Low-cost Index Fund Might Have Worked Better

[mickeyd]

The thought occurs to me that I don't ever recall reading about sports stars dumping their mega-millions in a Vanguard fund ( say Total Stock Market Index) and having to file suit several years later. Yet this kind of report is not that unusual.

“Over the course of 17 years, I invested in a series of opportunities presented by Charles Banks, on his assurance that we were working together for my family’s long-term financial security,” Duncan said in a statement. “Banks exploited my good intentions and our relationship for his personal gain and my substantial loss. I’m saddened that my name will join the list of athletes to fall victim to this sort of misconduct.”
Duncan, 38, said he met Banks during his rookie year in 1998. At Banks’s urging, the athlete invested several million dollars in hotels, beauty products, sports merchandising and wineries that the adviser owned or in which he had financial stakes, according to the filing.

Spurs’ Tim Duncan Said to Lose $20 Million to Bad Investments - Bloomberg Business

 

[samclem]

Sports stars, entertainers, lottery winners--it would seem that the very first logical thing to do when the money is flooding in is to set up a secure lifeboat that would allow a comfortable existence for one's remaining years even if the money stopped immediately and all the "swing for the fences" investments crumped out. With just 10% of what this guy lost, he could have set up some low-cost ETF/funds, withdrew 4% per year, and had an annual income of $80K. Sure, that's not "living large" by the standard of a sports star, but it seems to be enough for most people and would be a great backup/supplement to whatever "next career" the star might want to have.

 

[dallas27]

My practice partner growing up has done very well in the UFC, but his career is just about over now. I dont keep in touch and know nothing of his finances, but i often worry he will be broke in ten years.


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[retirementguy1]

Yep, most athletes are financially illiterate. They often come from humble backgrounds. Watch the ESPN 30 for 30 "broke" on Netflix. If you think his FA stole from him, he went through a divorce in 2013. He lost way more than $20mil in that deal and I never saw her on a court.

 

[shasta]

I have a friend who just got a decent portfolio starter balance from a death in the family.

What has she done so far? Kept the cash in her checking account. Comments that she wants to buy a Lexus.... :/ I told her to at least put it in savings till she can learn more. She said "I don't have a savings account"

Needless to say I'm not losing sleep but I worry about her making the most of this cash from her fallen relative. Tired of seeing everyone in financial ruin. (Plus it just makes them covet my comfort)

 

[racy]

Personal Finance 101 should be a required subject in high school.

 

[MRG]

Personal Finance 101 should be a required subject in high school.

+1
Best math class I ever had we spent 12 weeks on basic stuff, checkbook and balancing, even following stocks. Obviously not enough, but at least they did teach a little basic skill.

I did work with a former NFL linebacker. He played behind a future HOF guy, played mostly on special teams. I think he knew in college he would never make the big bucks, so he worked to come out with a decent degree. His professional career was maybe 5 years.

He obviously didn't make enough to retire on. I always had the impression he did the right things as far as savings, cars...., I think this guy is in the small minority of players that look beyond today's money.

It is sad so many of these people fall prey really bad advisors. Retirementguy suggested many come very modest families, I believe that's true. The kind of money they can possibly earn could change so many entire families lives.

 

[2017ish]

Personal Finance 101 should be a required subject in high school.

From today's Journal, for a slightly different take: A new study suggests that children need to learn more math, not finance, to be better with money. Harvard Business School's Shawn Cole discusses with WSJ's Tanya Rivero. The Smart Way to Teach Children About Money - WSJ