# What If The NBA Legend Who Blew Through \$154 Million Had A Savings Plan?

Time has a recent article claiming that NBA star Allen Iverson is broke (which he denies):

Poor Allen Iverson: the 11-time NBA All-Star, who earned over \$154 million during his 15-season career, is reportedly in deep financial trouble.

I thought it would be fun to take a look at his salary (excluding his endorsement history) and have students run a few scenarios (using Excel) assuming that Allen put in a “pay yourself first” process and saved a certain percentage of his earnings, invested them in a “boring” S&P500 fund which could focus his mind on playing basketball.

First his salary history (from Basketball Reference):

This becomes an excellent Excel skill builder to see if students can structure and solve for the question being asked:  What if Allen Iverson had a regular savings plan (saved a certain percentage of his salary each year) and placed his savings in an S&P500 fund?  How much would he have in that portfolio today?

The data elements in the spreadsheet (AllenIversonSavingsPlan) include:

• Savings rate: Try 1%, 5% and 10%.  This is the only input required and the spreadsheet will do the rest.
• S&P500 Returns for the period of his career:  I have embedded them in the spreadsheet (from NYU dataset)
• Each year his account balance needs to be adjusted based first on Additional Savings (assume they occur at the end of the year) and the return of the S&P500 return for that year.  So, investment returns will only apply to starting balances in a given year.

Note the simplicity of this approach.  It basically requires two actions:  1) Direct a portion of your salary into an investment account  2) Use an S&P500 Index Fund as your investment vehicle.  Total time required to set-up:  probably less than an hour.

So, what if you had whispered this simple idea in his ear when he was an NBA Rookie, here is where he would be today:

• if he saved only 1% of his salary = portfolio value at end of 2014:  \$3.3 Million
• If he saved 5% of his salary = portfolio value at end of 2014:  \$16.5 Million
• If he saved 10% of his salary = porfolio value ”   ”      ”    ”    :  \$33.0 Million

That should not be too difficult now, should it, especially in the fat years when he was earning upwards of \$20 million?