Kenny Anderson lost 60 million!

[RookieStar]

Ummm as a banker I can honestly say that putting it in a bank, either savings account or long term deposit is a good way to save and earn.

[jmb987]

Ummm as a banker I can honestly say that putting it in a bank, either savings account or long term deposit is a good way to save and earn.

You don't earn anything at the low interest rates banks are offering...in fact, you are losing money because you aren't even keeping up with inflation. Of course you, as a banker, would suggest putting your money into the bank. Why else would YOU suggest elsewhere? Your bank would be losing money if people started finding investments themselves.

[ahonui06]

If you are that rich, you shouldn't even be making investment decisions yourself. Hire a financial advisor and get them to do it for you. There is absolutely no reason for a rich baller to be hand-choosing stocks/bonds/investments himself anyway....it takes a lot of time to figure out how to do that correctly, and it makes more sense to hire a professional.

I have a feeling you're a financial advisor.

[mysticbb]

You don't earn anything at the low interest rates banks are offering...in fact, you are losing money because you aren't even keeping up with inflation. Of course you, as a banker, would suggest putting your money into the bank. Why else would YOU suggest elsewhere? Your bank would be losing money if people started finding investments themselves.

You are the perfect example for a guy who has a great chance to get broke once he gets a lot of money. Why? Because you think you can "outsmart" the bank. You think that people who are gettting paid for finding lucrative investments are not as smart as you. And that is the point on which the problem starts. You are NOT smarter than them. ;)

That doesn't mean that you aren't right about the fact that nobody should just save all his money in a bank account, but finding the right investment is a tough thing. If you are looking for higher interests than those "2%", you also take a lot of risk. You need to learn what risk management is in the end, and athletes are not always prepared for that. Just the wrong adviser, the wrong women, one or two of those "bs investments" and a big part of the money is gone. That's what happened to Pippen, Walker, Sprewell and now Anderson.

But people should also keep in mind that we are only talking about a couple of athletes here. There are a lot of athletes, actors, etc. out there who earned a couple of millions and you never heart about them again. They spent their money more wisely or had just a little bit more "luck". We only hear about the worst examples, because that is what the media will present us. The most are just fine and they can keep their money together. It is the same with the Lotto winners, over 90% of them are living a better life after they won the money, but there are no articles about them.

[mysticbb]

The classes should be contract negotiations 101, marketing (myslef), finance, accounting, how to not have a rap career aka money pit, great interviews, birth control is my friend, pre-nups, etc. I'd stay in school 2 years if they were actually teaching me stuff that I could use in my future profession.

Actually the NBA is offering such things to all the rookies. They can learn about that kind of stuff, sometimes they just like not to listen to that. The NBA office is aware of that problem and is offering help. The first step is the Rookie Transition Program.

[spudwebb]

What would you do when the dollar collapses? Those millions of dollars would then be worthless.

So you think the guy that said put his money in the bank is stupid because the dollar might collapse?
When was the last the dollar collapsed? Oh, that's right never.

Next to having a fort Knox of gold bullions in your cellar putting your money in the bank is one of the safest way of saving your money. Sure with todays interest rates vs the inflation, your savings have stagnant to negative growth. But it's a hell of safer than the volatility of market if you choose stocks or mutual funds, shady investment schemes that every Tom, Dick and Harry will bring to you, a real estate market that has and could collapse, or trusting a financial adviser who might steal all your money because you are a dumb athlete who has the education of a 2nd grader.

[dacher]

lol.. when the dollar collapses everything will collapse. The world as we know it will cease to be.

Your gold won't save you either. You'd be better off with an arsenal and warehouse of meds and booze, and if gold does still have any worth, take it from others with your guns or be nicer and trade for some in exchange for a couple of your guns.

Worrying about dollar or other conspiracy is as waste as worrying life over nuke war or god judgement. You don't know, I don't know, and we can't do anything about it.

[Joyeuse]

I read a research paper a while back about athletes' financial management. If I remember correctly, on average, it takes on average about five years after retirement for NFL athletes to go bankrupt. It is not pretty. In spite of all the misogyny here (come on, people, stop blaming players' wives and kids for their own poor ability to manage finances, this is getting ridiculous), the big problem is that athletes have poor financial literacy and they depend on their friends (who also have poor financial literacy) as advisors and money-handlers. Often, they like to have a large stake in something tangible (such as a movie or a small store), which are high risk investments. In addition, their physical assets (cars and so forth) tend to depreciate over time.

Anyway, on to investment advice. Some people are giving out bad advice here. The value of a savings account isn't that it's risk-free, but that it's low-risk and extremely liquid. If you're dealing with more than a couple million dollars, there are higher growth assets that are less risky than savings account, such as federal treasury bonds, because the federal government is far less likely than a bank to default. You keep money in a savings account if you expect even the slightest possibility you may actually need to use it in the near future. There's nothing wrong with keeping more than you need in a savings account, but there's nothing inherently safe about it except that some portion is insured by the federal government and there are certain regulations about how much currency banks need to keep in reserves and so forth.

If you're worried about the risk of the dollar collapsing, you don't have to (and probably shouldn't) invest in gold or precious metals; that is a strange myth and I'm pretty certain the reason some people believe gold is inherently more stable than any other asset is pretty similar to the reason athletes invest in tangible goods such as movies and stores: it gives them something physical to hang onto, whereas dollars and bonds seem like just empty promises even if they are actually less risky than gold. The actual uses for gold are pretty limited (jewelry, some electronics), so the price is fairly arbitrary and unpredictable, making it a risky hedge against inflation. It's true that there's been a buildup in the price of gold over the past couple of decades, but this isn't a consistent pattern throughout history, and it's entirely possible that gold will fail to outperform the general economy or will even suffer its own devaluation at any point in the future. Remember, the last asset to see a seemingly long-term, sustained explosion in prices without any obvious fundamental cause was housing, and we all know what happened after that. I'm not saying gold is or is not a bubble, but the reality is that physical asset prices can be very unpredictable and are not an appropriate way to hedge against risk; you can lose a lot of money if you invest too much of your money in the wrong asset at the wrong time. Plus, if you are talking about investing in $60 million worth of gold bullion, that actually costs money to secure.

A less risky hedge against future inflation is to invest a significant portion of your money in inflation-indexed bonds, such as TIPS. Stocks are another good hedge against inflation because their nominal price goes up with inflation, though like physical assets they generally carry significantly more risk than bonds. If you believe the dollar will devalue relative to other currencies faster than inflation (in other words, a change in the real exchange rate rather than the nominal exchange rate), you can invest in assets denominated in foreign currencies. Alternately, you could invest in a diversified basket of currency, though this will devalue with inflation over time.

It's generally not a good idea for a risk-averse individual investor to try to beat the market by making large, undiversified investments in assets such as gold. It's possible that gold prices will keep going up and make you rich. However, if you invest all your money in gold at the wrong time and it devalues, then you are in serious trouble. On the other hand, investing in an asset such as TIPS has extremely low risk and simultaneously hedges against the risk of inflation. For risk-averse investors, the best individual investment strategies involve diversification and multiple forms of risk-hedging.

As a disclaimer, I'll add that I study cognitive psychology and my topic of research is at the intersection of economics, game theory, and psychology. My research is closely related to the study of cognitive limitations on decision-making processes that affect financial and economic decisions. While I am very interested in why people make certain investment decisions, I am not a financial advisor and my advice should be taken with a grain of salt. Educate yourself, and on top of that, solicit serious financial advice from people who know what they're talking about. Don't depend solely on posts from a basketball message board for important financial decisions.

[mixerball]

So you think the guy that said put his money in the bank is stupid because the dollar might collapse?
When was the last the dollar collapsed? Oh, that's right never.

Ever heard of October 29, 1929?

[Chosen01]

Lol,Realgm= RealAccountants :lol

60 million blown, what a waste. And Spudwebb, you must have never heard of The Great Depression.

[spudwebb]

So you think the guy that said put his money in the bank is stupid because the dollar might collapse?
When was the last the dollar collapsed? Oh, that's right never.

Ever heard of October 29, 1929?

Like I said, the US dollar has never collapsed. A collapse of a currency is when a currency becomes devalued to a point of almost being worthless. Like what happened in Argentina where inflation hit 5000%. That has never happened with the dollar.

[mixerball]

So you think the guy that said put his money in the bank is stupid because the dollar might collapse?
When was the last the dollar collapsed? Oh, that's right never.

Ever heard of October 29, 1929?

Like I said, the US dollar has never collapsed. A collapse of a currency is when a currency becomes devalued to a point of almost being worthless. Like what happened in Argentina where inflation hit 5000%. That has never happened with the dollar.

Nine million savings accounts had been wiped out between 1930 and 1933

[spudwebb]

Lol,Realgm= RealAccountants :lol

And Spudwebb, you must have never heard of The Great Depression.

The market crashed. People stopped investing. Banks stopped giving out loans. Busineses collapsed. The economy collapsed. The dollar did not collapse. If you had a $1000 before the depression, it was pretty much worth $1000.

[spudwebb]

Nine million savings accounts had been wiped out between 1930 and 1933

And the point is? I said the US dollar has never collapsed and it did not during the depression.

[Blame Rasho]

You would think you can have 5 million dollars in a bank/fund/ whatever... get a eh 3% rate of return, that is just 150,000 bucks a year in interest income and live off it it.

[Mamba Venom]

It's very simple: BUY ASSETS NOT LIABLITIES

house; stocks; mutual funds; partnerships; anythign paying residual income or earning equity; yes

cars; clothes; boats; yachts; planes; anything with a monthly payment that depreciates; no.

they don't know this though.

Kenny Anderson spent all his money to impress ASS and that was a big LIABILITY

[the_warden]

Ummm as a banker I can honestly say that putting it in a bank, either savings account or long term deposit is a good way to save and earn.

You are a bad banker.

[the_warden]

Nine million savings accounts had been wiped out between 1930 and 1933

And the point is? I said the US dollar has never collapsed and it did not during the depression.

That has nothing to do with the value of the dollar and everything to do with FDIC insurance. Right now, your bank account is insured for up to $250,000. If you have $60M in your savings account and it gets wiped out, you are left with $250,000. If you have $250,000 in a savings account and it gets wiped out, you are left with $250,000.

At MINIMUM they should be looking at treasuries, since they're backed by the government (and if they have to print money to pay them then they will.) And things like mutual funds and stocks are going to be much better options, especially diversified, than just putting the money in a savings account. Of course there is a risk, but as mentioned before, there is a risk in getting your account wiped out, too.

As I said before, if you put your money in a savings account, the bank will reloan that money to other people. They'll collect a higher interest rate, give you 2%, and pocket the difference. Actually investing yourself means you reap those profits.

But if you kids want to get your 2%, best of luck to you and have fun retiring at 75.

[turbo2k]

You know what the sad part is? They are setting up the next generation of athletes to do the same thing. As long as this culture of spending occurs in sports and rap (where the culture is most prevelant), many young males (especially black males) see this as what they are supposed to do when they get money because all of their 'idols' do it. It's a nasty cycle. I really wish the education system would spend some more time on teaching kids finances.

[spudwebb]

But if you kids want to get your 2%, best of luck to you and have fun retiring at 75.

That 2% really sucks for you and I with our $40-100K salary. But even if savings were giving 0% interest and you were losing money, NBA athletes making millions are better off with money tucked away in savings and budgeting it than investing in these scams where they lose all their investment or trusting financial advisers who swindle away money.