Have you lost your shirt? You're in famous company

April 26, 1992|By Glenn Burkins | Glenn Burkins,Knight-Ridder News Service

Financial blunders aren't limited to working stiffs. Even top-dollar athletes fall victim, says the May-June issue of Real People magazine.

Naivete, trust in managers and the desire to make a quick buck have landed many pro athletes in financial hot water. For example:

* Tony Dorsett, a former running back for the Dallas Cowboys and Denver Broncos, lost $525,000 on non-performing oil-stock options.

* Basketball star Kareem Abdul-Jabbar of the Los Angeles Lakers said he lost $9 million on bad real estate projects in Southern California.

* Tennis champ Bjorn Borg lost his $3.75 million villa after his clothing company collapsed.

*

Now that interest rates are down, many income-hungry investors have turned their backs on certificates of deposit. Instead, they are racing to buy mutual funds that invest in government bonds.

In the first two months of 1992, investors pumped more than $4.6 billion into government funds, up from $500 million in the same period last year.

Although these funds do offer higher yields than CDs, they also carry greater risks: You could lose some of your principal. And in most cases the higher-yielding funds are the most volatile.

One way to measure volatility is to track a fund's share price (its net asset value) quarterly, over a period of three to five years.

In a bad year, the less volatile funds may show a decline of 1.2 percent to 2 percent, said Charles J. Mohr, president of SunAmerica Asset Management Corp. in New York. But funds that are most volatile may decline by up to 7 percent.

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