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Young athletes have been known to blow through their first big paycheck. Former NBA star Charles Barkley almost did, too — until Michael Jordan gave him one life-changing financial tip.
In an episode of The Steam Room podcast, Barkley says he and Jordan were about to sign endorsement deals with Nike at roughly the same time. Barkley’s deal was originally for $3 million, but before he signed on the dotted line, Jordan asked him one simple question: “Hey man, why you need all that money?”
The conversation led Barkley to make a decision that could have cost him millions, but instead made him a fortune. Here’s the game-changing money move that he learned from Jordan, and how you can apply it to your own wealth-building strategy.
Although $3 million was no small sum, Jordan recognized that with the right strategy, Barkley could turn it into something much bigger. He told Barkley to renegotiate his contract and take only $1 million in cash and the rest in Nike stock options.
After a brief discussion with his team, Barkley took the advice and set himself up for an immense windfall down the road. “I actually made probably 10 times that amount of money and I’m still with Nike to this day,” Barkley proudly proclaimed.
Barkley didn’t mention if he still holds his Nike stake, but the stock is up a jaw-dropping 4,000% since his signature basketball sneaker, the Nike Air Force Max CB, debuted in 1994. His story highlights how gaining equity can be far more lucrative than a quick cash payout, especially when it’s tied to a strong, growing business.
Here’s how you can apply this lesson to your investment strategy.
Like Jordan and Barkley at the dawn of their respective careers, young investors should be more focused on capital appreciation and growth rather than immediate cash flow.
This is why some financial advisors recommend using the Rule of 100 for age-appropriate asset allocation. To use this rule, subtract your age from 100 and the remainder represents the percentage of your portfolio that you should invest in stocks. So, if you’re 30 years old, you would set aside 70% of your portfolio for stocks while 30% can be allocated to safe havens such as bonds.
Another way to prioritize growth is to set aside a portion of your paycheck to invest in stocks every month. As of January, 2025, the personal savings rate is 4.60%, according to the Federal Reserve. By saving a greater portion of your income — say 15% — you could reach your financial goals faster.
However, given the current economic climate, many don’t have enough savings at the end of each month to invest in stocks.
But that doesn’t mean you can’t harness the power of compounding interest.
Rather than aiming to save up 15% of your paycheck each month, you could turn your spare change from everyday purchases into an investment opportunity with Acorns instead.
Here’s how it works: Once you link your debit and credit cards Acorns will round-up every purchase you make to the nearest dollar and set aside the excess. When the balance reaches $5 Acorns will then invest it in a smart investment portfolio comprising diversified ETFs.
This way you can turn everyday purchases like a $4.25 cup of coffee into a $0.75 investment in your future. Just $3 worth of daily round-ups means $1,000 in savings in a year — and that’s before compounding.
You can get a $20 bonus investment from Acorns when you sign up.
Meanwhile, young investors with a higher appetite for risk could instead focus on growth stocks rather than dividend-paying, blue-chip stocks.
If you want to begin investing in individual stocks, but don’t know where to start, consider consulting experts at Moby.
Founded by a group of former hedge fund analysts, Moby aims to help investors find undervalued stock picks that could potentially deliver multi-bagger returns. To do so Moby delivers hedge-fund level stock market analysis in plain English straight to your inbox.
Moby has a pretty successful track record — over the past four years, its stock picks have outperformed the S&P 500 index by 11.95%. And that’s over the index’s annualized returns of roughly 10% per year.
What’s more, over 75 stock recommendations from Moby have delivered returns of over 100%.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
