How can you go from earning $150 million in 15 years, to being millions of dollars in debt?
Quite easily it seems if you’re American actor Nicolas Cage, whose extravagant lifestyle and eccentric investments left his finances looking more like a horror story than a heroic Hollywood adventure.
In the late 1990s and early 2000s Cage was on top of the movie-making world, raking in around $40 million a year as one of the silver screen’s biggest stars.
Unfortunately, he also seemed to be among Hollywood’s biggest spenders, splashing out on everything from dinosaur fossils to a nine foot tall pyramid tombstone, not to mention a string of lavish property investments that included paying $3.4 million for an infamous haunted house in New Orleans.
While his $150 million fortune may not have Gone in 60 Seconds, it has certainly hit plenty of major speedbumps in recent years, including the collapse of the US housing market, and a $6.2 million bill from the IRS for unpaid taxes.
At one point Cage even filed a lawsuit against his advisers for fraud and negligence, before being counter-sued amid claims of his extravagant spending.
While Cage’s dramatic reversal of fortune is not the average riches to rags story, the reasons behind his financial downfall are just as relevant whether you’ve got $100,000, or $100 million on the line.
Spending more than you can afford, regardless of the size of your pay packet, is always going to end in disaster.
Attempting to avoid your financial obligations will always come back to haunt you.
And if you’re saving and investing for the future – whether it be for a comfortable retirement, or to provide a nest egg for your family – it’s more important to keep your eye on the ball than plan how you’ll celebrate when you hit a home run.
All too often investors make the mistake of being flashy, instead of conservative. Going for the big play, rather than a series of smaller, safer plays that would have won the game over time. Leading with emotion instead of logic.
What it really boils down to is one simple fact – it’s ok if your investments seem boring.
To be financially successful you don’t need to bet the lot on Bitcoin, find the next Apple or Netflix, or run a portfolio of negatively geared investment properties.
The secret is far simpler.
It’s spending less than you earn, saving for the long term, investing according to your values and goals, and accepting that there are factors that you can’t control, such as the economy, property prices, investment returns, and global events.
A famous sports coach once said, ‘You don’t need the big plays to win, you just need to avoid the dumb ones’.
The same can be said for investing. Keep it simple, stick to the plan and play the long game. Keep your eyes on the prize and you’ll be less likely to get distracted by those promises of short-term gain, which, inevitable, only lead to long-term pain.
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