[QUOTE=RickJay]
The other day my wife and I were talking idly about what we’d do if we won $25 million in the lottery. (it’s important to note for the sake of this story that here, lottery winning are tax free.)
I said that my inclination would be to just take half of it and put it in a savings account and get four percent on it. That’s $500,000 a year. My reasonaing was that our bank is a gigantic, regulated Godzilla-bank that will almost certainly outlive us. If we wanted to be really safe I’d hold savings accounts with three huge Canadian banks. When she pointed out that this was probably not the most tax- and return-friendly investment strategy, I said, “Yeah, but it’s the safest one. And that would be $500,000 a year. So who gives a shit?”
I always wonder, when you hear about super rich athletes blowing all their money in “investments,” why, even if they didn’t understand the ins and outs of mutual funds and stock portfolios, they didn’t just put the money in a savings account. If you’ve got a few million bucks and you walk into Bank of America and tell the manager “Here, I have a few million bucks. Give me five percent guaranteed,” he’s going to ask you if you’d like a blow job with that. When you have millions, it really isn’t going to matter to your actual quality of life in the long run if you make five percent or seven.
I know very little about money but I understand that a savings account with a big chartered bank is a pretty safe place for it. But maybe some people know even less than me. But that would make them stupid. So, I still nominate Robin Yount.
[/QUOTE]
Well, Derek Sanderson is now advising athletes on how to handle their money, and he now tells athletes almost exactly what you just said. When you get your first big signing bonus, when you actually have a hefty check in your pocket for the first time ever, THAT’s the time to do something to make the money grow. As you say, even if you stuck that first big signing bonus in something as petty as CD’s or a simple passbook savings account, you’d be generating big bucks that could keep you living in comfort for years to come.
But most young guys who get that big check think first of all the things they want to buy with it.
That MIGHT mean buying frivolous luxury items, but not necessarily. It might mean buying a mansion for your Mom, who supported you all your life. It might mean buying a lot of nice things for friends and relatives who didn’t have much. But the fact remains, if you’re spending that money and not giving it a chance to grow, you could be left with little or nothing… ESPECIALLY in the NFL, where contracts aren’t guaranteed, and the $100 million contract the newspapers announced might not end up paying you nearly so much.
