Dead celebs and their curious estate revelations

 

What the estates of George Michael, David Bowie, and Prince reveal about investment trends. (Getty Images)

When it comes to celebrities and their financial decisions, you’d be forgiven for expecting to read stories like those attributed to footballing legend George Best.

“I spent 90% of my money on booze, birds and fast cars,” he famously said after his early retirement in the 80s. “The rest I just wasted.” Such comments are not only regarded as being politically incorrect and financially irresponsible in 2017, they also fail to tick any of the boxes associated with sensible retirement planning strategies.

In the aftermath of the Great Celebrity Cull of 2016, we have access to some more encouraging financial case studies this year. It seems even the most hedonistic stars are familiar with the concept of wealth management now.

From George Michael’s pad in the country and town house in Highgate, to David Bowie’s extensive art collection which sold for double the original estimate of £24m, what is interesting about these alumni of 2016 is the way they favoured tangible assets as a core investment holding.

No one fits that profile more than Prince, who at the time of his death, had collected 67 10-ounce bars of gold, worth $840,000.

The haul represents a relatively modest diversification compared to his total wealth ($200m, according to the Associated Press). But its a curious stash nonetheless to be hoarding at the expense of a portfolio of stocks or bonds. Having either of the latter in your portfolio does suggest a degree of education and even sophistication with regard to the allocation of assets.

By contrast, piling up a portfolio of 12 properties worth $25m – which Prince did – suggests there was nothing more complicated in his strategy than keeping his money “safe as houses”.

It may very well be the case that there was a certain degree of paranoia in terms of his having a bombproof asset that cannot be eroded by a central bank.

It is, however, worth noting that in the 1930s it was the very perception of gold’s safety that was its undoing. In the aftermath of the 1929 stock market crash, and subsequent depression, then-President of the US Franklin D. Roosevelt made owning gold illegal. The ban was designed to prevent a run on the banking system, so it made sense.

The decade presented exactly the type of financial environment that hoarders of the yellow metal believe their strategy will protect them from. Instead, it became the case that anyone found storing gold would be fined twice its notional value. Thankfully that law was overruled in the 70s.

Back to the present, it’s worth mulling over whether Prince’s investment in gold last year would have been a winning one had he lived.

In the immediate aftermath of the Trump Presidential victory, gold peaked at $1,337 before falling by over $200. Since the start of this year, and in the run up to The Donald’s inauguration, we’ve seen quite a sharp rally back above $1,200.

It may be an acknowledgement that we are about to have a Twitter-toting loose cannon in the White House. If a combination of those fears, and the latest attempts by Trump to cool off the US Dollar take hold, one might imagine that a retest of last year’s best levels above $1,350 could be on the cards by the end of the first half of 2017.

How to save for a (Purple) Rainy day

If Prince had taken inspiration from his hits for his investments, what would his estate be worth?

Little Red Corvette, 1982: Had Prince shelled out around $26,000 for a ’65 Corvette Sting Ray back in the 1980s, he could have sold it today for around $159,000. A 511% return on investment.
Alphabet Street, 1988: Had Prince hung onto his “daddy’s Thunderbird” (the vehicle that got him down to Alphabet Street), he could have sold the hand-me-down at auction for around $12,000.
Diamonds & Pearls, 1991: Prince could have bought a 1-carat flawless diamond for $15,500 in 1991 would fetch around $26,000 today (+67%).

Pearls are a harder investment to judge, but had he bought a pair of natural saltwater pearl earrings in 1991, they might have sold for up to £1.74m in 2016.

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