Taylor Swift was recently named a newly-minted billionaire by Forbes, with an estimated worth of $1.1 billion. The 33-year-old’s “Eras” tour has become a financial phenomenon, earning $780 million from ticket sales alone, minting Swift as the first musician to reach billionaire status exclusively through the prowess of her music and live performances.
There’s a lesser-known route, though, Swift could have taken to hit the billion-dollar mark — compound interest. Following her first headlining tour in 2009, Swift, already the top-selling solo artist of 2008 with her ‘Fearless’ album, earned an impressive $18 million. If Swift opted to invest that sum into the diversified stock index, she could potentially near the billion-dollar mark by 2048, simply through the compounding effect. From 2009 to 2023, the S&P 500, with dividends reinvested, averaged an annual return of 14.11%. Swift’s $18 million earnings from 2009 would be worth $114 million today, solely through S&P 500 performance.
Compound
COMP
interest is often hailed as one of the wonders of the financial world, highlighting two truths: the earlier you start, the more time works in your favor, and it’s never too late to begin. This principle holds that no initial amount is too trivial to grow, given sufficient time and the magic of compounding.
Like Taylor Swift, NBA legend Earvin “Magic” Johnson has recently been named a billionaire by Forbes, with an estimated net worth of $1.2 billion. Many might find it surprising that during his illustrious career, Johnson’s total earnings amounted to only $40 million (by contrast, current NBA superstar Steph Curry will make $48 million this year alone). Johnson retired his Converse sneakers 27 years ago but had he channeled his NBA earnings exclusively into S&P 500 investments, that sum would have amassed to over $500 million today.
Johnson’s business ventures, including Starbucks
SBUX
, sports franchises, and other winners, have proven equally lucrative, yielding substantial returns. Interestingly, on Converse, Johnson chose a $100,000 yearly deal over Nike’s
NKE
, a then-emergent shoemaker, which included stock is now valued at over $5 billion.
Legendary investor Peter Lynch noted, “I made most of my money in a company in five to seven years, not five days or seven months.” The bottom line is the path to great wealth creation isn’t exclusive to those with chart-topping singles or record-shattering tours. Sometimes, it’s paved with the quiet, consistent growth of compound interest and the patience of a disciplined investor.
Swift’s and Johnson’s actual routes to wealth have been far more diverse and dynamic. Nonetheless, this hypothetical investment illustrates a foundational principle: how early and consistent investment, coupled with the market’s historical performance, can be a powerful wealth-building strategy for both the artist and the investor.
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