Bloomberg Businessweek recently put out a sports-themed issues that included an article about the frugal lifestyle of Jeff Foster. With a headline of “Jeff Foster, the Buffett of Basketball,” I was expecting a little more info about him being uber-savvy with investments that have paid great returns. But instead the focus is about how risk averse Foster has been. Which is also fine, I suppose.
Indeed, compared to his car-buying, entourage-supporting peers, Jeff is downright frugal.
At 34, he hasn’t achieved the fame of the league’s stars. Look him up onYouTube and you find this: “Amare Stoudemire dunks Jeff Foster to the ground!” and “Shaquille O’Neal alley-oop dunk over Jeff Foster.” Nonetheless, Foster has played in the NBA for 12 years and earned more than $47 million, and he’s done something extraordinary: He’s saved about three-quarters of his take-home pay. “Jeff’s an example of a pro athlete who’s done it right,” says Doug Raetz, co-founder of True Capital Management, a San Francisco-based wealth management firm that represents Foster and about 150 professional basketball, football, and baseball players.
The article even breaks down his investment portfolio.
“As I learned in my finance classes in college, when you’re in your twenties you invest heavily in the market, and as you get older, you become a lot less aggressive,” says Foster. His initial forays into investing coincided with the peak of the Internet bubble. “I was extremely aggressive investing early on. I put a lot of money into an Internet fund. I watched it go up about 20 percent in the first couple of months, but then it just vanished.”
Foster now considers himself fortunate for having learned an early lesson. By the time he signed his second deal with the Pacers in 2002—six years for $30 million—he had become a much more conservative investor. Today, while he still actively buys and sells stocks, only 13 percent of his portfolio is invested in the stock market. Although Foster and his advisers declined to provide the exact amount of his savings, they did provide a breakdown, by percentage, of his portfolio. The biggest portion—33 percent—is in fixed income, largely municipal bonds. Eleven percent is invested in managed real estate—apartment buildings and student housing that provide Foster with monthly income and tax breaks without the headache of personally overseeing properties and tenants. Eight percent is allotted to private equity; 7 percent is in private investments that aren’t supervised by True Capital Management.
Foster keeps 28 percent of his savings in cash. He says he normally has 5 percent to 10 percent of his portfolio in cash, “but I’m scared of the market now, though I think at some point there’s going to be an opportunity to invest and get a great return.”
It’s a good little piece heralding a guy who hasn’t been heralded as much as he should have been during his career. It could have used a line mentioning that Jeff is one of the best offensive rebounders of all time. But I did learn that he wanted to be a journalist back before he believed he could play basketball professionally, which I find interesting since it’s the exact opposite of my story.