By Vasilia Polycarpou, The Sport Financial Literacy Academy
The great desire for financial freedom is about having the resources to afford the lifestyle you wish and desire. Investing is one of the key ways to achieve this, allowing you to grow wealth through additional income streams.
Making uninformed decisions can lead to significant financial misfortunes for many athletes, such as Scottie Pippen’s losses. Scottie Pippen reportedly lost $27 million due to bad real estate investments and poor financial decisions. Ismail Raghib also experienced multiple failed businesses, showing the importance of making educated investment decisions. Financial predators often offer “get rich quick” schemes, so athletes need proper knowledge and information.
When making investment decisions, having the right knowledge helps form the foundation for effective strategies and success. Basic investment knowledge provides the tools for financial success and growth in wealth management over time. With a wide range of investment options available, it’s crucial to study the market for proper assessment. Researching the market helps identify trends, assess investments’ quality, and understand any potential issues before making decisions. Conducting due diligence before making investments reveals potential risks and better insight into market movements and conditions.
Having an investment advisor is crucial for building an effective long-term investment plan and making informed decisions. Advisors guide you in avoiding emotional decisions, protecting you from fraudulent schemes, and ensuring consistent financial success. When choosing an investment strategy, consider your financial goals, timelines, and how much you’re willing to invest. It’s essential to factor in risk tolerance, time commitment, and the type of investments that interest you. Investing in something that aligns with your beliefs, like Conor McGregor’s passion for luxury menswear, can be rewarding. Conor McGregor created his luxury menswear brand “August McGregor,” in collaboration with David August Heil, boosting his income.
When making investment decisions, assess your risk appetite, as each investment type carries different levels of risk and reward. The greater the risk of losing money, the higher the potential return, so understand your risk tolerance well. Diversifying your investments helps reduce risks by allocating funds to various assets that won’t all move together. Magic Johnson’s well-diversified investment portfolio includes real estate, team Liquid eSports, MLS’s LAFC, and 125 Starbucks locations. Magic Johnson’s net worth of $600 million in 2022 shows how diversified investments lead to long-term wealth and success.
It’s crucial to use risk capital for investments, ensuring you can afford to lose without jeopardizing financial security. Always have an exit plan for your investments, knowing the liquidity level of your assets helps plan this step. Athletes must start investing early to secure long-term financial freedom and prepare for life after retirement from sports. Caution and careful consideration of both risks and uncertainties in investments are essential for securing financial stability.
The Money Smart Athlete® Blog is established and run by the Sports Financial Literacy Academy® (SFLA). Through its education programs, the SFLA has the vision to financially educate and empower athletes of all ages to become better people, not just better athletes. For more information on our courses, our SFLA Approved Trainer Program®, and how they can benefit you and your clients, please get in touch with us at [email protected].