How and Why Athletes Go Broke (2009) • Hacker News Board

Re: How and Why Athletes Go Broke (2009)

#221

Post by brennoon » Sat, Feb 10, 2018, 5:34 AM UTC

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

I'm a senior in college and needed 3 more credits to fulfill my credit hours for graduation. I saw that we had a personal finance class open to any major. I find it ironic I've been waiting for this curriculum my whole life, and yet here I am able to take it during my last go-round as a student.

Re: How and Why Athletes Go Broke (2009)

#222

Post by hux_ » Sat, Feb 10, 2018, 5:36 AM UTC

rconti wrote: post #209

mobilefriendly wrote: post #149

Earlier quoted context omitted.

This highlights the problem-- the most "conservative" approach, a savings account, is actually TERRIBLE financial advice. First the money won't keep pace with inflation and second a bank failure will wipe out the fortune. That happened to savers in 2008, most notably the failure of IndyMac.

So- Your money not keeping pace with inflation is better than anyone profiled in the article managed. Worst case scenario, bank failure, they might still be better off.

People fall into two broad traps. Either they are loosing money for no good reason (a consumption culture with ever escalating healthcare/edu/housing prices makes this simple), or they are accumulating money for no good reason, thanks to some class they took that says beating inflation is the point of their story. Once your housing/family healthcare/edu expenses are taken care off kiddos, there is no good reason to be beating inflation. Unless you are trying to build the Taj Mahal or something.

Re: How and Why Athletes Go Broke (2009)

#223

Post by emodendroket » Sat, Feb 10, 2018, 5:40 AM UTC

tim333 wrote: post #186

WalterBright wrote: post #105

Earlier quoted context omitted.

The best thing a person can do in such a situation is to put the money in a savings account, and then set about learning what to do. Nobody is going to have their best interests at heart but themselves. If you want to have money, you have to learn to manage it yourself. There's not really a choice about it. Also, hire a properly licensed CPA. Make sure to listen to his advice on taxes. Don't give him a financial ince…

Savings accounts don't do great over the long term. The safest thing is usually just to buy real estate as long as the prices aren't stupid.

This article is from 2009, which, if you'll recall, was not a banner year for demonstrating the stability of real estate investments. Also, as detailed in the article, a big problem with real estate investments is knowing whether an investment is really worth what you are paying.

Re: How and Why Athletes Go Broke (2009)

#224

Post by emodendroket » Sat, Feb 10, 2018, 5:42 AM UTC

jdavis703 wrote: post #216

Jtsummers wrote: post #95

Earlier quoted context omitted.

You're right, them having debt like that means they're more likely to stick around (because they can't afford to quit). But it also means they could be more mercenary (seeking out the jobs that get them out of the debt, or let them keep spending themselves into debt). Debt also puts people into compromised positions. Having worked around defense stuffs, that's an exploitable position. And people will exploit it. It's…

For six figure debt? I was under the impression that six figure mortgages were pretty common...

The picture he has in mind here is probably more like six-figure credit card debt.

Re: How and Why Athletes Go Broke (2009)

#225

Post by emodendroket » Sat, Feb 10, 2018, 5:43 AM UTC

vostok wrote: post #141

nikanj wrote: post #131

Earlier quoted context omitted.

Except in this case it was Honest Goldman's Sound Financial Advice Inc advising you to buy, and Goldman's Shady Shell Fund Ltd selling. I don't think most clients of financial advisors check who's the counterparty in their trades. Legally, there's very little preventing your advisor from telling you to perform trades that make you poor and the advisor's buddies rich. A lot of the aftermath of the 2008 crisis boiled d…

I don't really see the issue unless there were incentives set up to encourage this and it wasn't properly disclosed. Usually when you trade with a bank desk you know that they're betting against you because they're the ones on the other side. If they weren't doing that then you'd always have to wait for a customer to take the opposite bet, but the market might move by the time such a customer appears. Generally you d…

As the article tells us, a lot of athletes walk into meetings with their advisers and just get snowed by a bunch of jargon they don't really understand. They're not necessarily sophisticated investors who even know to ask these questions

Re: How and Why Athletes Go Broke (2009)

#226

Post by emodendroket » Sat, Feb 10, 2018, 5:46 AM UTC

closeparen wrote: post #190

pascalxus wrote: post #123

At the end of the day, it's the same reason most people go broke: they know nothing about money. Unfortunately, Money is the most important thing in the world because you can't get anything without it. And yet, it's not even a primary subject taught in k-12. Where are people supposed to go for a decent financial education? Instead k-12 teaches kids about useless butterflies and countless other things that are of less…

>everyone should have the right to basic understanding of personal finances and basic economics. This is silly. Living within your means is like doing the dishes or the laundry. When someone "doesn't know how" or "needs to learn how" it's not that they're missing or failing to comprehend information. Even if they lack it, it's trivial to acquire. The relevant entities are discipline, habit, and values. This is not so…

Making a bunch of investments you don't understand well and losing your money I think is more a matter of education than "discipline."

Re: How and Why Athletes Go Broke (2009)

#227

Post by emodendroket » Sat, Feb 10, 2018, 5:47 AM UTC

JiNCMG wrote: post #214

30 for 30 did an episode on this. It was so interesting and while true many get scammed out of their money, a lot more are spending it check to check. Quotes from the show "I had more mortgages than HUD" "I had 30 to 40 cell phone contracts" "No athlete wants to earn a few percentage points in bonds. They wanna go for the big dollars, Open restaurants, clubs and car washes! They conquered sports now they will own the…

> Quotes from the show "I had more mortgages than HUD" "I had 30 to 40 cell phone contracts" "No athlete wants to earn a few percentage points in bonds. They wanna go for the big dollars, Open restaurants, clubs and car washes! They conquered sports now they will own their next endeavor"

I mean those all sound like athletes either getting scammed or getting in over their heads with business endeavors.

Re: How and Why Athletes Go Broke (2009)

#228

Post by emodendroket » Sat, Feb 10, 2018, 5:49 AM UTC

efa wrote: post #69

I don't know all the tax implications around huge salaries like these, but every time I read one of these stories I always wonder why they don't just stick their money in t-bills or CDs. Something completely risk free that will get a modest return. If you have 20 million in the bank do you really need to invest in high risk stuff to try to double your money? The problem is everyone they've ever known comes out of the…

I mean, it says right in the article. Besides the "friends" coming with "great investment ideas" that they have trouble turning down, the kind of person who becomes a pro athlete is often not the kind of person who thinks that investing your money in a mutual fund sounds like a good idea when they could be "swinging for the fences" doing something more tangible.

Re: How and Why Athletes Go Broke (2009)

#229

Post by emodendroket » Sat, Feb 10, 2018, 5:52 AM UTC

Skunkleton wrote: post #2

This sounds a lot like how most people go broke. Even when you are talking about people who have been fortunate enough to make a lot of money (like lotto winners), the story sounds the similar. Maybe we need better financial education in the public school system?

The article also makes the comparison to lottery winners, but I don't think "most people" go broke because they opened too many car dealerships.

Re: How and Why Athletes Go Broke (2009)

#230

Post by gech » Sat, Feb 10, 2018, 5:52 AM UTC

test6554 wrote: post #62

ChuckMcM wrote: post #55

Earlier quoted context omitted.

Agreed, look at it from their perspective. They haven't been around a lot of money before, they don't have a lot of friends who have been around a lot of money either, so they don't really know even what questions to ask to understand the people who are arguing to be their financial advisors. Perhaps major league sports would do well to help train their athletes in the basics of financial management in order to help…

It's not their responsibility though. The player could take a course on their own initiative.

Everyone but myself be damned.