Why Do Famous People Become Broke?
Written by Peter Taradash
As it goes, “Easy-come, easy go.”
It is surprisingly easy to spend huge amounts. Taxes alone can take more than half. Taking a big entourage of friends on trips, buying them expensive gifts, drugs, cars, and meals.
Expensive cars and homes require expensive maintenance and people working for you – agents, lawyers, accountants, hedge fund money managers, bodyguards, gardeners, cooks, drivers, girlfriends, and too often drugs and very expensive booze.
One guy once gave me a bottle of cognac that supposedly cost $5000. The bottle alone was hand-blown and was worth over $1000. I was greatly distressed when my housekeeper threw it out in the recycle bin with all my other old bottles and jars.
One decent-sized yacht can eat up $50 million. Keeping it staffed, gassed up, and running another few million a year, not including your berth (yacht parking spot) in a place like Monaco.
Same with a large jet plane. Or a private island, a castle in Spain, or a villa on the Riviera.
Try hard and you can over-spend over $60 million on a “collector car” like the Audi race car made for a certain dictator. Well-chosen collector items like antique furniture, cars, coins, and rare paintings, at least tend to hold value and even appreciate. So they are the kind of things I’d recommend as combination investments and excellent status symbols.
Michael Jackson’s private amusement park and zoo probably cost him well over $60 million. The mistake they make is to buy “toys” with immense running costs.
Only a few of the smartest ones earning in that league understand that big money won’t rain down on them forever. Instead of consumer products and things requiring upkeep and maintenance, they can and do invest. In What?
In income property, like warehouses, office buildings, apartment complexes, land. Also, conservative financial products like tax-free bonds, and gold bullion.
If they develop the expertise they can make serious money perhaps trading in racehorses, valuable coin collections—even jewelry, buying things to hold, and or re-sell at below value.
Income streams can also come from “royalties,” owning patents, copyrights, trademarks. Smarter well-advised celebrities go into “branding”—sometimes producing and selling their brands of merchandise (Paris Hilton Perfumes) and specialized products (like the George Foreman BarBQ Grill).
They might move to a tax haven like Bermuda or Monte Carlo for shelter because taxes alone can take more than half their earnings.
Some of the newly rich are not clever enough to hire an honest and capable financial manager. Why? They are not thinking ahead. Instead of retiring rich, they will end up on poverty row.
I believe Marilyn Monroe’s estate was only a few hundred thousand bucks. Not enough to buy a studio apartment in Monaco.
Big-time celebrities generally do not invest wisely. Sadly, they often die broke or close to it.
Source : http://petertaradash.com
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