Money management ought to be taught in school: Leander Paes

Recounting his early years of struggle, he spoke about how he slept in locker rooms and didn’t have money to pay his coaches, but they still believed in him, and how he’d be steeped in debt had things not eventually worked out for him.

“I remember when I was 19, I was in a place called Wolfsburg in Germany. I was $1,50,000 in debt. My coach at the time believed in me and said that I can pay him back when win, but that meter was ticking all the time. So I invested in my fitness, I invested in my skills. I was not born into money. My father worked really hard as a doctor, and as an athlete, my mother worked really hard,” the tennis champ said

This ingrained in him the value of money.

Know your risk appetite, have liquidity

Learning from his life as an athlete, Paes mentioned how each one of us has to think about the amount of risk we can or cannot take. He invested 50 percent of the money he made from his tennis career between 23 and 43 years of age, in real estate. He did not want to deal with the daily volatility of equity as he needed to invest time in his physical, mental, and emotional fitness in order to perform well on court.

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“I did not want to wake up one morning and realise a stock had gone down 1-2 percent, and suddenly see my backhand becoming shaky. Or, the next day, a stock rises 3 percent, and suddenly I get so excited that I serve a double fault at the Wimbledon finals. I did not want that,” explained Paes.

But then, alluding to the present turbulent geopolitical events, he touched upon the importance of having liquid cash. “Over the years, I have invested smartly in real estate. But then came Covid. I finished a 31-year career and suddenly I sat back and said, oops, I need liquid cash. I think Covid taught a lot of us great lessons about having liquidity. If you look at what's going on in the world today, I think it is in a very vulnerable position,” he added.

Leave it to the experts

The tennis icon emphasised that it’s very important to have smart people do smart things, and that one must have a good fund manager to manage their money.

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“If you want to learn how to play tennis, guys, come to me, I'll teach you a trick or two. But if I want to learn how to manage my money, they (the MF pros) are all in this room right here,” said Paes.

Be calculating

Asked whether he looked at the prize money while planning his schedule, Paes said, “One hundred percent. You have to be tremendously calculating. We're always calculating, whether it's our groceries, rent, or our financial investments, we're always looking for that extra 1 percent. For me, the extra 1 percent on a tennis court allows me to win.”

Giving specific examples, he talked about how when planning his schedule, he preferred to stay in one continent for eight weeks rather than travel across the world so he could save on airfare. He also mentioned how in his long career, he played not more than 5 percent of the time in Scandinavia because after accounting for their high taxes and his expenses, he would be left with barely 15 percent of his prize money.

Paes said, “At the end of the day, to manage money as an individual athlete who does not have an association to pay for him or any sort of financial backing, you have to be very calculating.”