£392,000 pension pot in just 8 years! Personal finance lessons from footballing elite

As England’s footballers continue their World Cup odyssey, personal finance lessons can be learned from the footballing elite.

A firm of Stockport Chartered Financial Planners has identified a number of lessons that investors can learn from the off-field lives of some of the highest-profile exponents of the beautiful game.

Prest Financial Planning is based in the Stockport suburb of Hazel Grove, not far from the Premier League property hotspots of Wilmslow and Alderley Edge.

Mike Walker, a financial planner at the firm, said,

“Being based in Greater Manchester we get to see the best football in the world on a weekly basis.

“We also get to witness players’ lifestyles up-close. While at the very top level they can afford to splurge a bit, we thought we would take a look at what the rest of us could learn from some of their financial decisions.

“George Best famously said that he spent a lot of money on booze, women and fast cars, and just squandered the rest. We thought we’d put his theory to the test.”

Ronaldo’s car insurance

In January 2009, within days of taking delivery of a £200,000 Ferrari 599 GTB, the then 23-year-old Manchester United star Cristiano Ronaldo crashed it in a tunnel under the runway at Manchester Airport. Following the accident a number of experts publicly said that, were he to be able to secure insurance at all in future, he would face premiums of at least £40,000 per year.

What else could he have done with that money instead of insuring another supercar? Were someone to invest £40,000 per year into a UK pension fund for the eight-year duration of an average Premiership career, they could at that point have a pension fund worth £392,429, assuming an annualised growth rate of five per cent per year.

Investments can fall as well as rise in value but five per cent is the Financial Conduct Authority’s mid-point figure for average annual growth projections for tax-privileged long-term investments such as pensions, and so is useful for the purposes of illustration.

If they stopped playing aged 32 and never contributed another penny then, again with annualised growth averaging five per cent per year, by the current minimum pension age of 55 they could have a total fund of £1,236,400 – which is more than the current lifetime limit for pension fund size.

Balotelli’s bar bill

The mercurial Mario Balotelli’s relatively brief stint at Manchester City probably generated even more headlines than it did goals. Among these was the story of bar bill of at least £4,000 – possibly far more – that he ran up on a 2012 visit to a bar in Ibiza run by the brother of the BBC football anchor, and England’s most prolific World Cup finals goalscorer, Gary Lineker.

What, though, if a young person of significant means had chosen to prioritise saving over sambuca and, on a quarterly basis for the three-year duration of Super Mario’s City career, invested the value of Balotelli’s big Balearic night out into an ISA returning an annualised rate of five per cent per year? That person could, if that growth were achieved (and, of course, if might be much higher or lower), have ended up with a tax-free nest egg of £51,658 by the time the Italian striker transferred to AC Milan in 2013 at the age of 22.

Sterling’s new pad

Having transferred from Liverpool to Manchester City in 2015, current England squad member Raheem Sterling bought a five-bedroom mansion in the Cheshire town of Wilmslow for £3.1 million last year. By instead buying in the Manchester lawyers’ playground of Didsbury, however, it would be possible for someone to pick up a seven-bedroom detached home for £1.2 million.

This may or may not prove to be a smart move depending on the future trajectory of both neighbourhoods’ property markets. For someone with substantial – though perhaps not Sterling-level – assets the £1.9 million difference would potentially free up cash to invest in a more diversified range of investments rather than having too many eggs in one basket.

£1.9 million would be too much to put into a tax-privileged investment such as a pension or an ISA. A number of other products are available, though, including onshore and offshore life insurance company bonds that offer some tax advantages and can be used to invest in a range of mainstream assets that are appropriate to the circumstances of the individual investor.

Walker concluded,

“These strategies might not always cut it for the ultra-high-paid stars in the handful of clubs at the top of the Premier League but they show just what can be achieved by the majority of those who make their money young, whether through sport, music or entrepreneurship. By making a few adjustments in order to save or invest early in life they can make a massive difference to their future circumstances.”