Financial Advice For Athletes

Handling Risk

noreply@blogger.com (Mark) — Thu, 01 Sep 2011 04:35:00 +0000

It is important for every athlete to deal with the risks and challenges that will face them both during their playing careers and after their careers. One of the most effective ways to make sure that they have enough money to last them throughout their entire lives is by seeking good retirement plan management.

In a previous post I discussed how important it is to maintain the power of attorney and control over all of your financial assets.As long as you maintain control of your money, you can look for a qualified management company that will handle your portfolio for you. When you are dealing with larger sums of money, you need to take a conservative approach that focuses more on capital preservation than capital appreciation. You don't want to risk losing your hard earning cash to some investment scam.

Be sure to invest with a broker that offers protection for all of your assets. The best brokers have SIPC protection in which your assets are covered up to $500,000 per account. You should look for a reputable company to handle your retirement plan. You need to find one that has been around for years and has a sterling reputation in the industry.

Be sure that you clearly understand everything that you are investing in and where all of your money is. You should know the procedures for how long it will take to withdraw your assets and any penalties associated with withdrawal. Also,be sure that the bulk of your money is invested domestically and not in offshore accounts. Offshore accounts are often associated with scams and it can be very difficult to recoup your money from overseas institutions.

Rule Number 6: Create An After Retirement Income Stream

noreply@blogger.com (Mark) — Sun, 10 Jul 2011 18:43:00 +0000

The best time to start planning for your life after retirement is during your playing career. You can set yourself up for a cushy retirement by diversifying now. One of the ways that athletes can set their post retirement portfolios up for success is by dividend investing. Dividend stocks are companies that have yields that are above 3%. This may not seem like a great return on your money but for an athlete with a substantial sum of money, dividends can provide a stream of income to live off of.

Imagine that you invested $1 million dollars in a rock solid stable company like Pfizer. Pfizer has a tremendous amount of free cash flow and a great balance sheet. The stock is currently yielding 4% which equates to more than $40,000 a year in annual dividend payments. That is just on the income side. The stock also has slow growth potential which could offer provide stock appreciation for investors as well over time.

Pfizer is just one example of a dividend stock. You can get yields over 5% from the highest yield divided stocks. Telecommunication and healthcare stocks have yields of 5.5% and up. They have great growth prospects and pay out lots of income as well.

There is no reason for athletes to dabble in incredibly risky stocks and business venture when they already have cash. Their portfolios should consist of safe stable investments that will not lose their capital. Learn how to buy stocks that will work for you buy doing your homework first.

Athletes Are Falling Prey To Predatory Lenders

noreply@blogger.com (Mark) — Tue, 19 Apr 2011 05:44:00 +0000

The recent labor strike has forced many professional football players to seek out short term loans to meet their financial needs. Banks and financial companies are lending athletes money at interest rates starting at 25%. This is predatory lending at its best. Financial institutions are using the NFL strike as an opportunity to profit heavily from athletes misfortunes. These loans are low risk to the banks since they know that athletes receive multimillion dollar salaries and that the strike will be settled soon. Even the average NFL player makes over six figures in a year. The current NFL strike has demonstrated the importance of athletes being responsible with their money.

It is important that athletes save a significant portion of their earnings, invest their money in stable businesses with opportunities for growth, and generate a passive income stream. This will ensure that athletes will not get wealth but will be able to hold onto it and properly manage it.

The Importance Of Guaranteed Investments

noreply@blogger.com (Mark) — Fri, 04 Feb 2011 22:14:00 +0000

Professional athletes are typically risk takers by nature. They would not be in the positions that they are in life if they were not. You have to be some sort of risk taker to believe that you can overcome the long odds against you and make it as a professional athlete. Taking risks has its place in your financial life but only after you have structured your portfolio with guaranteed investments.

Individuals whose incomes are in the highest brackets should look to guaranteed investments with low tax consequences. There is no use paying all of your money to Uncle Sam. Municipal bonds are good low risk safe investments for athletes. Municipal bonds can have higher yields than many corporate bonds because they are free from state income taxes. They also are typically guaranteed by the state or local government. As long as you don't live in a bankrupt city, your investment should be fine.

One of the ways that you can make more money investing is by risking less of it.

Feeling Richer Next Year

noreply@blogger.com (Mark) — Wed, 22 Dec 2010 20:10:00 +0000

Do you want to feel wealthier in 2011? If so, then take a look at the 5 Steps To Feel Richer In 2011.

Rule Number 5: Avoid Speculative Ventures

noreply@blogger.com (Mark) — Sat, 27 Nov 2010 09:32:00 +0000

Too many athletes have lost their fortunes by trying to help family members and friends fund their speculative ventures. Your uncle, cousin, and best friend may mean well but they probably don't have any experience in running a company. There is no time for them to undergo on the job training with your precious money. If you decide to back a business venture, follow these 3 rules.

1. Be sure to check the background of all parties involved if you do decide to back a business venture. Check out their financial history, credit, and work background. You want to know as much as possible about everyone that you are going into business with.

2. You should always require a business plan from anyone whose venture you are considering backing. Have your attorney, financial advisor, and other professionals take a look at the plan. You need to know how feasible the business plan is and how long it will take you to recoup your investment.

3.Only commit as much money as you can afford to lose. We all hate to think that a business venture may not succeed but this is a distinct possibility. You should only risk what you are comfortable with losing.

Rule Number 4: Never Trust Investments Offering Huge Returns

noreply@blogger.com (Mark) — Thu, 21 Oct 2010 06:13:00 +0000

Many professional athletes have fallen prey to scammers that offer investment products with guaranteed high returns. Many "investment professionals" promise investments that offer double your money back guaranteed. Remember that if it sounds too good to be true then it is. There is no investment that offers guaranteed returns even close to 100%. The only guarantee that counts when investing is one given by the United States Federal Government (savings accounts, savings bonds, treasury bills, treasury bonds). The only risk to these assets is the risk of default by the federal government.

Mutual funds, bonds, and overseas investments that offer extremely high returns carry extremely high risk as well. Your potential for a great return on your investment is equal to your potential for a great loss on your investment. Any investment that can double your money can lose all of your money as well. Athletes should never invest in risky investments like hedge funds. John Elway just lost $15 million dollars investing in a hedge fund Ponzi scheme. Most athletes are already millionaires and have no need to chase high returns. Their primary goal should be preservation of capital and then a modest return.

Rule Number 3: Live Within Your Means

noreply@blogger.com (Mark) — Mon, 28 Jun 2010 05:57:00 +0000

ESPN has a story on the bankruptcy of Mark Brunell. Brunell invested in businesses in which he did not have more than enough cash to cover the liabilities. Mark Brunell was one of the best QB's in the NFL in the 90's and I am certain that he is a good man. Brunell invested in a number of different real estate ventures that have led him to the doors of bankruptcy. The only way that he can escape his creditors is through bankruptcy. Don't blame Brunell though. This can happen to just about anyone when you allow yourself to become overextended.

It's estimated that Brunell made over $50 million dollars during his playing career. It's believed that Brunell now has less than the $3 million dollars needed to cover the loan repayment. While we shouldn't mire in the misery of others, you can learn an important lesson from the Mark Brunell case. You have to live within your means. Even athletes have to budget their money. They make a great sum of money for a limited time and need to adjust their spending so that they can maintain their standard of living after the glitz, glamour, and big contracts are over.

Rule Number 2: Save Save Save!

noreply@blogger.com (Mark) — Sat, 12 Jun 2010 19:28:00 +0000

Many athletes generate a great sum of money but don't have anything to show for it at the end of their careers. How can you avoid this problem? Save your cash! A good rule to follow is to save at least 10% of your income from every paycheck. No excuses! This money should only be placed in your savings account. This money is not for investing, speculating or starting a business. This is the money that you will use for a financial cushion.

Your best bet is to save money in a FDIC insured savings account or a NCUA insured credit union. Both organizations are insured by the Federal government. Credit unions often offer a higher return on your money than commercial banks. These saving accounts are insured up to $250,000. If your account balance exceeds $250,000, open another savings account! You never want to place more money in an account than the government will reimburse.

You can also deposit money in a certificate of deposit. Certificates of deposits are guaranteed investments as well. Checking, savings, certificates of deposit, and IRA's are FDIC insured. Savings for retirement should always be in guaranteed securities. Only trust guarantees by the United States Federal government. Don't listen to personal guarantees from financial advisors, money managers, or any other financial professionals. Even investments guaranteed by foreign governments can be difficult to enforce.

Saving money is contagious. Remember that 10% is the minimum that you want to save. You can go higher. If you want to save 15 or 20% of your money, just do it!

Photo by: Tony Crider

Rule Number 1: Never Sign Away Power Of Attorney

noreply@blogger.com (Mark) — Mon, 07 Jun 2010 19:16:00 +0000

It doesn't matter who the person is. It could be your agent, financial advisor, publicist, or your best friend, never give anyway a general power of attorney over your finances. A general power of attorney gives an individual full power over all of your finances. The individual is supposed to act as an agent on your behalf but as so many athletes find out; these individuals often act in their own best interests.

Here are a few of the issues with granting someone general power of attorney:
1) They can write checks that you know nothing about.
2) They can sell off your assets (stocks, bonds, mutual funds, businesses).
3) They can enter you into binding legal obligations. (debts)

The greatest power that you should grant anyone over your finances is a limited power of attorney (LPOA). A limited power of attorney gives an individual the right to perform certain transactions that are spelled out in a written document. The action has to be clearly stated in a legal document and the agent cannot go outside of the scope of this agreement.
This way you can protect your finances. A LPOA should be used for whoever buys, sell stocks and bonds for your account.

Never give anyone the power to write checks on your behalf. It doesn't matter what the circumstances are. No matter how busy you are, Write your own checks.

Financial Advice For Athletes

noreply@blogger.com (Mark) — Mon, 07 Jun 2010 19:08:00 +0000

Welcome to my new blog Financial Advice For Athletes! I got the idea to start this blog from an article that I wrote for Investopedia. The article ran on Yahoo Sports and detailed how almost 80 percent of National Football League players and 60 percent of former National Basketball Association players end up broke within five years of retirement. This blog will aim to help athletes make solid financial decisions and financially plan for life after retirement.

For more information on investing and making money including ebooks and resources, visit Buy Like Buffett.