Evander Holyfield is one of boxing's most distinguished heavyweight champions, and also one of its most financially successful. When he and Mike Tyson met in the ring for the first time during a 1996 bout, Holyfield, knocked out "Iron Mike" and earned an astounding $34 million dollars. That jaw-dropping amount is just one of the multi-million dollar paydays he's had during a career that's lasted nearly a quarter of a century.
But knocking out opponents isn't the only endeavor where the champ has seen terrific success; unlike many other high-earning sports figures and celebrities, Holyfield has been as successful at managing his money as he has been at managing his career.
Five Tips From the Champ
Holyfield credits his financial success to five basic principles, which he shares in his autobiography, Becoming Holyfield. They include:
1. Be careful who you trust
Never put all of your eggs (or trust, in this case) in one basket. It's a tried-and-true principle whether you are building a team to help you train for a championship or you are assembling a team to help you manage your money. Holyfield looks at each of his advisors - whether it's a lawyer, broker, manager, or trainer - the way investors should look at their portfolios. His philosophy is to never invest more in a single strategy than he can afford to lose.
The champ's advice is not only a good idea when choosing professional advisors (which the champ covers in more detail in tip No.4, below), but it's also a good idea in terms of where you put your money. In the realm of investing, diversification is a strategy that has racked up quite an impressive record of its own. Like a good boxer, your portfolio needs different skills in addition to strength. (Read Portfolio Protection In Diversification And Discipline for insight into how a diversified portfolio can help you avoid taking a beating in a tough market.)
2.Your advisors are not incorruptible
History is littered with athletes, rock stars, lottery winners and other celebrities that have been taken advantage of by unscrupulous advisors. The champ reminds us that even advisors that start out looking out for your best interests can fall victim to addictions or personal problems that cause them to behave out of character.
Trust your advisors, but look out for yourself by periodically checking up on the status of your affairs, even when they have been handled successfully for a long period of time. After all, it's your money, so make sure that you know what is happening with it. Don't accept vague advice or assurances, like "Trust me, it's a good idea", and don't invest in things that you don't understand. (Take a look at The Ghouls And Monsters On Wall Street for a reminder about some of the creepiest cases of financial fraud and the characters behind them.)
3.Break rule No.1 when you can
Whether you are working with an advisor or planning your future with a spouse, at some point, you'll have to trust somebody. Cultivate these relationships carefully, keeping rule No.2 in mind, but letting yourself expand where you can. (Since your choice of spouse can have an enormous impact on your finances, Relationship Money Matters and The No.1 Reason Why Couples Fight can help you begin to plan for whatever dreams lie ahead for you and your special someone.)
4.Stick with experts
When you've got money to spend, everyone volunteers to help. Your neighbors, your family, even people you meet on the street will tell you that they can figure out how to help you. Unfortunately, all the good intentions in the world don't make you an expert.
On this point, the champ's recommendation is simple: hire people who are good at what they do. When you need a financial advisor, hire a good one. When you need an attorney, hire a good one. Putting the right expert in charge of the task is half of the battle. (To learn how to weed out advisors that are just out to make a quick buck, read Find The Right Financial Advisor and Choosing An Advisor: Wall Street Vs. Main Street.)
Boxers who don't pay attention get knocked out. The same thing happens to investors. Because your financial situation will not remain static over time, and neither will your relationships with your advisors, you need to remain alert.
When your needs change, make an adjustment. If your financial goals have changed, adjust your investment strategy. If you are not comfortable with your portfolio or the advice that you are getting, find a new expert to guide you. Don't feel bad about the need to make changes. While your personal trainer might be the world's best trainer, he's the wrong man to call when you are having a heart attack and need a doctor. Boxers and other athletes change their stable of experts to reflect their current needs; you may need to do the same from time to time.
Plan Like A Champion
You might never step in the ring with a world-class fighter, but that doesn't mean you can't take a champion's advice when managing your money. Whether you have a vast fortune at your disposal or a more modest sum that you hope to build into a nest egg, plan carefully for a total financial knockout.