'Learn this word': Shaq reveals the 1 concept he used to preserve his fortune as an NBA player — and you don't have to be a millionaire to apply it

“I saw horror stories about how five years after professional athletes stop playing, they have nothing,” Shaq explained during an interview with social media personality James Dumoulin published Dec. 12. “I didn’t want to be part of the horror stories, so I had to teach myself.”

Being a professional athlete is a glamorous but short-lived career. According to research by RBC, athletes typically retire before the age of 30 — with an average retirement age of 28 for NBA players. Few become superstars with the earning potential and longevity of Shaq — who played 19 seasons in the league — while many others may not acquire his financial discipline.

Dumoulin pressed Shaq on how he managed to preserve his vast fortune. The basketball Hall of Famer didn’t hesitate to answer.

“I think for those who are not financially literate, learn this word: annuity,” he said.

The magic word

An annuity, in simple terms, is a financial product that provides a steady stream of income, often used for retirement or as a tool to safeguard wealth over time. It can be structured to pay out regularly for a set number of years or even for life, making it a powerful way to ensure financial stability.

While Shaq didn’t go into detail about his specific investments, his advice underscores the importance of financial literacy and the use of strategies that prioritize long-term security over short-term splurges. For professional athletes like Shaq, whose peak earning years can be short-lived, tools like annuities offer a way to convert substantial but finite earnings into a lasting income stream.

In fact, when it comes to financial discipline, Shaq shared a piece of advice he once received: “Save 75% and have fun with 25%.”

The save-and-invest mentality is what enabled him to build upon his fortune. He was an early investor in Google and invested in Ring before its acquisition by Amazon. He also operates a large portfolio of restaurant franchises.

For those without the benefit of an NBA-sized paycheck, saving three-quarters of your income might seem out of reach. However, the core lesson remains universal: whether you’re earning millions or living on a modest salary, knowing how to invest your money wisely — including the use of tools like annuities — can set the stage for long-term financial success.

Start small, build big

Many insurance companies offer annuity products that allow you to invest money upfront — either as a lump sum or through regular payments — in exchange for guaranteed income in the future. You can choose from different types, such as fixed annuities, which provide a guaranteed payout, or variable annuities, where returns are tied to market performance. The key is to find a product that aligns with your goals and risk tolerance, offering you the ability to build wealth steadily without requiring a large upfront investment.

For those looking to diversify, investing in dividend stocks is another way to generate passive income. Many blue-chip companies pay regular dividends — a part of their profits — to shareholders. Some of these companies even raise their payouts annually, making them an attractive option for investors seeking a reliable and growing stream of income in retirement.

Again, you don’t have to start big. One accessible way to start investing dividend stocks is through platforms like Acorns. Acorns makes it easy for anyone, even beginners, to grow their wealth by automatically investing spare change from everyday purchases.

Signing up for Acorns takes just minutes. Link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference — your spare change — into a diversified portfolio.

For those seeking a more customized experience, Acorns Gold allows for a mix of automated investments and individual stock selection, giving you the flexibility to tailor your strategy.

With Acorns, you can invest in a diversified portfolio with as little as $5 — and, if you sign up today, Acorns will add a $20 bonus to help you begin your investment journey.

Passive income from real estate

Real estate is another compelling investment option that aligns well with Shaq’s emphasis on financial tools like annuities, thanks to its ability to generate consistent cash flow through rental income.

It can also serve as a hedge against inflation: when inflation rises, property values often increase as well, reflecting the higher costs of materials, labor and land. At the same time, rental income tends to go up, providing landlords with a revenue stream that can adjust for inflation.