NFL player’s great advice if you receive ‘chicken’

‘Fear of death increases in exact proportion to increase in wealth’ – Ernest Hemingway

By AARON KATSMAN
CHICKEN, POTATOES AND THYME (SLOW ROAST) (photo credit: PASCALE PEREZ-RUBIN)
CHICKEN, POTATOES AND THYME (SLOW ROAST)
(photo credit: PASCALE PEREZ-RUBIN)
What would you do if you came into a bunch of money? Travel, buy a new car, and maybe give a little charity. For many, it’s all about short-term improvement in standard of living.
After losing a playoff football game last weekend, Seattle Seahawks running back Marshawn Lynch gave some insightful financial advice. Lynch came out of retirement, at the end of the season, to help out the injury-ravaged Seahawks. He did a great job of investing his money over his playing career and set himself up financially for life. His advice was given to younger players. “I done been on the other side of retirement, and it’s good when you get over there and you can do what the [‘bleep’] you want to,” he said. “Start taking care of y’all mentals, y’all bodies and y’all chicken. So when you’re ready to walk away, you walk away and you be able to do what you want to do.”
For those of us who have been living in Israel for a long time and think that chicken is something we eat, the loose translation of what he said is, “Protect your mind, your body, and your money, so when it’s time to retire, you can do whatever you feel like doing.”
He’s giving this advice to football players, who are notorious for squandering all their money. Sports Illustrated reported: “78% of NFL players also go bankrupt or are under financial stress within two years of retirement and 60% of National Basketball Association players are broke within five years of leaving the sport.”
Lynch’s advice struck a chord with me. I believe that it equally applies to those who come into to a sudden windfall, often from inheriting a large sum of money. Over the years I have had numerous meetings with individuals that have received an inheritance. When I started asking about plans for the money, saving and investing for the long-term is nowhere close to being the first answer given.
Alessandro Martinello of Lund University studied the habits of those that received a sudden inheritance. He wrote, “First, we show that heirs respond to a sudden, salient, and sizable increase in available financial resources by decreasing their saving efforts in the ten years after inheriting, and that the net worth of the heirs converges back toward the path established before parental death. Overall, only about a third of the initial increase in net worth remains nine years after parental death.”
The research indicates that most people who don’t make investing a priority and instead focus on buying things blow through the money in short order. Those who buy property or other financial assets like stocks and bonds keep and grow their money over time.
First steps
Don’t get me wrong, there is nothing wrong with spending some of the money on material things, it’s just that you shouldn’t get carried away. Unless you inherit millions, what seems like a lot of money to you probably can’t be stretched for as many things as you think. Here are some tips on how to deal with receiving a lot of ‘chicken.’
As I have written many times, I often recommend to those who suddenly come into to a large amount of money to wait two to three months before making any decisions. I find that this helps the client settle down and become a little more focused and much less impulsive about what to do with the money, and ultimately allows the client to accomplish the goals the money was intended for.
Then make a game plan. Figure out what it is that you want to do both long and short term with the money. Make sure your goals are realistic based on the amount of money that you received. It may be beneficial to speak with a financial adviser as they can help direct you and draw on their experience to make sure you are headed in the right direction.
Invest
After defining your goals and needs, it’s time to implement an investment strategy that will help you achieve whatever it is that you want to accomplish. Keep it simple. Too often I see people get involved in all kinds of investment schemes which they have no business investing in. Deposits in Ukrainian banks, gold mines in Africa, and oil pipelines are just a sampling of what I have heard. Again, unless you inherited tens of millions, stick to stocks, bonds and real estate. Paying off your mortgage is also a possibility.
Be ‘mental’ with your ‘chicken.’ Why sacrifice long-term financial security for instant gratification? Heed the sage advice of Marshawn, and you can have a comfortable financial future.
The information contained in this article reflects the opinion of the author, and not necessarily the opinion of Portfolio Resources Group, Inc. or its affiliates.
Aaron Katsman is author of the book Retirement GPS: How to Navigate Your Way to A Secure Financial Future with Global Investing (McGraw-Hill), is a licensed financial professional both in the United States and Israel and helps people who open investment accounts in the United States. Securities are offered through Portfolio Resources Group, Inc. (www.prginc.net).
Member FINRA, SIPC, MSRB, FSI. For more information, call (02) 624-0995 or visit www.aaronkatsman.com or email aaron@lighthousecapital.co.il.