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06-17-2009, 01:55 PM
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#21
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2006
Location: Collin County, TX
Posts: 9,296
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Quote:
Originally Posted by HFWR
Spend 90% on sex, drugs, and rock-n-roll, then waste the rest...
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Save a few bucks for penicillin....
__________________
There's no need to complicate, our time is short..
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06-17-2009, 03:29 PM
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#22
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Thinks s/he gets paid by the post
Join Date: Nov 2005
Location: Colorado, USA
Posts: 1,127
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I'd warn him that he's likely to get bombarded with offers to help him manage his money and telling him he needs to act fast. He needs to be cautious and skeptical, and remember they they all make money for themselves with his money. He can stick the money in a couple of savings accounts until he really knows what he wants to do with it.
Coach
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06-17-2009, 04:22 PM
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#23
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Moderator Emeritus
Join Date: Sep 2007
Posts: 17,774
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I suggest he read the "Four Pillars" book cited above, or at least thumb through "Investing for Dummies," which should give him a broad (admittedly shallow) background about the concepts behind investing--asset allocation, determining risk tolerance, age-appropriate allocations, etc. so he'll know what people are talking about as he makes decision.
Cool that your family gets to enjoy watching him play professionally! And nice that he can finish his degree on MLB's dime when he's ready!
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
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06-17-2009, 04:31 PM
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#24
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Recycles dryer sheets
Join Date: Apr 2007
Posts: 491
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Realistically, a 21 yo concentrating on a career in MLB is not going to spend the time to learn investing. They need to find a hourly investment they can trust. They do exist, just hard to find.
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06-17-2009, 05:42 PM
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#25
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Quote:
Originally Posted by Walt34
At age 21 I'd buy a small house, an airplane, a speedboat, a motorcycle, and a Corvette. Then spend the rest on alcohol and women. One day in a drunken stupor I might think that maybe I should save a little bit.
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Quote:
Originally Posted by FUEGO
There wouldn't be much left for women and booze.
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Or airplane, speedboat, motorcycle or Corvette.
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06-17-2009, 05:45 PM
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#26
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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Quote:
Originally Posted by Culture
Realistically, a 21 yo concentrating on a career in MLB is not going to spend the time to learn investing. They need to find a hourly investment they can trust. They do exist, just hard to find.
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Uh, why not? There is plenty of down-time during season (think of all that travelling and hotel-room time) and even more in the off-season. And learning to invest is not rocket-science nor brain-surgery. To learn investing takes about the same amount of skills as learning to cook a hamburger or to drive a car.
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06-17-2009, 09:26 PM
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#27
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2008
Location: No fixed abode
Posts: 8,765
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If he's getting a $500K signing bonus, then I suspect his salary will be near or in the low millions. I would definitely recommend the rookie financial orientation process, and I also agree with Dex's insurance recommendation. I would also have him look for a financial advisor (fee only). I would absolutely not go with ANYONE who approaches him, not even me . Let him (or someone close to him - you, a responsible parent, like that) find one by researching them through normal channels. I assume he has an agent. If so, I would really hesitate to take his/her advice on a financial advisor. They are too conflicted, IMO.
Mostly I would park the money for a while (CDs, money market accounts, etc) after allocating a play fund that is just enough to have fun with, but not enough to Len Bias him. After the endorphins have settled a bit, then start allocating it out via a conservative AA.
Of course if he has a little left over, a fun investment like HFWR recommends would not hurt too much.
__________________
"Good judgment comes from experience. Experience comes from bad judgement." - Anonymous (not Will Rogers or Sam Clemens)
DW and I - FIREd at 50 (7/06), living off assets
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06-17-2009, 10:48 PM
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#28
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Moderator Emeritus
Join Date: Jun 2007
Location: At The Cafe
Posts: 6,873
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Kronk says it would be about $300,000 after taxes. Since he's young, I think he ought to go wild with, say, 10% of it and find a way to preserve the rest. That would be $30,000 to play with, not very much but would teach him the meaning of 10%.
OP, please ask him to join the forum so we can live vicariously. He could think about living the way we do, on just 4% or less of our PFs. Hope he can RE at some point.
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06-18-2009, 07:17 AM
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#29
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Recycles dryer sheets
Join Date: Jan 2007
Posts: 131
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Quote:
Originally Posted by harley
If he's getting a $500K signing bonus, then I suspect his salary will be near or in the low millions.
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The minor leaguers don't come close to the money that the is given out in the major's. As a rookie you start off in single A ball and then move up thru the system, some faster than others, but usually takes at least a few years for the player to develop and get promoted.
Google Answers: MLB and Minor league Minimum Saleries
First contract season: $850/month maximum. After that, open to negotiation
Alien Salary Rates: Different for aliens on visas--mandated by INS (Immigration).
Triple-A--First year: $2,150/month, after first year no less than $2,150/month
Class AA-First year: $1,500/month, after first year no less than $1,500/month
Class A (full season)--First year: $1,050/month, after first year no
less than $1,050/month
Class A (short-season)--First year: $850/month, after first year no
less than $850/month
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06-18-2009, 08:18 AM
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#30
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,037
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Buy us all season tickets and we will dispense advice for free in exchange for hot dogs and beer.
Seriously, he will be approached by many "experts". I will second that he needs to avoid the ones who come out of the woodwork to "help" him. Got a local guy who will give him good solid advice versus the big ring wearing sharpies ?
Congrats to your brother for his opportunity. Keep an eye on him so he doesn't go hog wild with the windfall.
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
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06-18-2009, 10:17 AM
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#31
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Confused about dryer sheets
Join Date: Jun 2009
Posts: 8
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All -
Thanks for the input so far. It has been pretty helpful. He is a pretty smart kid, but I just want him to make an educated decision and not get taken advantage of those people "coming out of the woodwork."
Some themes I saw....Look into an advisor that charges by the hour, if invest in funds use Vanguard, nothing wrong with doing some CD laddering, etc.
Quote:
Originally Posted by jblack
The minor leaguers don't come close to the money that the is given out in the major's. As a rookie you start off in single A ball and then move up thru the system, some faster than others, but usually takes at least a few years for the player to develop and get promoted.
Google Answers: MLB and Minor league Minimum Saleries
First contract season: $850/month maximum. After that, open to negotiation
Alien Salary Rates: Different for aliens on visas--mandated by INS (Immigration).
Triple-A--First year: $2,150/month, after first year no less than $2,150/month
Class AA-First year: $1,500/month, after first year no less than $1,500/month
Class A (full season)--First year: $1,050/month, after first year no
less than $1,050/month
Class A (short-season)--First year: $850/month, after first year no
less than $850/month
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JBlack is right in that after this bonus, the Minor League salaries are pretty low. So I feel it is all the more important he handles this wisely.
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06-18-2009, 10:23 AM
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#32
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Recycles dryer sheets
Join Date: Mar 2009
Location: Newcastle, WA
Posts: 208
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Lucky sod.
I remember what I would've done with $500,000 at 21, so he'll likely blow most of it and regret it much later.
Can you imagine having the wit to just put it in a diversified account, and not checking on it again (apart from dealing with the taxes) until age 6 or so? What a wonderful (potential) break in life.
Unless he does what I would've done: bought a Porsche, partied, travelled until it was mostly gone.
__________________
Don't just do something; stand there!
- Jack Bogle
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06-18-2009, 04:18 PM
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#33
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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1. Have an older brother who can help guide him through this exciting, confusing time. Hey, he's got this already! Good job!
2. 10% or so (even 20%) to blow on a car and/or other toys makes sense to me. It's a nice reward for something he's probably worked hard at to earn, and he'll still have a nice chunk of change and a college education to fall back on.
3. Personally I'd do something like open a Vanguard account and go with something like 70% in the total stock market index fund and 30% in a bond fund, but going to an hourly adviser isn't a bad idea either. Just avoid anyone that gets a commission, who will guide him into an annuity, insurance policy, overly risky investment, or charge a high commission for something that may well not beat the overall market. Most managed funds do NOT beat index funds. Maxing out an IRA sounds like a great idea too.
I don't really see the point of CD laddering unless he wants/needs to supplement his low minor league salary a bit, or maybe a partial ladder to fill the gaps of the off-season. I'm not clear if that monthly salary is only during the season?
Congrats and best of luck to him! Hopefully he'll have success and make the bigs and wonder why he was so conservative with the bonus. But if he doesn't, he'll be thankful for investing a large chunk of it.
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06-18-2009, 04:27 PM
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#34
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Gone but not forgotten
Join Date: Jan 2007
Location: Sarasota,fl.
Posts: 11,447
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Lots of good advice . I'd definitely say take 10% and have a ball and put the rest in a secure place . My stepson got two very large inheritances . One when he was twenty and the other at twenty four . He spent them quickly and now regrets it .
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06-18-2009, 04:43 PM
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#35
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2003
Posts: 5,105
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"Often a slip between the cup and the lip" - research insurance a lot can happen between now and a contract with the NBA
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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06-18-2009, 04:53 PM
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#36
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2003
Location: Kansas City
Posts: 7,968
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Pay yer taxes - put all the rest in Target Retirement(age dated VG of course). Then go back to living the way you did BEFORE the bonus.
Not to be poop head but sometimes careers don't work out the way you'd expect.
And for heaven's s sake don't read books or do a lot of looking for active managers - unless they can put up cash or gold in escrow to guarantee their promises.
heh heh heh - You can learn to party responsibly in the stretch after the career takes off.
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06-18-2009, 05:02 PM
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#37
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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psst Dex...basketball is the NBA...baseball is MLB.
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06-18-2009, 05:51 PM
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#38
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2003
Posts: 5,105
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Quote:
Originally Posted by RunningBum
psst Dex...basketball is the NBA...baseball is MLB.
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I'm tired; I got up at 4am today to hike a mountain.
NBA, MLB, NFL, XXX - what's the difference
__________________
Sometimes death is not as tragic as not knowing how to live. This man knew how to live--and how to make others glad they were living. - Jack Benny at Nat King Cole's funeral
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06-18-2009, 06:09 PM
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#39
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2007
Posts: 13,227
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Quote:
Originally Posted by dex
I'm tired; I got up at 4am today to hike a mountain.
NBA, MLB, NFL, XXX - what's the difference
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Yeah, but you mixed them up yesterday too! Another mountain?
Funny thing, I got up at 4am on Sunday to run up a mountain, actually we went up 2 different mountains, probably about 4000 feet of climb in all.
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06-18-2009, 06:11 PM
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#40
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Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 1,012
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Quote:
Originally Posted by jblack
The minor leaguers don't come close to the money that the is given out in the major's. As a rookie you start off in single A ball and then move up thru the system, some faster than others, but usually takes at least a few years for the player to develop and get promoted.
Google Answers: MLB and Minor league Minimum Saleries
First contract season: $850/month maximum. After that, open to negotiation
Alien Salary Rates: Different for aliens on visas--mandated by INS (Immigration).
Triple-A--First year: $2,150/month, after first year no less than $2,150/month
Class AA-First year: $1,500/month, after first year no less than $1,500/month
Class A (full season)--First year: $1,050/month, after first year no
less than $1,050/month
Class A (short-season)--First year: $850/month, after first year no
less than $850/month
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given this pay scale maybe psssst wellsley is in order for income supplementation
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