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Money Smart Athlete Blog

Financial Literacy

Building and Maintaining a Financial Plan, Financial Literacy

Athletes: How should your income affect your investment choices

Last week we explored the concept of Risk Appetite and its three basic descriptive categories: risk-averse, risk-seeking and risk neutral. Understanding your Risk Appetite or Risk Tolerance is one of the major factors that you have to take into account when creating your investment plan. The second important factor relates to your income; these two concepts are closely intertwined.

Financial Literacy, Risk Management

Athlete-Investors: Understand your Risk Appetite

When psychologists and sociologists study deviant behavior they tend to focus on socioeconomic backgrounds, conditioning and environmental and structural factors. Economists on the other hand, for right or wrong, have come up with a different perspective: risk-appetite. They argue that people commit crimes as rational beings weighing risk against gain. In the case of criminals, prison sentence against loot. The rational response to risk is not necessarily to avoid it at any cost but to take it into account in your decision making. Risk appetite refers to the amount of risk that an individual or organization is able and/or willing to accept in pursuit of certain objectives. There are three basic categories of risk appetite: risk-averse, risk-neutral and risk-seeking. Every single individual has their own risk appetite, including athletes.

Financial Literacy, Special Themes

The Best Athlete Investors

Despite being well paid, many professional athletes are looking for alternative sources of income to grow their wealth. To this end, they often use their sports earnings to invest in various ventures and projects. Most investments are usually made after retirement; however, we have a number of cases where athletes begin investing way before they retire.  The rationale behind athletes’ investments is the creation of alternative sources of revenue which can potentially lead to the creation and accumulation of wealth. 

Financial Literacy, Special Themes

Athletes and Investments: Keep an eye out for market trends

The significance of creating a financial plan that can eventually guide athletes to financial freedom, has been reiterated in a number of articles, here on the Money Smart Athlete Blog. Being able to choose wisely when, where and how to invest money, in order for them to grow, is a very critical component of a financial plan which can help athletes meet both their short and long-term goals they set.

Financial Literacy

The complementary relationship between financial literacy and the athlete’s advisers

Athletes particularly the most successful and famous ones have an army of advisers behind them, regulating their every move and advising them on various aspects of their lives ranging from investments to public conduct. Nonetheless, a certain degree of financial literacy is still vital irrespective of how many advisers an athlete has at their back or who those advisers are. At the end of the day, nobody cares as much about your future as you and you should never delegate the handling of your interests entirely to your advisers. Hence, the relationship between financial literacy and your team of advisers should always be seen as complementary and not as substitutive or mutually exclusive.

Financial Literacy

Athletes and Investment Basics

The reward for athletes who reach a top level in their sport, does not only come in the form of public recognition and a display case full of medals. Most professional athletes are privileged with earning what an average person earns in a lifetime, in just a few years. Many will squander this money away in a short time, but others will make the right decisions, including investments, that will allow them to retain their financial freedom and security after their retirement.

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