Financial lessons from 7 celebrity millionaires who lost a fortune
Amitabh Bachchan, Boris Becker, Nicolas Cage, Mike Tyson -- they all went bankrupt. Here are money lessons you can learn from celebrities who lost a fortune.
Amitabh Bachchan, Actor
- Source of wealth: Films, TV shows, endorsements
- The highs: In 1999, he had a net worth of Rs 60.52 crore, while his current net worth (after recovering from bankruptcy) is Rs 2,866 crore.
- The lows: At 57, his company, Amitabh Bachchan Corporation Ltd, ran up losses of nearly Rs 90 crore. He had no films or money, had legal cases, and a tax recovery notice on his house.
- Reasons for fall: ABCL took on more than it could handle, like the Miss World pageant, and exhausted all money. Then it took bank loans which it couldn't repay. Bachchan had retired, so there was no income, and no savings.
- Don’t launch a startup without adequate research and expertise.
- Don’t take risks in retirement or dip into the retirement kitty.
- Don’t fund projects with notional money, or without an emergency corpus in hand.
Boris Becker, Tennis Player
- Source of wealth: Tennis/poker prize money, endorsements, sponsorships, earnings from a best-seller book.
- The highs: Former World No. 1 and youngest player to win Wimbledon at 17, the German ranks among the Top 10 highest earners in tennis, and had a net worth of Rs 1,400 crore.
- The lows: In 2017, he went bankrupt. In 2019, he was forced to auction 82 trophies & personal souvenirs. He reportedly owed nearly Rs 617 crore in debt, and in 2001, he had owed Rs 50 crore in back taxes in Germany.
- Reasons for fall: He reinvented himself as commentator, coach and poker player, but high spending, and unpaid loans and taxes took their toll.
- Loans don’t go away if you keep ignoring them. They become bigger as interest keeps adding up. Repay at the earliest.
- Don’t spend more than you earn. It doesn’t matter whether you earn in crores. If your outgo exceeds your income, the money will not last very long.
Vijay Mallya, Business Tycoon
- Source of wealth: Conglomerate of over 60 firms under UB Group.
- The highs: The 'King of Good Times' and chairman of the United Breweries Group had a net worth of nearly Rs 11,500 crore in 2007.
- The lows: In 2016, he left India on the day that 17 public sector banks moved the Debt Recovery Tribunal to retrieve Rs 9,000 crore he owed them. He also faces charges of fraud and money laundering.
- Reasons for fall: Kingfisher Airlines, launched in 2005 and grounded in 2012, kept piling losses. Mallya defaulted on loans taken to keep it afloat. He also continued to maintain his lavish, extravagant lifestyle.
- Don't get emotionally attached to a loss-making investment. Cut the losses to safeguard your portfolio.
- Don't take loans if you are unsure of your financial ability to repay.
Nicolas Cage, Actor
- Source of wealth: Films
- The highs: One of the top earners in Hollywood, at one time, he was worth Rs 1,075 crore. He owned 15 residences across the world, besides several luxury cars and rare artefacts.
- The lows: In 2009, he was forced topay back taxes worth Rs 100 crore, for which he had to sell some of his properties.
- Reasons for fall: Lavish lifestyle with bizarre and extravagant purchases like a dinosaur skull, pygmy heads, an island, and castles. Poor investment choices and wrong money managers were also to blame for his fall.
- Even if you are earning astronomical sums, you need to invest it so that it keeps growing.
- It is essential to choose your fi nancial adviser and wealth manager carefully.
Eike Batista, Entrepreneur
- Source of wealth: Equity holdings in EBX Group, and in oil, gas, logistics, mining.
- The highs: In 2012, he was the richest man in Brazil and seventh richest in the world, with a fortune of around Rs 2.5 lakh crore.
- The lows: Today, at 60, Batista’s net worth is in the negative, with Rs 8,600 crore in debt, one of the biggest falls in fortune of a billionaire. He was also given a 30-year prison sentence for bribery.
- Reasons for fall: His firms overstated oil and gas reserves earnings, even as operating and profit targets were missed. When oil reserves dipped and mineral prices crashed, his companies’ stock prices fell over 99% and the oil company OGX went bankrupt.
In business or as an employee in a salaried job, don’t promise more than you can deliver. You will lose credibility, and with it, your job and money.
Mike Tyson, Boxer
- Source of wealth: Boxing prize money. Later, fi lms, TV shows, books.
- The highs: World heavyweight boxing champion at 20, his career earnings were Rs 4,910 crore. After his fall, he rose with TV shows, films and books. His current worth is Rs 21 crore.
- The lows: In 2003, he filed for bankruptcy with Rs 193 crore debt to the IRS, divorce lawyers, and an ex-wife.
- Reasons for fall: He led a lavish lifestyle and spent excessively on 110 luxury cars, several mansions, and exotic pets like tigers, squandering Rs 2,500-2,870 crore. Later, alcohol and drug addiction, court cases and convictions ruined his career.
- Avoid addictions, be it alcohol, drugs, smoking or gambling. It will eat into your wealth and ruin your career.
- Keep track of your investments even if someone else is managing it for you. Remember, it is your money.
A.K. Hangal, Actor
- Source of wealth: Films
- The highs: From 1966 to 2005, the character artist featured in 225 Hindi films, like Sholay and Bawarchi. Though his net worth is not known, he was fiancially secure.
- The lows: After 2007, he found it difficult to get any roles due to old age and medical problems. By 2011, he couldn't even pay his medical bills and the film fraternity came forward to help him. He expired in 2012 at the age of 98, in extreme poverty.
- Reasons for fall: Since he lived till the age of 98, his kitty could not sustain him in retirement. No source of income and medical problems exacerbated the problem.
- Your retirement kitty should be large enough to last 20-25 years after you quit work.
- Invest your retirement corpus so that it can beat inflation and grow sufficiently in retirement.