Do any movie stars invest their millions to make more money? Do they have stock in big companies? Which movie stars start successful companies outside of acting and become even wealthier?
—Jason Andrews, Richmond, Virginia
The B!tch Replies: Most celebrities have no choice but to invest, because—like clones—they seem to age faster than the rest of us. It's a plight that, in Hollywood, can lead to a brutally early retirement. One minute, you're Molly Sims; the next, you're Lurch. (Need proof? I give you page 45 of the Oct. 16 issue of Us Weekly. Don't say you weren't warned.)
Most actors never come close to the $20 million (and up) paychecks offered to A-listers like Brad Pitt and Julia Roberts. Instead, think of Hilary Duff, who makes about $2 million per picture, according to reports.
Actors like Duff and Jessica Simpson, who reportedly earned $2.5 million for Dukes of Hazzard, must find a way to turn their slim movie paychecks into (a) lifetime salaries for their squadron of chittering assistants, each of whom earns at least $35,000; (b) payments on, say, an $8.5 million house in Malibu; (c) upkeep on a fleet of SUVs equipped with spinning gold rims and a tiny man who lives inside the wheel well to keep the undercarriage clean; and (d) food for their ever-growing battalion of Burberry-clad Chihuahuas.
In other words, stars may be rich, but their tastes are usually even richer—which means they need to find ways to profit from investments.
The most popular method these days? Real estate.
Stars are also dipping into stocks, bonds, mutual funds, hedge funds and, of course, giant, sparkly rocks. Like most mortals who have money to invest, stars are usually advised to diversify.
“Unless someone is an insider or affiliate of a publicly traded company, usually owning a lot of stock within one company is strongly discouraged,” says Tammy Trenta, a Beverly Hills financial planner.
Trenta herself exemplifies yet another strategy stars often use: entrepreneurship. Trenta has a handbag line called Theresa Kathryn. Gwen Stefani is selling clothing and accessories from her L.A.M.B. fashion house. Simpson is making wigs now. Carlos Santana has, quite inexplicably, manufactured some suspiciously cute women’s shoes. Like I said: Diversify.
Other aspects of a star’s investment life aren’t so normal.
“The [investment] accounts are normally opened in a business name, such as the star's personal entertainment company, with its own tax ID,” Trenta explains.
So, Mel Gibson could be making all of his money in a chain of skinhead strip joints called Sugar Tits, and we would have no idea.
A smart star also meets with an investment adviser at least once a year to make sure no one is stealing—or giving the celeb bad advice. And there have been some very bad investments.
Back in the 1990s, John Cusack and Sylvester Stallone invested in a private fund called Lipper Convertibles. Stallone invested more than $2 million and, according to reports, made at least a million more as part of the deal. Cusack also reportedly made a healthy bundle.
But the fiscal strategy backfired after the fund collapsed in 2002, and fraud charges were brought against the portfolio manager. This past August, clients who lost their money sued the actors and other more fortunate Lipper investors, saying their profits were “unjust.”
If a government trustee gets his way, Cusack and the others will have to return their Lipper profits, so they can be pooled and split evenly among winners and losers. The actors, meanwhile, have filed court papers insisting they have done nothing wrong and should be allowed to keep their money.
Time for Sly to redirect his funds into a handbag business.