Those without wealthy parents rely on common sense or whatever public schools teach about money management. This is a disadvantage for celebrities rising from humble beginnings as financial literacy isn’t a natural skill and money management is rare in most school curriculums! You don’t need much money to make money through investments. The key to wise investments is to understand what you invest in, with advice from a trustworthy financial advisor.
M.C. Hammer came from humble beginnings in Oakland, CA, but made $30 million on musical hits in the early 90s, besides earning $30 million annually in music production. With no financial training, he bought a huge mansion, spending 0.5 million dollars every month, paying servants for maintenance and a lavish party lifestyle, spent millions on renovations, purchased a private plane, a helicopter, 19 racehorses, and luxury cars. He filed for bankruptcy in 1996, but regained money through investing in emerging restaurant chains and early investments in Twitter and YouTube (being a regular user of both platforms). The Hammerman’s experiences are cautionary about overspending and encouraging about knowledgeable investing.
Hollywood legend Debbie Reynolds made her money in films, besides collecting tinsel town memorabilia. She bought a Las Vegas casino, added a Hollywood-themed museum, giving live stage performances for years. But the casino was far from Las Vegas strip, failing to attract enough people. After selling the failing business in 1998, the museum went bankrupt, forcing Debbie to sell memorabilia to pay off debts. She sold expensive pieces from her collection, published her memoirs, turning her assets into a sustainable cash flow.
Singer and songwriter Bono started a private equity firm called Elevation Partners focusing on investments in media/ entertainment, businesses. With great investments in Facebook and Yelp, it doubled an investment of around $300 million when the videogame companies Pandemic Studios and BioWare were bought out by EA. But later investments bombed, losing $435 million invested in Palm, manufacturing handheld PDAs, and spent $264 million for a majority stake in Forbes. He bought shares in Facebook before it went public, and sold majority holdings in Forbes very profitably.
With his successful music production label and his clothing company, Jay Z is among the best businessmen in Hollywood. But not all investments have succeeded. He invested in New York’s Chelsea neighbourhood for a 150,000-square-foot upscale hotel, but funds ran out due to the 2008 financial downturn and real estate crash and Jay Z’s company returned the property to the bank. After an out of court settlement in 2010, Jay Z returned to his successful track record, making $60 million in 2014 alone. His investments include high-end cognac, nightclubs, and a sports company.
After selling 40 million albums worldwide, alto diva Toni Braxton filed for bankruptcy twice, in 1998 and in 2010. With only $5 million in debt in 1998, she put out a great album in 2000. Her next bankruptcy filing for $50 million, due to excessive spending and tax dues, forced the sale of her California mansion. She bought a small home in L.A. to focus on her acting career. Her 2014 album was a hit, winning a Grammy Award. No matter how bad your finances are, keep doing what you do best for a way out.