I was recording my podcast last night and the topic of NFL athletes came up. My guest, Kadeem Wells, a real estate investor and entrepreneur from South Los Angeles, was talking about how little professional athletes know about money and how they ultimately become prey for wise guys, who come in the form of advisers, merely to siphon out the wealth that these young men have earned at such a young age.
This post will cover a few tips that professional athletes should be doing to ensure that they never have to work in their lives whether they play sports or not. As a result these athletes will have the financial stability outside of their job to stand (or kneel) for what they believe in, even at the expense of losing said job because their cash flow is so strong.
We are seeing a common trend among athletes like Nnamdi Asomugha and Kawhi Leonard who choose to live like they still don’t have money even though they do (shout out to www.afrugalathlete.com).
Both athletes have millions and still drive their HS car. Just because you get money doesn’t mean you have to spend it. You were able to survive without millions and the luxuries it affords you for your entire life, so why blow it all? When you were broke and without millions of dollars you somehow managed to eat, clothe yourself, get from point A to point B etc etc. The key here is to continue to live this life of “brokeness” so you can use the millions you earn to earn actual millions you can live out of (see Cash Asset Cash).
You do this by staying broke. Continue to live the same exact lifestyle because the cash you get is just a bonus. This doesn’t just apply to athletes this applies to anyone who walks into a financial windfall. When we get money we spend it, when other cultures get money they invest it. I like to take my windfall and put it away out of sight. I had already strategically planned my finances without that windfall so why factor it in now?
The goal is to take that windfall and preserve it, make it permanent, then have it produce money you live off of. This is exactly what Master P did to start No Limit Records. He received $10,000 from a life insurance policy and instead of upgrading his lifestyle temporarily he upgraded his family tree for generations to come. You don’t eat the tree you eat the fruit of the tree. In some cultures its actually illegal to cut down fruit trees. Your windfall is the fruit tree if you use it correctly.
An example of this is the story of Lebron James who took $1 million and bought into Blaze Pizza. That $1 million is now worth $35 million. That $1 million could have bought one Bugatti which would have either depreciated or increased in value marginally. Since he honored the money and didn’t eat the tree he can now buy a Bugatti and have $34 million left over. The luxuries will come but luxuries come from assets not from income.
I think this is why Lebron is so bold with his message. His finances outside of basketball are so strong that he doesn’t have to pander or play politics. Other athletes should take note. Cash liberates you. Your cars and jewelry might look good on the gram but they can’t help you when your boss decides to cut your check off because you took a knee. Stay broke and stack. Stacked cash is the ultimate luxury.
Don’t eat the principal
Whatever you do, don’t eat the principal. When I say “eat” I mean spend. This goes into what I just stated above. There are a few things you can do when you hit millionaire status. You can live out of the millions or you can do the things that real millionaires do. Real millionaires aren’t doing the things that TV millionaires are doing. TV millionaires have the best of everything. Real life millionaires, like Grant Cardone and Gary V, fly coach and have ONE luxury car that was bought by a customer.
If you track the lives of real millionaires you see someone who is PRUDENTLY frugal and selectively extravagant. One thing you see them spending big on is their business and their investments. Grant Cardone is a great example of this. He pulls all the money out of his business and plows it into either advertising or multi family real estate. Guys like Grant, Gary V and probably your boss will go all in on the expansion of their business and their asset column because they know that the money they throw into there will come back ten fold. Not only that, they still have the money they stashed away to acquire or invest.
Wealthy people use money as a sword. Poor people use money as a spoon to consume. Same metal, different purpose.
You have to not only hold onto your swords or your trees or whatever metaphor we can use to honor the actual value of money to our society and accumulate more swords, those swords are your protection. We live in a capitalistic society not a love society. Thus you need capital. You need so much cash put away forever that no problem could ever take you down. Jews get this and that is why they would rather have cash than stuff. During the Holocaust the Jews who could afford to leave and seek protection where the ones who survived. If a war were to break out and all you had was spoons (cars, toys, trips, Hennessy) you would get slaughtered. That is what is happening to a lot of us. There is a war going on and athletes cant stand for what they believe in, got them jays though.
So you have to first stay broke so you can create/preserve the principal then after you do that you have to remember NEVER to spend the principal only to live out of what
Pick the right vehicle
This is the fun part. SO many people wish they had the means to invest on a large scale and they spend their lives in poverty because they literally could never save up the millions required to invest in the things that athletes can now invest in. Don’t take this opportunity for granted.
Now that you are a millionaire you have the ability to literally buy money. Yes, buy money. You do this by buying cash flow. That cash flow comes in whether you work or not, that cash flow is power. When you not only have cash flow but the preserved wealth you put away by staying broke and not eating the principal, you can literally do whatever you want. You can press your own agenda, you can be unapologetically whatever the hell you want to be because nobody has power to cut your lights off, or pull food off your table.
You get this cash flow through rental properties, apartment complexes, franchises, buying existing businesses, becoming a lender, becoming a venture capitalist and investing in tech companies and a host of many other ways. Your millions grant you access to elite group of investments set aside for what is called an accredited investor. An accredited investor is someone with a million in net worth or who makes over $250,000 per year. They don’t care how many cars you have or how many LV belts you have. Its about income and net worth. You can’t get access to these life changing investments without millions in advance.
An example of this are the multi million dollar office buildings and apartment complexes on sale on loop net. I was on loopnet and saw a commercial building with a Starbucks lease on it on sale for lets say 3 million. The cap rate was 5%. That means that this building kicks off 150k in income each year. You still keep your 3 million because as I stated in an earlier post, buying assets is the time when you buy something but you never lose your money. You basically took 3 mil and shifted it and got paid for doing so. You can sell it at a later day. There are so many other examples of large scale investing that just makes too much financial sense for us to blow so much of the principal on luxuries.
After you pick the right vehicle you sit back, collect and manage your managers and CEOs. You won the wealth game. Congrats. You also probably changed your community and created jobs for single moms and ex cons or college grads. When you create wealth you create opportunities. When you immunize yourself you also immunize your community. That is the new Jays or the new Rolls Wraith. “Equity, what do you own, can you make s**t move”?
This is an overly simplistic blog type post but the goal here is really to get athletes to use their millions to become owners and producers not just large scale producers. By doing so you free yourself up to be a true impact for your community not just someone who symbolically impacts their community. Anything that is going to change for us will be changed by us. If you want to work with our team and the Todd Ventures Platform to turn your riches into wealth email us at firstname.lastname@example.org
Be great, invest well,