MAKING MONEY IS EASY, LEARN TO MAKE IT LAST

Making Money Is Easy, Learn To Make It Last, Money Management

Use Your Money Wisely

If you think making money is difficult, especially in these turbulent times, wait till you try to make it last. It takes all of one’s financial acumen and enterprise to save, invest and help it grow. More so for celebs and stars, who are wont to churning out copious amounts of wealth and creating unwieldy portfolios.

Handicapped by lack of financial expertise and paucity of time, they often end up entrusting their wealth to inefficient wealth managers, or worse, unscrupulous ones.

At other times, boosted by success and faux confidence in their own abilities to manage money, they take wrong investing decisions. Then there’s the heady pitfall of power, which makes them believe their money will last forever. For these and several other reasons, the world touts a long list of celebrities who have acquired untold wealth, only to lose it all.

Some have learnt their lessons and recovered, while others fail to do so. Despite the incongruence in the quantum of wealth made by such celebs and the average salaried professional, there are financial lessons to be learnt by all.

Don’t Spend More Than You Earn. Invest To Make It Grow

A behavioral anomaly that has been the nemesis of many a millionaire is the belief that they will never run out of money. Be it the German tennis prodigy Boris Becker or Hollywood actor Nicolas Cage, they spent their money faster than they could make it.

One of the top earners in Hollywood at one time, Cage was worth 1.075 crore and owned 15 residences across the world, besides several luxury cars and rare artifacts. His downfall was primarily the result of his lavish lifestyle and extravagant purchases like a dinosaur skull, an island, and shah of Iran’s Lamborghini. The simple financial rule is that if you keep spending more than you earn and don’t invest in instruments that help your money grow, you will eventually run out of it.

Don’t Take Risks In Retirement. Keep Investing

When Amitabh Bachchan decided to set up a film production and event management company, Amitabh Bachchan Corporation Ltd (ABSL) , he had already retired. The firm drained his resources, so he took bank loans, which he couldn’t repay and ended up with a bankrupt company.

At 57, he had no films or endorsements, no money, had legal cases against him, and tax authorities put up a recovery notice on his house. He was forced to restart his career and managed to repay all debts. Today, his net worth is Rs 2,866 crore. The clear learning here is not to take undue financial risks after retiring or launch projects without sufficient expertise and financial backing. One also needs to keep investing in retirement to ensure that the money keeps growing at a pace faster than inflation.

Loans Don’t Go Away If You Ignore Them. Repay At The Earliest

Becker, who once had a net worth of Rs 1,400 crore, and continues to rank among the top 10 highest earners in tennis, was reluctantly forced to auction 82 trophies and personal souvenirs in July this year.

One of the primary reasons for his downfall, besides a lavish lifestyle, was his refusal to repay loans and pay taxes, which ran into several hundred crores of rupees. He could have saved himself this predicament by simply paying on time the money he owned. It is important to understand that loans keep becoming bigger because the interest component keeps adding up. So repay all your debts at the earliest to keep them from eating into your wealth.

Avoid Addictions. They Destroy Both Your Wealth & Career

World heavy weight boxing champion at 20, the legendary Mike Tyson had career earnings of Rs 4,910 crore. However, too much wealth and fame at an early age rendered him incapable of controlling his spending or taming his addictions.

He spent excessively on 110 luxury cars, several mansions, and exotic pets like tigers, squandering away Rs 2,500-2,870 crore. Later, severe alcohol and drug addiction, court cases and convictions ruined his career. He is not the only star to be felled by addictions, the others being Hollywood stars Lindsay Lohan, Robert Downey Junior, Charlie Sheen, and Indian music composer O.P. Nayyar.

Don’t Get Attached To A Loss-Making Investment

The ‘King Of Good Times’, Vijay Mallya, is a clear instance of the destruction wrought by emotional attachment to a loss- making investment. Clinging to kingfisher airlines, which was launched in 2005 and grounded in 2012, led to his downfall as the company kept piling losses. Mallya defaulted on bank loans that were taken to keep it afloat. Compounding this error was the fact that he continued to maintain his lavish, extravagant lifestyle. This wisdom applies just as well to stock investors, who refuse to get rid of a loss- making stock in the hope of recovering their money someday.

To ensure that you don’t drag down your entire portfolio due to a single stock, it is important to cut the losses and make a clean exit.

                                                          Source: Economic Times

 

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