Celebrities are usually very rich, but most have cultivated expenditure traits that over-exceed their savings, and hence the need to invest carefully, the money they make from music, sports and films.
Stardom is at best transient and will not last forever, and both the A-listers and lower rated stars need to be very smart with their money to safeguard their futures. Investments of excess savings are their best options for future expenses apart from lucrative endorsement deals, and they have to consider similar opportunities like the ordinary folks working to invest their funds. So, where and how and in which instruments do they invest their money?
REAL ESTATE INVESTMENTS
You would think that flipping houses are only for the middle classes, but stars take huge steps to flip high-value homes. It is the most popular investment option for stars, who purchase properties in upmarket areas, giving these a personal touch and then sell them to the hoi polloi who desire a former celebrity’s home. Kanye and Kim West have been flipping houses since they have been together, at times never having lived in them for a single day. Matthew McConaughey has several properties. Taylor Swift has over $50 million invested in a single New York block purchasing duplexes and apartments, and multiple homes in Beverly Hills.
INVESTMENT IN STOCKS AND FINANCIAL DERIVATIVES
According to Beverly Hills financial planners, celebs are investing funds in stocks, mutual funds, bonds, investments, hedge funds, and in jewelry. Like all non-celeb clients, celebs are also advised to regularly diversify their investment portfolio, which ensures that they get the most, from churning their portfolios. However, not all investments end up as promised. Back in the 90s, Sylvester Stallone and John Cusack invested in Lipper Convertibles, a private fund. Sylvester invested over $2 million and made at least a $1 million, while Cusack got more. In 2002, the fiscal strategy of Lipper collapsed with the portfolio manager charged with fraud. Other private fund clients sued Stallone, Cusack, and other investors who got the lion’s share of the profits terming them as unjust. They are now on the blink of losing their money to a pool where it will be shared with all investors equally. They are now stuck in court trying to stop the government from taking away their money insisting that they did nothing wrong.
ENTREPRENEURSHIP AND INVESTMENT STARTUPS
Gwen Stefani has a clothing and accessories line from her L.A.M.B. fashion house, Jessica Simpson is making wigs, Carlos Santana is making women’s shoes, Ashton Kutcher has many multi-million dollar investments in tech start-ups. More celebs are turning to entrepreneurship to stretch their millions even further. Their celebrity status helps in securing customers to their ventures, and they are turning their few millions into mountains of cash. Apart from endorsing brands, they create their own companies complete with a tax ID. Some environmental-conscious stars like Leonardo Di Caprio and Angela Jolie and invest in green energy.
Celebs have bills to pay and responsibilities to fulfill, just like us; from maintaining their luxury cars, caring for pets, paying their assistants, and much more. They are under much bigger pressure to keep up with Joneses to ensure retention of a loyal fan base, and more importantly, to lead the big life that they’re used too. Investing their money smartly ensures that they have a continuous revenue stream, even if we do not see them on the TV or in movies very often.