Investment Tips for College Athletes: How to Grow Your Earnings Effectively

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Key Takeaways

• College athletes are now entitled to receive up to $20.5 million in revenues from their schools.

• Before investing, it's a good idea to learn the financial basics and build a strong foundation.

• Roth IRAs are one of the best tools young athletes can use when starting their investment journey.

With the landmark House v. NCAA settlement now finalized, college athletes will be entitled to a share of the revenue they help generate. As of July 1, 2025, schools can share up to $20.5 million annually in revenue with athletes, alongside billions in retroactive name, image, and likeness (NIL) payments.

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

Breaking Down the Settlement and Student-Athlete Compensation

Under the settlement, over the next 10 years, about $2.78 billion in damages will be distributed to eligible current and former student-athletes. The settlement administrator, guided by the House class (named for Grant House, a former Arizona State University swimmer, and other athletes) counsel, will oversee and manage these payments.

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

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 progress against the cap, ensure compliance, and monitor roster allocations.

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

• NIL payments directly by the schools, their designees, and contractors

• Additional direct benefits paid to athletes and their families that go beyond NCAA rules

• Academic and graduation-related awards, capped at $2.5 million

• Athletic scholarships and other financial aid exceeding scholarship limits, capped at $2.5 million

Although each school has a $20.5 million cap for the 2025–2026 academic year, that number will likely increase by 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's important to focus on financial education. Building lasting wealth starts with knowing the fundamentals and having a clear plan.

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

It's also crucial to set clear goals. Are you saving for a vehicle, a home, 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 an advisor who makes a percentage of your portfolio—can be beneficial because they can tailor a plan specifically to your needs and goals while helping you navigate savings, budgeting, taxes, and more.

Getting Started

Once you’ve outlined your goals and made a plan, you can take on 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 make no more than $165,000 if you file taxes as an individual. (For 2026, it's $168,000.) Married couples filing jointly can make no more than $246,000. (For 2026, it's $252,000). For 2025, your contributions start to become limited once you hit the $150,000 mark as an individual, and the $236,000 mark as a married couple filing jointly. (For 2026, it's $153,000 and $242,000, respectively.) Note: These limits are based on your modified adjusted gross income (MAGI).

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

In 2025, if you're under age 50, you can contribute up to $7,000 annually, as long as you meet the income limits. For 2026, it's $7,500.

Open a Brokerage Account

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

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

Automate Your Investments

It may take some time to develop the habit and discipline of investing, so if you’re receiving periodic payments, scheduling regular automatic contributions to your investment account is a smart way to stay consistent. It’s a simple, hands-off way to grow your money and stick to your long-term goals. Just don’t forget to review your portfolio from time to time to make sure your investments are still aligned with your goals and risk tolerance.

Diversify Your Portfolio

Spread investments across different asset classes, including stocks, bonds, and cash, to reduce risk and smooth returns over time. This investment strategy protects your 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 hit as hard.

Bonus: Use a Budget

Another good idea is to make a budget. This is key to avoiding overspending and maintaining control over your finances, especially if you're experiencing lifestyle creep. Several popular budgeting techniques, such as the 50/30/20 rule and zero-based budgeting, can you 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 debts or savings. "For a college athlete, a need might be to buy a textbook for class, while a want would be to buy a concert ticket,” Watkins said.

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

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