Thread: Confirmed Signing with Link: Blues re-sign T.J. Oshie (5 years, $4.175M per)
View Single Post
Old
07-20-2012, 07:11 AM
  #119
96
Esq.
 
96's Avatar
 
Join Date: May 2008
Location: Los Angeles
Posts: 4,915
vCash: 500
Quote:
Originally Posted by Halak Ness Monster View Post
I understand that concept but with interest rates on securities such as Treasury notes where they are, is it worth it? 2 year notes are yielding 0.22%. That's a total of $4.40 of interest earned on a $1000 note.

Oshie will be making about an extra 1.15 million in his 3rd year. You'd have to invest an awful lot in Treasury notes to make up the difference even with inflation.

Sure you'd be getting a little extra cash by investing what you hold onto today but perhaps some payroll flexibility in 2-3 years would be a little better.

Perhaps Stillman could do better by getting into equities but there's a lot more risk there and the markets have risen enough in the past two years that you have to wonder when it could collapse again given the shaky ground that it sits on.

God I feel rusty when it comes to all this. I majored in finance in college but I haven't used a lot of what I learned since.
Oshie and most other athletes should have a financial advisor. And I doubt any financial advisor would recommend investing hundreds of thousands or even millions of dollars in treasury notes. The money will be invested in mutual funds and higher risk securities, most likely. Of course there is a chance of more economic trouble, but that's precisely why those things offer higher returns. If you have enough money as a cushion, as most people earning $5M per year do, you can afford to take on more risk in return for higher payouts.

96 is offline   Reply With Quote