How to NOT invest like Mike Tyson
We’ve all heard of Mike Tyson, considered to be one of the greatest boxers of all time. Though he entered the Hall of Fame in boxing, he definitely did not enter the financial management Hall of Fame.
Mike Tyson has become a prime example of how mismanagement of money can lead you to bankruptcy irrespective of how much you earn.
In June 1988. Mike Tyson earned $22 million from one single fight. This was the famous fight with Michael Spinks. In one night, Mike Tyson had earned more than an average person earns in their entire lifetime. However, things soon took a turn for the worse and in 2003, Mike Tyson had filed for bankruptcy.
He had earned more than $500 million over his career, and yet he was left penniless. If Mike Tyson had just invested his earnings of $22 million from that one night in an Index Fund with a CAGR of 11%, he would have now been worth more than $600 million. Also read Learn how to invest like Virat Kohli
How to avoid burning your wealth like Mike Tyson
Do not splurge
Mike Tyson was notorious for spending money on luxurious items. Some of his exorbitant purchases include a gold bathtub for $2.2 million, pet tigers, and a large jewelry collection among others.
As investment guru Warren Buffet said, “If you buy things you don’t need, you will soon sell things you need“.
Create a budget
One of the best ways to ensure you are living within your means is to create a budget. A budget helps you keep track of your expenses and incomes. You will know where you need to improve you money management skills and ensure you do not over spend.
As we saw earlier, if Tyson had just invested his one fight’s earning in an index fund, he would have earned more than his entire career earnings. Compounding is the eighth wonder of the world. Compounding makes your money work for you. The longer you give it, the harder it works.
Stay away from drugs and others
Drugs, alcohol and other addictive substances drain your money faster than you can realize. Not just this, they impact your health too which in turn forces you to shell out massive sums of money.