Everybody makes mistakes, even the rich and famous. Here are some celebrity mistakes worth sharing, and let's hope we can all learn from other people's mistakes.
Bad Business Deals
Starting a business can be risky. Through their connections, celebrities may be pulled into several business ventures, but not all those business deals may make it. Just ask - next time you see them - Britney Spears, Jessica Simpson, Rihanna, Nicky Hilton, and Natalie Portman about their not-so successful business ventures.
A key takeaway here is not that starting a business is a bad idea, but you have to be careful, don't risk more than you can afford to lose.
Risky Real Estate
Owning real estate can be a sound investment choice. However, many celebrities have poured their profits into elaborate and risky real estate ventures only to liquidate for pennies on the dollar when funds became tight and foreclosure loomed.
Hollywood legend Debbie Reynolds put millions of dollars into her Las Vegas hotel and resort casino, where she performed nightly. The location was a bit off the bustling Strip, and that, along with bad management, caused the venue to consistently lose money. Eventually, she filed for bankruptcy protection, and the casino was sold at a huge loss.3
Kim Bassinger spent $20 million buying a whole town in Georgia to bring new fortune to the dying community. Unrealistic expectations and poor planning doomed the project, forcing her to file for bankruptcy and sell for a loss of over $16 million.4
Nicolas Cage, a prolific real estate investor, bought two castles, one in Germany and one in the US. These iconic landmarks needed untold amounts of cash for renovations and upkeep. When the financial crisis loomed, Cage had to sell his properties for cheap before they lost all their value.5
Many celebrities jumped on the cryptocurrency bandwagon, only to lose huge amounts of money. Most recently, the collapse of FTX, a cryptocurrency digital exchange, brought to light how many celebrities lost fortunes in the crash.
Many famous investors, including Tom Brady, Madonna, Jimmy Fallon, and Kim Kardashian, are being sued by other investors for promoting these risky investments on their social media sites. With all this crazy crypto news, the mantra “buyer beware” should be a reminder to invest only in what you research and understand. Plus, cryptocurrency markets still lack regulation to protect investors.6
Many celebrities own impressive art collections. This asset appeals to those who want to diversify their investments with high-quality tangible assets. Investing in art is not for beginners, though. As with any investment, there are scammers out there looking to make a quick buck from unsuspecting buyers.
Jack Nicholson, Barbara Streisand, and the band Kiss were taken for $1.9 million in a shady art deal. Robert de Niro lost over a million dollars when a New York art dealer sold 50 of de Niro’s late father’s paintings and never paid a dime to the de Niro estate. John McEnroe lost $2 million when the same art dealer who defrauded de Niro sold him a painting that had liens against it. When it comes to investing, we all need to be careful about who we trust.7,8,9
Just like everyone else, celebrities want to keep their money safe and grow their wealth over time. Unfortunately, these celebrities fell victim to shady investments that cost them. Learn from these mistakes. Work with a financial professional who can help you understand the risks and rewards and do your research before investing in an unknown asset.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.