one of the classes in America who get paid huge sums in cash for their work. This disposes them to either great profit through investment or waste through unbridled expenditure. However, we are constantly seeing many celebrities choose the former, but even then, great caution is still required in making investment decisions, or it may still end up as a waste.”

What celebrities look out for

In 2006, Dr. Dre took his love of good headphones to the market and co-founded Beats Electronics, a company that Apple AAPL bought for $3 billion in 2014. Jessia Alba took her love for environment-friendly products and built an environmentally-friendly brand, The Honest Company, that has since broken the $1 billion evaluation.

Aston Kutcher’s A-Grade Investments Company was launched in 2010, and he has since invested in unicorns like Spotify, Uber UBER , Skype, and Airbnb, to mention a few. A-Grade’s shrewd investments turned their initial $30 million fund into an over $250 million portfolio in only a few years.

The critical question to answer is; how do these celebrities do it? What informs their successful investments?

Familiarity and Passion

“It is bad business to invest in anything that you are not familiar with, passionate about, or knowledgeable in,” explains Rusani, “In my role as a fund manager and investor, I have personally observed that the best investments are made in industries that the investor understands and can predict. This principle has guided me in building my own portfolio with over 25 investments and in facilitating my three exits to date.”

A cursory glance at most of the investments that celebrities make, from Headphones by Dr. Dre to CBD companies by Snoop Dogg, will reveal one thing; celebrities look for a safe space, a market they understand or are passionate about, and an industry that they can contribute profitably to.

In the words of Ashton Kutcher, “Invest in the things that you know. If you drink beer all the time — if you go to microbreweries and you try all kinds of them — you probably know which ones are the best, and my advice is always to invest in what you know…do the investigation necessary to know whether or not it’s something that is going to have ultimate value.”

Futuristic Fit

To explain how a futuristic fit is helping celebrities make investment decisions, Rusani poses a vital question; “What will the future look like?” Since the beginning of time, thinkers, clerics, and philosophers have tried to answer this question, but to no avail.” Mr. Rusani further explains, “They have failed to predict the future because the future isn’t set in stone. Innovators and inventors have come closest to predicting the future because their innovations effectively create the future of humanity and how we relate to the earth. Some of the wisest investors are those who observe the innovations poised to define humanity’s future and get into it early.”

Alongside many celebrities like Reese Witherspoon, Lindsay Lohan, Mike Tyson, Elon Musk, Snoop Dogg, and Floyd Mayweather, Sami Rusani was also an early adopter of cryptocurrency in 2014. Sami Rusani’s firm belief in the futuristic relevance of cryptocurrency has seen him maintain a strong interest in the industry, helping raise over $100 million for different crypto platforms and companies while maintaining both equity and tokens in companies that have become market leaders.

In the words of Lindsay Lohan, “It’s only a matter of time till everyone in Hollywood and beyond gets involved, maybe we will see the tokenization of movies, and of how artists are paid in films, music, and art. I see a future where crypto, NFTs, and blockchain will be the norm, rather than the exception.“

While the crypto space has been taking a few hits in recent times, it should be noted that the optimism of these celebrities may yet materialize in the long term.

The need for a disruptive or futuristic tendency in investments has also seen celebrities invest in a score of technology companies, from streaming services to fintech companies. Everyone wants to help shape the future, and celebrities consistently vote with their dollars.

Social Impact

“I pride myself on being an impact-driven investor,” Says Rusani, “Positive change is my thing, and this desire has led me to maintain several sustainability-focused investments in my portfolio. In the investment sphere, social impact has become one of the most important metrics when deciding to invest. Celebrities are concerned about social-impact investments, not just because it is a great thing to do, but because it guarantees returns, if not in dollars, in the fulfillment of knowing they have helped create a better world.”

Celebrities are perhaps the most impactful influencers of human behavior. With the social engineering that occurs through their movies and art, it is refreshing that many major players in Hollywood have taken a solid positive stance on social impact and sustainability.

Titanic star, Leonardo DiCaprio, has built a track record of investing in various small environmentally-focused start-ups. Drake invested in and partnered with an environmentally-conscious fintech company, Aspiration, that has taken up the responsibility of calculating Drake’s environmental impact. Beyonce also holds a stake in a Vegan beverage company WTRMLN LN WTR, which limits food waste by turning watermelons marked for discarding into delicious watermelon water. At the same time, billionaire talk-show host Ophrah has made a name for herself through her humanitarian investments worldwide.

According to IFC’s latest report, the global market for impact investments shows that $2.3 trillion was being invested in 2020, of which $636 billion clearly had an impact management system in place. These numbers suggest that impact investment is no longer in its early days and is proving a healthy investment choice. With the Covid-19 pandemic, the industry has surged even more as more celebrities and entrepreneurs dedicate more dollars to help solve critical problems.

Having worked with some of the most prominent investors in different industries and helping raise over $250 million in funds for other companies in the last four years, Rusani believes that these three factors are the most decisive that drive the investment strategies of celebrities and every modern-day top investor.