Introduction
Athletes earn millions of dollars while their careers are at an all-time high. However, when their careers are over and if they have not saved enough, then life becomes an extremely tough and tacky ball game for athletes to deal with.
Therefore, investing their hard-earned money into investment options and practicing precise wealth management techniques or optimized financial plans becomes the dire need of the hour for many athletes or sports professionals.
On this parlance, let us discover the top 7 Wealth Management Tips for Athletes. Helping you get started here:
Choose the right domicile
You must choose the right domicile to help you save taxes for the millions of dollars you might cash in at the end of every single year. You can enquire with your State’s county as to how you can save taxes while filing! And, you can file your taxes in one of those counties.
Say for instance, when you reside in one of the no-tax states, then it means that you can significantly save on your earnings amount. For instance, you have the Dubai UAE that levies very low taxes as compared to the advanced economies of the globe. Similarly, states like Nevada, Alaska, Florida, Wyoming, Nevada, South Dakota, and Tennessee have no-tax domiciles for successful and long-term career-centered athletes.
Therefore, when you reside in advanced tax-free domicile regions, you can save a significant portion of your income towards building investment portfolios.
Understanding the impact of taxes while signing up for bonuses
It is always essential that you remain conversant with state laws that are pertaining to your hometown or home country where a successful athlete belongs. In most cases, the state governments or local bodies can allow maximum tax waivers for athletes who are playing on their home grounds or home territories.
And, you can avail of lucrative tax rebates while signing up for bonuses. However, you must keep your tax consultants or wealth planning committees in the loop so that your tax teams do the necessary paperwork for you while you are away playing games for different zonal areas across the globe.
In a crux, please remember that it is the effective compliance of wealth management strategies that can secure you a prosperous financial future post your retirement.
Streamlining your deductions in a sustainable manner
As a successful athlete, you must not only be successful career-wise but you would also be a globe-trotter traveling to different countries or nations all over the globe.
Therefore, you must precisely evaluate what kind of deductions you must take to calculate the net fees or net amount you actually take on hand. The deductibles may be done on account of the following expenses your sponsor may undertake for you as such.
These expenses are as follows:
- Fees to be paid out for the agents
- Cost of gaming cum gymming clothes
- Fees that can be levied in lieu of gym membership programs and sports equipment
- Nutritional supplements
- injury related medical expenses and
- Rentals of banners or sports ground premises
These expenses are borne by the sponsors and from the final match-winning prize money there, can be 20% deductibles from each of the following overheads that stay deducted from every player and the remaining amount is distributed to the winning players of a match or tournament as such.
Therefore, you must allow qualified wealth managers or investment bankers to factor in the paperwork for these deductibles to determine exactly the money you have earned in that particular match or trophy.
In a crux, to aim for long-term financial security and allow your asset or savings account to remain intact, you must utilize your award-winning salaries vis-avis your rewards in an optimized manner indeed.
Look for a Certified Financial Planner
As a sports athlete, you are required to travel to different locales across the globe to play for events, championship programs, or trophy events that are held all over the globe.
Here, again, prize-winning amounts may differ from one match to another and from one event to another. Therefore, you must look for a financial planner who is certified to handle your investment portfolios and tax implication norms in a systematic and well-defined manner.
You can look for a Chartered Financial Planner who comes to the field with years of advisory experience and also has competent educational qualifications that add to the professional excellence as you would have diverse and complex investment needs that only a highly qualified financial analyst or chartered financial planner can understand and have customized investment solutions that align with the complex requirements you have of an athlete.
Your financial planner or investment advisor must diversify your portfolio between short-term bonds and equity from that of long-term investment solutions as you have career earnings that stay on a budget or can be of very high amounts too. Therefore, your financial planner sits with you or your coach to discuss financial matters and then streamline your financial solutions accordingly.
Managing personal relationships in a well-balanced manner
As professional athletes who are globe-trotting throughout their career span, things often get missed out with respect to
a. Their gift earnings from sponsors or related conglomerates
b. The actual prize-winning amounts they earn in a match or trophy event
c. Plus, various other gift emoluments like bikes, high-profile cars, or winning property acres of land
Therefore, it is the need of the hour that athletes keep their close confidants or family members in loop to segregate their prize earnings from gifts or other kind of emoluments.
The prize money would be taxed differently from gifts earned by professional athletes during the span of their playing careers.
Therefore, a family-based tax consultant or financial planner keeps in touch with the athlete’s family members to discuss their earnings, prize emoluments, and tax implications that can apply to the above.
Choosing fiduciary or independent financial advisors
As a professional athlete, you might have complex investment needs and diverse implications on tax and varied other nitty-gritty that demands individual attention to handling your investment portfolios and helping you with tailored financial solutions from time to time.
Therefore, choosing fee-only fiduciary financial advisors seems a very good wealth management technique that can move forward in your journey to investing or dealing with financial instruments.
This way, you can contact your financial advisor while you are out on the move or staying at different geographical locations playing your games ahead. You can connect to your independent advisor via phone calls, skype, emails, and instant messaging mediums. You may not have time or the bandwidth to connect with a financial advisor who works inside a wealth management firm.
Therefore, connecting with an independent practitioner seems the ideal solution, and this way you connect with someone who is professionally competent to take care of your investments or finances using tailor-made or customized strategies as such.
Managing taxes while you play road games
As an athlete, road games or road shows may commensurate you with certain monetary compensation and different states levy taxes on different specifications of their geographical domains. Several local bodies or governments of different economies have different norms on slabbing your incomes with taxes.
While, with games played inside indoor playgrounds or stadiums, specific tax rules apply. Therefore, you must have a financial advisor who clearly understands complex tax implications that apply to indoor games or road games and then slab your income. This way, you do not pay taxes at two types of jurisdictions and end up losing most of your earnings in terms of monetary compensation you receive from sports sponsor companies you play for or represent within the team.
The Bottom Line
As a thumb rule, it is imperative you work with your financial advisors or allow your family members to deal with financial planners to chart out your incomes vis-a-vis their tax implications in an effective and organized manner.
It is also important that you aim for precise wealth management strategies in preserving your income as sports careers can be short-lived and once you retire from your games, you might not be able to earn as much as you were earning while your game was at its peak.
Therefore, it is all the more important that you save your earnings for rainy days ahead of you!
