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How and Why Athletes Go Broke (2009)

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Re: How and Why Athletes Go Broke (2009)

#241

Post by uiri »

WalterBright wrote: post #183
WalterBright wrote: post #126

Earlier quoted context omitted.

Your bank will stop calling you if you threaten to move your account.

BTW, any sane business would put their best salesmen on dealing with their wealthier clients, and those salesmen will know that haranguing customers on the phone is hardly the best way to sell them.

Actually, you might be surprised at how often a soft no means yes, in business. Of course, in one's personal life, people try not to be rude, so a soft no is often really a hard no. An athlete or doctor or lawyer who is too busy to give the salesman the time of day might be really interested but simply too busy to make time for the call. A good salesman won't give up after the first soft no. It is often the case in these situations that persistence is polite.

Re: How and Why Athletes Go Broke (2009)

#242

Post by jakidud »

There was a podcast by Freakonomics where they tried to educate ex-NFL players about finance and economics. It seems one of the most important differences from the average person is that NFL players earn almost all their life's earnings in the first quarter of their lifetime

Re: How and Why Athletes Go Broke (2009)

#243

Post by mysterypie »

dandandan wrote: post #240
rconti wrote: post #210

Earlier quoted context omitted.

I suspect this is per depositor not per account... but I'm not sure.

It's per account and can be doubled with a "payable on death" designee.

> It's per account

I think you're mistaken about the first part of your statement:

The FDIC says, "All single accounts owned by the same person at the same bank are added together and insured up to $250,000." (see https://www.fdic.gov/deposit/covered/categories.html )

But you are correct that it can be doubled, tripled, quadrupled, or even greater by opening different account types such as a Retirement Account, a Joint Account, a Revocable Trust Account, etc., at the same bank since each account type seems to get separate treatment (according to the same FDIC link).

Re: How and Why Athletes Go Broke (2009)

#244

Post by [deleted] »

uiri wrote: post #241
WalterBright wrote: post #183

Earlier quoted context omitted.

BTW, any sane business would put their best salesmen on dealing with their wealthier clients, and those salesmen will know that haranguing customers on the phone is hardly the best way to sell them.

Actually, you might be surprised at how often a soft no means yes, in business. Of course, in one's personal life, people try not to be rude, so a soft no is often really a hard no. An athlete or doctor or lawyer who is too busy to give the salesman the time of day might be really interested but simply too busy to make time for the call. A good salesman won't give up after the first soft no. It is often the case in t…

[deleted]

Re: How and Why Athletes Go Broke (2009)

#245

Post by alasdair_ »

ChuckMcM wrote: post #238
freddie_mercury wrote: post #172

Earlier quoted context omitted.

This is not a good way to calculate it because it ignores volatility of the investment. There are decades of publications in the topic of sequence of returns and the impact on retirement. $25,000 is likely a little too low but $70,000 is way, way too high. Most people who've done research agree that something like $25,000 to $35,000 a year from $1,000,000 is reasonable for someone retiring extremely young.

Which corresponds to 2.5 - 3.5%. Back in the 90's when I was doing my research 4.2% was the "magic" number. Of course your life expectancy has to factor in to, so if you boost your withdrawal rate as you get older you can try to hit $0 right when you die. (like timing the market, not recommended) As people point out the thing to remember is that your costs change too, your health care costs go up but if your family m…

May I suggest taking a look at https://earlyretirementnow.com/2016/12/07/the-ultimate-guide... - it's the best guide I've ever found on optimal safe withdrawal rates.

Re: How and Why Athletes Go Broke (2009)

#246

Post by sytelus »

TLDR; 60-70% of players go bankrupt or are under financial stress after they retire. Reasons are (1) they don't follow balanced mix of investments and squander money in opportunities presented by smooth talkers (2) they end up hiring people who are friends of other players as opposed to actual professionals to manage their assets (3) divorce.

The recommended mix of investments for 20+ million assets is apparently "5%to private equity, 7%-12% to real estate, 50%-65% to a mix of public securities(stocks, mutual funds and the like) and the rest to alternatives such as gold and hedge funds.".

Re: How and Why Athletes Go Broke (2009)

#247

Post by richardw »

rconti wrote: post #212
alvah wrote: post #86

Earlier quoted context omitted.

I'm not convinced it's as black and white as that. Look at the example given (Rocket Ismail). Not to pick on an individual, but he doesn't seem to be taking responsibility for any of his losses, even with the supposed "hindsight" he now enjoys: -"One of his advisers pitched the idea as"fail-proof, with no downsides," Ismail recalls. He never recouped his money and has no idea what became of the restaurant." -(COZ Rec…

I think the issue is, we're all thinking they're stupid for not realizing the risk of their investments, but maybe they do! Or maybe they recognize half or a quarter of the risk. But they don't understand the alternatives. Nobody is on the "other" side saying "invest in mutual funds!" They probably get "exciting business opportunities" and "help your friends and family" and "spend it all on hookers and blow!" and the…

I suspect that you're right and possibly because of the following reason: they've had a lifetime of outsize results. They were always the fastest, strongest, got the girl. Now comes along either a normal ETF with average returns, or the promise of outsized ones sold as insider tips between experts. It'd be tempting and in-character to swing for the fences.

Re: How and Why Athletes Go Broke (2009)

#248

Post by jwagenet »

grahamburger wrote: post #197
pzxc wrote: post #193

Earlier quoted context omitted.

The math books teaching the formulas for calculating interest is not the same as personal finance education. As a geek of course I knew all the formulas, I couldn't even take a math class my senior year because I took Calculus as a junior and they ran out of possible math classes for me to take. But although I knew all the formulas, nope, I can't recall any math problems, or any explanations/descriptions, relating to…

I see what you're saying, and I didn't learn a lot of those specifics in school either (or actually I'm pretty sure I leaned some of them but have forgotten and had to learn again, which is basically my larger point). I'm not sure that I agree that we should be dedicating time in school to things as specific as what you listed (but maybe I could be convinced!). It seems to me that the few kids that would actually pay…

We should absolutely be dedicating time to personal finance while kids are in school. I especially think a personal finance class would be much more useful as a junior or senior math requirement than stats, trig, or calc in under-served communities where financial skills would be most valuable. Yes, maybe it doesn't make sense to be begin committing serious time to any topics more complicated than saving and spending management until kids are old enough to get jobs. But to argue the topic is too boring for kids to pay attention is pretty lame considering many of my peers in highschool were pretty disinterested in the whole thing to begin with. At the very least, a reintroduction of the topics every year or so would provide kids with some recognition of the topics and a more structured curriculum requiring students to track (preferably) real expenses and create budgets would probably go a long way.

Re: How and Why Athletes Go Broke (2009)

#249

Post by thaumasiotes »

ChuckMcM wrote: post #112
test6554 wrote: post #62

Earlier quoted context omitted.

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

Its true they could. I think of it like auto repair shops. Here is something really valuable to your daily life, and you want it taken care of properly, but how do you verify that the person you are talking to is honest and trustworthy? You could buy the factory service manual for your car and read it cover to cover, with digressions into the parts which are assumed to be known by anyone servicing a vehicle, and then…

> In my experience in the Bay area with people who suddenly have more wealth than their friends and family ever did, there are two ways that people seem to split. Either they start splendiforus spending because they are "rich" or the start calculating what sort of 'burn rate' they can support drawing down at a rate of anywhere between 2% and 10% of their net worth.

Nobody tries to keep their costs below their income? If I was suddenly wealthy, I'd try hard to make sure lifestyle spending was covered by growth in my wealth, not by drawing it down.

Re: How and Why Athletes Go Broke (2009)

#250

Post by Consultant32452 »

hi41 wrote: post #160
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…

Yes, my thought too. I want to learn about managing money properly. Do you know any good book which is friendly to lay persons like me. I don't want the book to be too dry but also don't want a book like the idiot guide which tries very hard to be funny.

I recommend the books by Dave Ramsey. Here's got everything from personal finance to wealth management.
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