The Steps for Professional Athletes to Set Up an Investment Fund.
Did you hear that Lionel Messi is setting up an investment fund to invest in sports media and technology globally? Good for him, but I remember the days when the news about professional athletes investments were all about how players went bankrupt. I'm happy to hear that there's more news of superstars investing wisely now.
Not all professional athletes have the luxury of making and saving enough money to do this, but for those athletes that do, this is a three-part post where I share professional athletes' three tips to set up an investment fund.
1. BUILD A TEAM: When investing, you will not only want to find professionals that have the expertise to help you come up with and execute a good strategy, but you will also want to make sure that you have someone that you can trust.
In 2013, when Kobe Bryant wanted to invest, he let Jeff Stibel a serial entrepreneur into his circle of trust - people you invite into your life - when they started Bryant Stibel; when LeBron James makes business decisions, we all know that Maverick Carter and Rich Paul are his circle of trust. So, after picking capable people that you know, like and trust, it's now time to develop a strategy.
2. DEVELOP A STRATEGY: Strategy should be driven by the objective of the investor. For example, Pension Funds have the objective of meeting a target return to ensure that retirees receive pension payments. Many have portfolios that are diversified across sectors, geographies and asset classes, such as stocks, bonds and alternative investments.
While athletes may have a different objective. For example, Michael Jordan decided to purchase the Charlotte Hornets, because he's passionate about basketball and enjoys being an owner. His portfolio will technically be overweight in the sports sector, but it's up to his objectives. So athlete, when it comes to a strategy, I'd recommend that you, along with the people in your circle of trust, clearly identify your objective, your risk tolerance, and desired return.
Write out a detailed long-term investment plan that aligns with your objective, to make sure that your team is all on the same page. And on this plan give yourself flexibility, because opportunities will come up and if there are good opportunities, you should be able to take them.
3. LEVERAGE YOUR BRAND: Now that you have your team, and strategy, one thing you can do is to leverage your brand. This isn't for everyone, some athletes like to be minority owners of businesses or build a diversified investment portfolio without anyone knowing that they're involved.
That said, many athletes that have played their competitive sports for many years, have built a positive brand in their community and maybe globally that has value. And so it might be a good idea to leverage that brand through your investments. For example, Tom Brady along with his business partner Alex Guerrero, who is in Tom Brady's circle of trust, have come up with the TB12 Method, that shows exercises and diets that can help you be healthy like Tom.
If you build a team, develop a strategy, and leverage your brand well, you may be able to preserve your wealth a little better for many generations to come.