A game plan for the future
Argonauts linebacker MIKE O'SHEA tells THERESA EBDEN why RRSPs are part of his financial strategy
As the inside linebacker of the recent Grey Cup-winning Toronto Argonauts, Mike O'Shea makes a living knocking people down. Off the field, one of the most important things he's had to tackle is saving for retirement.
With 85 per cent of his holdings in stocks, the 12-year Canadian Football League veteran is planning to aggressively grow his savings well beyond his years in professional sports.
Salaries for CFL players tend to range in the five to low six figures instead of million-dollar-plus incomes received by their National Football League counterparts.
And that makes saving for retirement a very real concern for Mr. O'Shea, who at 34 is starting to research other career paths even though he has no immediate plans to hang up his helmet.
"As an athlete, you have to come to the realization that you're not going to be playing football forever, you're not going to be playing your sport forever," he says. "Your RRSP, you have to treat as your pension. You leave it to your experts and don't mess around too much. You look at it as forced savings, and stay away from speculative stuff."
For Mr. O'Shea, retirement saving started at age 19 when he had a wad of summer savings after working in his native North Bay as a line man - not the ogre-ish sort that flattens quarterbacks, but the kind that connects residential telephone wires for Bell Canada. A roommate explained to Mr. O'Shea how to get a big tax return by starting an RRSP. Mr. O'Shea followed through, collected his cheque for about $4,000, and then cashed in the RRSP soon after.
It was only a few years after his teenaged RRSP dalliance that Mr. O'Shea found himself playing for the Hamilton Tiger-Cats. There, he restarted his RRSP, this time for the long-haul. He set up regular deductions from his bank account, later buying shares of such companies as CryptoLogic Inc., Newcourt Credit Group Inc., Intel Corp., Microsoft Corp., and Fairfax Financial Holdings Ltd.
Even with his low starting salary, Mr. O'Shea says he would try to top up his RRSP at the end of each year. "A couple of guys on the team were stockbrokers and investment advisers, so it was easy - they explained the virtues of saving and investment."
ince then, he has always sought out financial advice from current or former teammates in the know.
His financial adviser now was once a fellow Argos linebacker: Brendan Rogers is with RBC Dominion Securities in Winnipeg. In addition to checking in with his adviser, Mr. O'Shea says he reads the business sections of newspapers, hoards back issues of personal finance magazines for tips and has even read through the Canadian Securities Course books.
Despite his strong start, Mr. O'Shea's investing history hasn't been without its fumbles.
One of his worst mistakes, he recalls, was acting on a tip from a teammate who rarely talked about stocks. He bought shares in a tech startup named Delano Technology Corp. The Richmond Hill, Ont.-based company went public at $18 a share in February, 2000, only to lose four-fifths of its value in one year before being acquired and delisted when it was trading at 11 cents a share in August, 2002.
There are, he says, similarities between investing errors and mistakes in sports. "There are decisions you make on the football field you can dwell upon. Then the next play comes and goes - and you've made another bad play. The same is with a stock player: You beat yourself up over not buying or selling soon enough, and you mis the bigger picture, like taking your gains."
Now, 12 years into his football career, Mr. O'Shea's income has increased and his RRSP has become an overall part of his tax strategy.
"As a pro athlete you get paid in lump sums and then you don't get paid anything. It's almost like at the end of every year you plan on using that money to survive, and also you hopefully plan on using that money to get a job, and you strategize for tax savings as you go along."
Mr. O'Shea recently took advantage of tax savings from RRSP contributions when he bought his home in Milton in 2002.
He borrowed from his RRSP for part of the 25-per-cent down payment, as part of the Home Buyers' Plan. Prior to this, he had contributed to his RRSP to fill up the room more than 90 days prior to the closing date, then kept the money in Treasury bills for safety. After withdrawing it for the down payment, he got a hefty tax return from the contribution as well as some nominal interest.
Getting raises over the years hasn't diminished Mr. O'Shea's concerns about retirement savings.
In the CFL, players know there are financial risks and challenges that other pro athletes don't necessarily face, including the lack of guaranteed contracts, he notes.
"If they cut you, you don't get paid. You can sign a five-year million-dollar deal, and they cut you tomorrow and they owe you nothing. Your planning is maybe not as easy as if you had 52 weeks of pay."
The league's pension plan allows players to contribute each year and have that matched up to $2,500, Mr. O'Shea says.
That leaves lots of room to contribute to his RRSP, which he looks at as a mini-mutual fund. He's bought shares in chemical and paper companies, a bank and other selected businesses .
When it comes to making his picks, Mr. O'Shea takes the lead from a different sort of champion: Berkshire Hathaway Inc. chairman Warren Buffett. Much like America's second-richest man, Mr. O'Shea says he tries to study companies and own what he understands and believes in.
"I haven't picked so many [stocks] that I've diluted my ability to have a good return. If you own five mutual funds, you're owning parts of different companies - you're really the master of none."
Mr. O'Shea has included his young family in his savings plans. He set up a spousal RRSP for his wife, Richere, and has been researching income-splitting. For his four-year-old son and two-year-old daughter, he set up Registered Education Savings Plans.
He also holds non-registered investments, and is the new co-owner of Philthy McNasty's sports bar in Toronto's Yonge and Eglinton neighbourhood. He says he has designs on becoming a commercial pilot, so owning a restaurant is just part of a bigger plan.
"Hopefully, it is one of a few businesses I'll have by the time I'm done playing football.
"I think right now I have the greatest job on Earth, and I have to find that next greatest job on Earth, and save while I'm doing it."
Theresa Ebden is a producer with Report on Business Television.