Several years ago I wrote a little book titled, Think Like an Athlete, Manage Like a Pro, where I extolled the many positive personal qualities that successful athletes utilize and that business leaders can employ to build their companies. One thing you won’t hear me recommend is that you invest like an athlete. The halls of retired professional athletes are littered with tales of bankruptcy and financial excess leading to financial ruin. One statistic I read recently stated that 78% of pro football players and 60% of NBA players are bankrupt within 5 years after retiring!

With this knowledge I was all the more intrigued to learn of the financial success of one of my all-time favorite athletes, John “Hondo” Havlicek. A recent Forbes magazine article explained how Hondo achieved his success with discipline and sound advice. Consider that he earned $15,000 in 1962 as a professional basketball player with the Boston Celtics. If we factor in inflation at 4% per year then $15,000 per year in 1962 would equate to $116,524 a year in 2014. There are probably ball boys in the NBA making that much today. So how did he do it and what can we learn from his success?

1. Start early. Yes, Hondo told his advisors to invest his money in “Blue Chip” stocks. He was looking to invest his money for the long haul. Like Hondo if you don’t understand investing go with companies that you are familiar with which typically are Blue Chips, those that make up the DOW for example – like AT&T, Lockheed, Eli Lilly, H&R Block and UPS. The best way to invest in Blue Chips is through a mutual fund such as an exchange traded fund (ETF). If you didn’t start early, OK start now. It is never too late.
2. Stay invested. Hondo didn’t try to time the market. He learned early that markets go up and down but over time he would benefit from the historical growth of the market instead of potentially missing some of the best days by pulling out when things look bleak. Consider that 95% of the market gains between 1963 and 1993 resulted from the best 1.2% of the trading days during that time! If you missed 90 of the best performing days your return would have dropped from 11% to 3%. Stay invested!
3. Don’t overspend – Even though $15,000 a year in 1962 was considered a good income Hondo knew his career was not infinite so he had to prepare for the long –term. If you put a budget together now and start living within your means and find some extra dollars to invest it can have a huge impact on your retirement income.
4. Find a financial manager you can trust. This was critical to Hondo’s success as he relied on expert advice early on especially when he invested in several Wendy’s hamburger franchises. Many pro athletes go broke because they pick an advisor who enables their bad spending habits instead of providing the “tough love” advice that is necessary especially at a young age. You should find an advisor who you trust and who provides good overall financial advice not just investment advice; financial planning advice. A good place to start is with a CFP – a Certified Financial Planner.

Unfortunately we tend to hear and read about the financial misfortunes of athletes. So it’s refreshing to hear of a success story like that of John Havlicek. What makes it even more meaningful is the fact that each of us can and should relate to his financial story and heed his advice. It’s much more difficult to relate to the mega millions being paid today to athletes and to comprehend how they can lose it all within a short period of time. Take these four tips to heart and you too can retire on your terms. Plan well. Live better.

Time Out! Which of the four steps John Havlicek embraced for his sound financial plan is most important to you? You can leave a comment here.