Wednesday, August 31, 2011

Handling Risk

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.

Sunday, July 10, 2011

Rule Number 6: Create An After Retirement Income Stream

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.

Monday, April 18, 2011

Athletes Are Falling Prey To Predatory Lenders

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.

Friday, February 4, 2011

The Importance Of Guaranteed Investments

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.

Wednesday, December 22, 2010

Feeling Richer Next Year

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

Saturday, November 27, 2010

Rule Number 5: Avoid Speculative Ventures

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.

Wednesday, October 20, 2010

Rule Number 4: Never Trust Investments Offering Huge Returns

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.