How to grow your profits effectively

With the historic settlement now completed between House v. NCAA, college athletes would be entitled to a share of the revenue they help generate. Starting July 1, 2025, schools can share up to $20.5 million annually in revenue with athletes, along with billions in name, image and likeness (NIL) payments retroactively.

For the student-athletes who receive this compensation, it is an opportunity to build a stronger foundation for long-term personal and professional growth. For those with limited financial experience, this is a good time to adopt smart long-term investment strategies. Here’s what you need to know.

Breaking settlement and compensation for student athletes

Under the settlement, over the next 10 years, approximately $2.78 billion in compensation will be distributed to eligible current and former student-athletes. The settlement administrator, under the guidance of House class advisors (named for Grant House, a former ASU swimmer, and other athletes), will oversee and administer these payments.

Athletes will receive equal payments annually. Amounts will vary depending on several factors, including the sport, years of competition, and any scholarships available.

As for current athletes at participating institutions in the ACC, Big Ten, Big 12, Pac-12 and SEC, their payments will be managed and reported through the College Athlete Payment System (CAPS). This system enables schools to allocate funds to student-athletes, oversee payments and advancement against the cap, ensure compliance, and monitor roster allocations.

The following institutional payments to student-athletes count toward the annual cap:

• There are no direct payments by schools, their representatives and contractors
• Additional direct benefits paid to athletes and their families that go beyond NCAA rules
• Academic and graduation-related awards, maximum $2.5 million
• Athletic scholarships and other financial aid beyond scholarship limits, up to a maximum of $2.5 million

Although each school has a cap of $20.5 million for the 2025-2026 school year, that number will likely increase 4% annually over the next two years. It will be reevaluated every three years during the 10-year settlement period.

Before you invest

Before investing, it is important to focus on financial education. Building lasting wealth starts with knowing the basics and creating a clear plan.

“Not having a plan in place would be the number one mistake I see,” said Thaddeus L. Watkins, SE-AWMA, AAMS, CRPC, and financial advisor at Edward Jones. “No player will get on the court or field without a game plan.” “Imagine entering the biggest game of your life without a game plan. How successful will you be?”

It is also important to set clear goals. Are you saving for a car, a house, or long-term wealth? Your priorities and timeline should guide how and where you invest.

Additionally, working with a professional — preferably a fee-only financial advisor, not one who makes a percentage of your investment portfolio — can be beneficial because they can design a plan specifically to meet your needs and goals while helping you navigate savings, budgeting, taxes, and more.

Never

Once you define your goals and make a plan, you can start investing. Here’s what you might want to try.

Open a Roth IRA

A Roth Individual Retirement Account (IRA) is one of the best ways to build long-term wealth, as long as you meet the income requirements.

For 2025, to contribute to a Roth IRA, you can’t earn more than $165,000 if you file taxes as an individual. (For 2026, the amount is $168,000.) Married couples filing jointly cannot earn more than $246,000. (For 2026, the cost is $252,000.) For 2025, your contributions will begin to become limited once you reach the $150,000 mark as an individual, and the $236,000 mark as a married couple filing jointly. (For 2026, they are $153,000 and $242,000, respectively.) Note: These limits are based on your modified adjusted gross income (MAGI).

With a Roth account, you can make contributions with after-tax dollars. Your money grows tax-free. Your withdrawals in retirement are tax- and penalty-free, as long as you have had the account for five years and are older than 59 ½.

In 2025, if you’re under 50, you can contribute up to $7,000 per year, as long as you meet income limits. For 2026, $7,500.

Open a brokerage account

If you’ve maxed out your Roth IRA (or can’t contribute due to income limits), look into a taxable brokerage account. Unlike retirement accounts, these accounts have no contribution limits, income limits or withdrawal penalties, giving you access to the funds at any time. Although you’ll pay taxes on your earnings, these accounts allow you to invest for post-retirement goals, making them ideal for young athletes who want to start building wealth early.

If you focus your brokerage account on diversified, low-cost index funds or exchange-traded funds (ETFs) that track a broad market index, you can reduce risks and fees. This approach also helps you achieve long-term market growth without the stress of picking individual stocks.

Automate your investments

It can take time to develop an investing habit and discipline, so if you receive periodic payments, scheduling regular automatic contributions to your investment account is a smart way to stay consistent. It’s a simple and practical way to stretch your money and stick to your long-term goals. Just don’t forget to review your investment portfolio from time to time to ensure that your investments are still consistent with your goals and risk tolerance.

Diversify your investment portfolio

Distribute investments across different asset classes, including stocks, bonds and cash, to reduce risk and generate smooth returns over time. This investment strategy protects your investment portfolio because different types of investments often perform differently under the same market conditions. By not relying on a single asset type, your losses may not be as great.

Bonus: Use a budget

Another good idea is to create a budget. This is key to avoiding overspending and maintaining control of your money, especially if you suffer from lifestyle creep. Many popular budgeting techniques, such as the 50/30/20 rule and zero-based budgeting, enable you to manage your money effectively and build healthy financial habits.

The 50/30/20 rule states that you should spend 50% of your income on wants, 30% on wants, and 20% on debt or savings. “For a college athlete, the need might be to buy a textbook for class, while the want would be to buy a concert ticket,” Watkins said.

However, with some expenses such as tuition, fees, housing, and supplies often covered by scholarships, student-athletes may want to consider allocating more of their discretionary income to saving and investing.