The Edmond Sun

Opinion

October 4, 2012

Smartest risk-takers know when to walk away

WIRE — I know a wealthy, self-made man who made most of his money before age 45. I looked at his financial information and told him, “You are not going to stop working until you drop dead. If you wanted to retire, you could have done that a long time ago. You like what you do and will never stop.”

My statement shook his inner psyche, and then he realized I was right. He never truly plans to quit.

He realized I operate in the same fashion. Sitting in a rocking chair and playing shuffle board are not in my plans.

Someone once asked when I would retire. I responded, “Death. My work brings me great joy. I can’t imagine giving it up.”

The great Kentuckian Al Smith wrote his first book at age 84. At age 85, he just finished his second book, “Kentucky Cured,” to be released in November.

Al always has something to do and some place to go. He is an interesting role model in that he had a full-time job for 20 years. Years ago, he sold his chain of newspapers and devoted the rest of his life to helping others.

I’m not privy to Al’s financial information, but I suspect he and his wife set up their finances with a long-term view. Which is what some former professional athletes should have done.

Sports Illustrated did a fascinating study in 2009 titled “How (and Why) Athletes Go Broke.” The statistics were stunning. By the time they have been retired for two years, 78 percent of former NFL football players were bankrupt or under financial stress because of joblessness or divorce. Within five years, 60 percent of former NBA basketball players were broke.

These people made millions. What happened?

Many blow money on large entourages and wild spending — the same way many lottery winners do. A lot more get burned by getting involved in businesses far away from their area of expertise.

According to USA Today, my childhood hero Oscar Robertson has a plethora of tax and financial problems related to a chemical company he owns. Robertson is not only a basketball legend, he has been a devoted community advocate who has lived his life in an exemplary fashion.

But, at age 73, it’s going to be tough for the Big O to make big money again.

People often ask me, “Why don’t some of these professional athletes put their money in the bank or a lifetime annuity? They don’t need to do anything risky or stupid.”

A good question.

I suspect the same confidence and courage that allow someone to become a professional athlete work against them in business. They never know when to go to the sidelines.

It’s not that hard to be financially secure. Spend less than you make, save the rest, and don’t do anything stupid. Assume you are going to live to an extremely old age, and make sure you have money that lasts as long as you do.

It’s not hard, but it is tedious. And it’s not the least bit glamorous.

I knew of a woman who was always trying to meet a guy driving a new Mercedes. She should have been looking for someone who drives a 10-year-old Toyota. The Toyota driver is more likely to have real wealth in the long run.

The focus on long-term savings is the primary difference between my friend who has real wealth and big stars who have spent real wealth.

My friend accumulated his wealth quietly and protects his money carefully. He is intensely frugal, with no inner need to show off his wealth. His money is a byproduct of his focus on putting out a quality product.

He also knows his business, inside and out. He knows as much about his industry as Oscar Robertson knows about basketball. He goes to work every day because he enjoys operating at his peak potential — just like Oscar Robertson did when he played basketball.

Oscar got out of basketball near the top of his game. After the Cincinnati Royals made the silly mistake of trading him in 1970, he led the Milwaukee Bucks to an NBA championship before he stepped down in 1974.

I hope he works out his financial problems and leaves the business world on top as well. He is a classy guy who needs to ask himself an important question:

At what point do you stop taking financial risks?

DON MCNAY is a columnist for the Richmond (Ky.) Register. Contact him at don@mcnay.com.

1
Text Only
Opinion
  • Bangladesh’s sweatshops — a boycott is not the answer

    One year ago this week, the eight-story Rana Plaza garment factory collapsed in Bangladesh’s capital city of Dhaka, killing 1,129 people. The building’s top floors had been added illegally, and their weight caused the lower stories to buckle. Many of the victims were young women who had been sewing low-priced clothes for Western brands, earning a minimum wage of about $9 a week. It was the worst disaster in garment industry history.

    April 24, 2014

  • Loosening constraints on campaign donations and spending doesn’t destroy democracy

    Campaign finance reformers are worried about the future. They contend that two Supreme Court rulings — the McCutcheon decision in March and the 2010 Citizens United decision — will magnify inequality in U.S. politics.
    In both cases, the court majority relaxed constraints on how money can be spent on or donated to political campaigns. By allowing more private money to flow to campaigns, the critics maintain, the court has allowed the rich an unfair advantage in shaping political outcomes and made “one dollar, one vote” (in one formulation) the measure of our corrupted democracy.
    This argument misses the mark for at least four reasons.

    April 23, 2014

  • The top 12 government programs ever

    Which federal programs and policies succeed in being cost-effective and targeting those who need them most? These two tests are obvious: After all, why would we spend taxpayers' money on a program that isn't worth what it costs or helps those who do not need help?

    April 23, 2014

  • Free trade on steroids: The threat of the Trans-Pacific Partnership

    Many supporters of the proposed Trans-Pacific Partnership, or TPP, trade agreement are arguing that its fate rests on President Obama’s bilateral talks with Japanese Prime Minister Shinzo Abe in Japan this week. If Japan and the United States can sort out market access issues for agriculture and automobiles, the wisdom goes, this huge deal — in effect, a North American Free Trade Agreement on steroids — can at last be concluded.

    April 22, 2014

  • Can Hillary Clinton rock the cradle and the world?

    What's most interesting to contemplate is the effect becoming a grandmother will have on Hillary's ambition. It's one of life's unfairnesses that a woman's peak career years often coincide with her peak childbearing years.

    April 22, 2014

  • Chicago Tribune: If Walgreen Co. moves its HQ to Europe, blame Washington’s tax failure

    The Walgreen Co. drugstore chain got its start nearly a century ago in downstate Dixon, Ill., before moving its corporate headquarters to Chicago and eventually to north suburban Deerfield, Ill.
    Next stop? Could be Bern, Switzerland.
    A group of shareholders reportedly is pressuring the giant retail chain for a move to the land of cuckoo clocks. The reason: lower taxes. Much lower taxes.
    If Walgreen changes its legal domicile to Switzerland, where it recently acquired a stake in European drugstore chain Alliance Boots, the company could save big bucks on its corporate income-tax bill. The effective U.S. income-tax rate for Walgreen, according to analysts at Swiss Bank UBS: 37 percent. For Alliance Boots: about 20 percent.

    April 21, 2014

  • Sulphur a future major tourist destination?

    Greta Garbo says, “I want to be alone,” in the 1932 film “Grand Hotel.” That MGM film starred Garbo, John and Lionel Barrymore, Wallace Beery and a young actress from Lawton named Joan Crawford. It told the stories of several different people who were staying at an exclusive hotel of that name in Berlin Germany.
    It was critically well received and it inspired more recent films such as “Gosford Park” and television shows such as “Downton Abbey” in that it detailed the relationship between powerful and wealthy people and those who served them. The film opened amidst much fanfare and it received the Oscar for best picture in the year of its release.

    April 21, 2014

  • St. Louis Post-Dispatch: Why poverty across the world matters to Americans

    A child starving in South Sudan should matter to Americans. That was the message delivered last week by Nancy Lindborg, whose job at the U.S. Agency for International Development is to lead a federal bureau spreading democracy and humanitarian assistance across the world.
    That world has reached a critical danger zone, with three high-level crises combining military conflict with humanitarian catastrophes affecting millions of innocents in Syria, the South Sudan and the Central African Republic.
    But back to that child.

    April 18, 2014

  • Government leadership complicit in overfilling prisons

    One of the thorniest problems facing any society is the question of what to do with transgressors. Obviously, the more complicated a culture becomes, the more factors come into play in trying to figure out what to do with those who choose not to “play by the rules.”

    April 18, 2014

  • My best days are ones normal people take for granted

    It is a weekend for working around the house. My fiancee, Erin, and I have the baby’s room to paint and some IKEA furniture to assemble. I roll out of bed early — 10:30 — and get into my wheelchair. Erin is already making coffee in the kitchen.
    “I started the first wall,” she says. “I love that gray.” Erin never bugs me about sleeping late. For a few months after I was injured in the Boston Marathon bombings, I often slept 15 hours a day. The doctors said my body needed to heal. It must still be healing because I hardly ever see 8 a.m. anymore.

    April 18, 2014

Poll

Do you agree with a state budget proposal that takes some funds away from road and bridge projects to ramp up education funding by $29.85 million per year until schools are receiving $600 million more a year than they are now? In years in which 1 percent revenue growth does not occur in the general fund, the transfer would not take place.

Agree
Disagree
Undecided
     View Results