Olympic 100-metre gold and silver madallists (from left) Shelly-Ann Fraser, Kerron Stewart and Sherone Simpson. - file photos

1. How should our athletes invest their earnings, taking into account the fact that their careers have a relatively short lifespan?

Dwight Newman, senior vice-president - Markets & Trading, Mayberry Investments:

"I would advise our athletes to stick to age-appropriate asset allocation. That is, a mix of assets such as real estate, stocks and bonds. For a 22-year-old like Bolt, he should be heavily invested into equities and bonds, because these are proven assets in the long term. Our champion athletes are earning as they go, so should feel comfortable to invest as they have cash coming in. For any short-term needs, I would also recommend repurchase agreements. One would hope that their advisers are helping them to a secure a home and investment in real estate as these are also part of the long-term investing strategy they should consider.

"Chances are their career is not going to be as long as the average professional due to the nature of the sport and possible injuries, so I would try to put away as much as possible. Notwithstanding their increased standard of living, long-term investing is very, very key. We are all aware of athletes, who, 20 years after retiring from the sport, have little or nothing to show for their efforts."

2. Our top athletes can now earn US$4 million per season. Some, like Usain Bolt, have the potential to earn much more. How would you advise them to invest this money, taking into account the fact that their careers have a time limit?

Ian Watson, vice - president, sales and marketing, Guardian Asset Management:

"Athletes must surround themselves with expert investment knowledge in the form of accredited financial advisers who will assess their needs and create the optimal portfolio mix. Preservation of capital should be top priority for them based on the fact that most athletes start earning in their late teens/early 20s and typically slow down after age 30.

"We recommend the following portfolio mix which can be adjusted based on investment goal, risk tolerance and time horizon:

Forty per cent in long-term-investments - a mixture of fixed-investment instruments (e.g. bonds) both in local and foreign currencies, as well as some amount of prime real estate and structured notes

Thirty per cent in investments that will provide above-average returns, such as equity-based mutual funds which have been proven to outperform fixed; income over the long term.

Ten per cent in liquid investments which will provide steady income and hedge against interruption in earnings due to injury, etc.

Twenty per cent in medium-term investments, e.g. commercial paper.

"This mixture will provide both growth and diversification of risk. Any investment strategy must, however, be reviewed periodically."

3. What should they do with gifts of land, cars and bonus payments?

Dwight NEWMAN of Mayberry:

"They should definitely, keep the cars. As for the land, it should form part of your long-term investment portfolio. In terms of bonus payments, I wouldn't blow it all. I would advise them to enjoy a small percentage of it, but for the bulk of the money, I would say invest. Again, I would say put funds into bonds because while these investments might experience volatility over the lifetime of the investment, you are still getting your coupon (interest) payments every three months or every six months. Especially for someone at the beginning of their career, I would be buying an equal amount of bonds and equities to supplement the real estate that they should hold."

Ian Watson, Guardian Asset Management:

"Gifts of land, cars and bonus payments should be maintained/ developed as part of their overall investment portfolio.

"Cars will provide utility; however, since this is a depreciating asset, care should be exercised not to hold more than is necessary as maintenance can be costly. This assumes that there are no restrictions for sale on the vehicles.

4. What kind of advice should they avoid?

Dwight NEWMAN of Mayberry:

"Our world-class athletes should avoid investment schemes that promise very high returns in a very short time. It has been proven that any investment which gives a high return comes with the acceptance of high risk, which should be avoided in all cases. Although all investments come with a certain level of risk, your adviser should help in deciphering good risk from bad risk.

"Also, I would avoid going into businesses that exist in an environment of uncertainty. For example, you get into a business because of emotional or sentimental attachment to the individual who is making the proposal. It is not until later that the soundness of the business is questioned and moneys cannot be recovered."

Ian Watson of Guardian Asset Management:

"Our successful athletes will tend to attract a lot of old and new acquaintances who are seeking their own gains. They influence limitless spending and partying. They take investment advice from unqualified, unscrupulous persons, which leads to depletion of their assets.

"Local investors note that athletes can feel confident in investing in local equities markets, as there are no taxes on capital gains and secondly, dividends are distributed tax free. With regard to the money and bond markets, interest is taxed at 25 per cent Locally, as well, personal income is only taxed at 25 per cent, comparing very favourably with other jurisdictions."

avia.collinder@gleanerjm.com