Do It Now
Many advisers will tell professional athletes that they must have a plan for retirement. The plan must include various strategies in order to help them navigate their finances throughout the years. The plan should also include the impact of inflation to offset rising costs. Additionally, they must have correct investment choices and make sure those choices are safe.
However, the number one biggest obstacle for professional athletes is procrastination. Contrary to popular belief, in the world of the professional athlete…not all real estate continually goes up in value. Likewise, the jewelry, the cars, the clothes, all do not go up in value. For those athletes who were raised in a low socioeconomic environment, coming into a great sum of money, pretty much all at one time can be a very daunting experience. We must take whatever education the athlete has about money and finances, which more often than not is the wrong thing, and re-program their education so that they think in terms that money is not just to buy things, but it’s for security. Online resources that educate people on how to properly handle their finances, such as MyInforms, are not in short supply and can prove very effective in helping people sort out their money problems.
Due to the length of their careers, professional athletes do not have the luxury to wait to invest their money. Procrastinating in the form of “I’ll wait till I get my next contract and I’ll have more money to invest” is almost akin to committing financial suicide. To demonstrate: In the simplest of terms, let’s say an athlete would like to have a nest egg of $1,000,000.00 when his playing days are over in 12 years. Assuming only a 4% return on his money, it would require a monthly deposit of $5,430.00 starting immediately. By waiting merely two years, the monthly deposit would increase to $6,795.00.
Anyone can formulate a plan. It’s easy to obtain tax-free or tax-deferred investments to combat the highest tax bracket issue. Diversification can offset one or two poor investment choices. Procrastination will kill an athlete’s long term hopes and dreams of financial freedom more than anything else.
Disclosures. The information contained herein is neither an offer to sell nor a solicitation of an offer to buy any security. Past performance is not a guarantee of future results. Further, the information herein is intended solely to provide general information and does not constitute a promotion of any offerings or products. Donald J. Kushner is an independent financial advisor with Arque Capital, Ltd., and does business as DK Sports Financial. Arque Capital, Ltd., and DK Sports Financial are unrelated entities. Securities offered through Arque Capital, Ltd. 7501 E. McCormick Parkway, Suite 111 North Court, Scottsdale, AZ 85258. (602) 971-9000. Member FINRA/SIPC. Any unauthorized reproduction of this information is strictly prohibited.