Economist Writing Every Day

I was watching the most recent episode of Welcome to Wrexam and was horrified to see another athlete with the wisdom to start planning for their future only for their time and money to be guided into a high risk, low payoff investment.

Stop!

If you are a professional athlete, actor, musician- if you are anyone in a career whose dollar rewards are front-loaded within careers that are short and hard to forecast – please, in the name of Shaquille O’Neal and all that is holy, do not take the money that needs to be the foundation of your family’s financial wellbeing and throw it into endeavors that are more likely to melt it down than grow and prosper.

Ok, Mr Know It All Economist, What should I do with myself and my money?

Great question, let’s start with what you shouldn’t do.

1. Don’t invest your money in anything cool. Your peak income earning years are likely behind you. You can’t afford to be paid in cool. Everything balances out in the wash. If something is cool to invest in (art, music, memorabilia, fashion, film, etc) then it pays out that much less monetarily.
2. Don’t invest your time or money in anything that priortizes the economic outcomes of everyone but you. You’re heavily specialized, which means you may have managers, agents, publicists, etc. You’re a gravy train for others and that train is going to slow down one day. Your job is to ensure your future, not theirs.
3. Don’t insist on maintaining the same economic trajectory. Trying to match or beat your peak athletic earnings is going lead you to taking on too much risk. Look for skills and opportunities that accessible that offer a career you can imagine doing for 20 years. Leverage your connections, skills, public awareness, and interests.
4. Try to tame your instincts towards overconfidence. You were in the top 0.01% of the population for your previous athletic endeavor. You are highly unlikely to be at the same level of elite excellence at your next profession. Look for something you are likely to be good at. Good can and may turn into great, but don’t assume it from the start.

Ok, but what does that add up to? What should I actually do?

Fine, here you go.

1. Invest most of your money in S&P 500 index funds.
2. Buy a house in a place you want to live long term. However much house you think you should buy, get 25% less.
3. Look for a job. Don’t overconcern yourself with the salary, focus on skill acquisition. If need by, take an internship or two.
4. If there is a field you want to work in, yes, even a cool one, and someone gives you an opportunity to work and learn, by all means go for it. But if they ask you for money, run away as fast as you can.
5. Take risks with your time and your feelings (it’s been a long time since you were bad at something!), not with your money.

It’s ok to make less money and in less exciting ways. Ninety-nine percent of people can’t be wrong.