By Lazaros Ioannou, APC Sports Consulting Limited
Athletes often build wealth at a young age and in a short time. That’s why creating long-term wealth matters so much. Whatever your financial goals—whether it’s funding your kids’ education or retiring on a yacht in Greece—investing can help you get there.
When you invest, your money works to grow more money. Over time, you usually earn higher returns than you would from a regular savings account. With a solid investment strategy, and guidance from financial advisors, you can grow your assets and fund big goals. These might include buying your dream home or car, starting a business, or paying for your children’s schooling.
Today’s investment world is complex. You need to stay educated and informed. If you invest in financial markets, you might benefit when companies do well. If you invest in real estate, rising property values could bring profits. Investment options are nearly endless.
Before you invest, understand risk and return. Every type of investment comes with its own level of risk and potential reward. Risk means your actual return may differ from what you expected. Low-risk investments offer lower returns, while high-risk ones can lead to higher rewards. Investing means giving up some financial safety in hopes of long-term growth. Choose a risk level that fits your comfort zone.
In this article we look into four ways through which Money Smart Athletes can create long term wealth.
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Your savings account
When you deposit money in a savings account, the bank lends it to others. You earn a low return, but your risk is also low. Your savings are protected up to a limit by authorities like the FDIC in the U.S. or EDIS in Europe. Always keep emergency funds in safe, low-risk accounts. But remember—money in savings just sits there. It doesn’t grow much.
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Stocks
When you own stock in a company, you partially own the company and have a right to a portion of the company’s value. You can profit by how the market values the asset you own. If the company posts a big profit, investors will want to own its shares, driving up demand for them and thus increasing their price. You can profit by selling your shares at a higher price than the price you bought them. To profit from the stock market you need to be guided by a professional financial advisor.
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Business
Being an entrepreneur and investing your money in a new or existing business, is not an easy job, as it requires not only money but also your time and an entrepreneurial mind set. That aside, it is an ownership investment with high potential returns. People such as Bill Gates of Microsoft and Elon Musk of Tesla have made huge personal fortunes by being entrepreneurial in creating products and services and selling them to the market.
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Real Estate
Buildings that you buy to rent out or repair and resell are considered ownership investments. The latest financial crisis followed by the housing market crash is a good illustration of the risks associated with investing in real estate. The house you purchase to live in is not considered an investment, as it’s not purchased with an expectation of profit.
Diversification is very important when you are deciding on your investment options. You should always try to keep your investment portfolio as diversified as possible so if one investment is not performing well, you may recover or minimize any potential losses from your other investments.
Making money through investing requires researching and evaluating different investments, not simply knowing the basics about investments. You need to be guided by a licensed professional on setting up an investment strategy based on your financial plan goals. For more information on the subject matter you may contact us at [email protected]