Why Do Some Celebrities Make Bad Investment Decisions?

A major investment scandal occurs once every few years. I hear that famous celebrities have lost money. Being rich doesn’t mean being smart. As a money manager magazine ad once said, “Making money and managing money are two different skills.” Why do some celebrities make bad investment decisions? , how does it help persuade clients to accept your advice?

1. They believe the good times will last forever. This often happens to people involved in professional sports. They assume their careers will last forever. They might think that product sponsorship deals come after they quit the game.

good adviser: Remind clients that the future is unpredictable and they need to set aside money for the good times. Caesar may have had a triumphant parade, but there was a man whispering in his ear, “All glory is fleeting.”

2. They get bad advice from the wrong people. We often hear stories about celebrity business managers who were ill-qualified for the job, had conflicts of interest, or simply made bad decisions. They may be childhood friends.

good adviser: Many companies have professionals such as athletes and lottery winners.

3. They don’t take advice. They may not pay attention to their investments. The person advising you may not be reachable. They think they are smarter than their advisors.

good adviser: They recognize that busy people need professional money management. Let others make your day-to-day buying and selling decisions. Professional money management is often a good fit. Advisors schedule regular meetings well in advance.

Four. they do not diversify. They invest in several stocks and industries in hopes of winning big. They don’t understand that it’s better to get conservative returns over the long term through liquid securities than go after big scores.

good adviser: It may sound tedious to clients, but they try to keep investors focused on the components of their portfolio.

Five. They don’t understand the risks. They help a friend venture into the restaurant business, not knowing that his 30% of restaurants will fail in his first year. (1) Only 1 in 5 Broadway shows have the potential to recoup their costs. (2) They invest in unproven ideas in the hope that they will pay off big.

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