Poker Articles

You’re trying to stay focused as you quickly glance to see your time bank still at 0.  You’ve been playing the best poker of your life - in the biggest online poker tournament of the week.  It’s been a long battle, but somehow you find yourself heads up for the championship with the chip lead.  After re-raising before the flop, you attempt to trap your opponent with a weak lead after flopping two pair.  Your opponent immediately pushes the rest of his chips into the pot and you can’t call quickly enough.

You see that the villain has revealed a flush draw under his avatar, but your strong glare instantly moves back to the blank spot where the turn card is due.  You let out a minor sigh of relief when the turn hits a blank but your mind quickly starts racing thinking of how the river card could play out.  After what seems like an eternity, the final card hits the board and you jump out of your seat as it misses the draw.  You don’t even comprehend the final joke Lee Jones is saying to your new best friend who just finished 2nd, but instead immediately go to your cashier screen to see what you actually just won in the last 9 hours.  You’ve just hit the biggest score of your life – now what do you do?

Many poker players play a similar scene over and over in their heads while they think about their poker goals and what they would like to accomplish.  It seems like such a distant dream for so many players to even get to play in a weekly big tournament – let alone to even have a fighting chance at a win.  The truth is that this could happen to anyone and in sometimes a relatively short period of time.  For instance, I had only deposited $200 into my account 11 days before I won the weekly Sunday Million on PokerStars.  From my personal experience as a poker player and a financial advisor, I would like to share some key things I’ve learned about hitting a big score:

• You don’t need to play higher tournaments or jump into the biggest cash games now that you have a lot of money.  If you weren’t ready for high stakes one day ago, don’t think that extra money will make you any more ready.

• A big reason why we all play poker is to win money.  Now that you’ve accomplished that you need to keep it that way by being smart with most of the winnings.  Keep as much as you feel comfortable in your bankroll but get the rest of the money “working” for you ASAP before you have to pay taxes.  A good strategy I teach is to project how much you are going to have to pay in taxes next year, and then take all of that “tax money” to buy a CD at a bank for as long as you have before your taxes are due. 

For example:  If you calculated that you owe $50k in taxes by April 2009 and it is now March 2008, I would suggest you immediately buy a 12 month CD at your bank that would pay up in March of 2009.  In this example, you just pocketed around an extra $2,500 on money you couldn’t spend anyways that you normally would have just paid to Uncle Sam.

• Since you will probably play a lot more poker with your new found wealth, an analogy I like to use is that you have the “high risk investment covered in your portfolio.”  Compared to other similar investments, I believe in playing poker as an investment that will fluctuate like crazy in the short term, but should be profitable in the long run.  If you can start getting your money working for your in more “conservative” investments, then you are on a great path to “diversifying yourself.”  Diversification is just a fancy word for balancing risk between your investments.

• One of the best investments you can do is one where your earnings grow and compound tax-free.  Investment products like Cash Value Life Insurance or Variable Annuities are perfect for those who have a lot of money to “front load” - which just means a big chunk put away all at once. 

The reasons I believe Cash Value Life Insurance is one of the best investments for many poker players are:

1.  All of the money in your “mutual fund” side accounts grow tax free and are even tax free upon withdrawal.  This is similar to a Roth IRA but with Cash Value Insurance you have much higher contribution limits.

2. When you “front load” cash value insurance, especially at a younger age, your cost of life insurance is a lot lower (then when you are older and need it) and your money starts compounding tax free at a quicker rate. 

3. The money in your side accounts is available to you a lot quicker than with traditional retirement plans like IRA’s or 401k plans.  A younger person may not like that fact that they have to wait until they are 59 ½ before they can get their savings without penalties.  With Cash Value Insurance there is no age requirement to get your money out tax free. (as long as you don’t lapse your policy)

4. Some other great benefits of cash value insurance policies are that there not traceable by the IRS, nor can you get sued for any funds you have in the account at any time.  These two facts alone can save you a lot of hassles - especially if you have saved up over $ 1 million into these investments.

The main point I have been making is that there are measures you need to take when you hit a big score.  For some people a big score is over $1 million dollars, while others view their first 5 figure score as life changing.  The bottom line is that it is never a bad time to become a responsible poker player.  When you do finally hit the big score you’ve been looking for, remember to take a step back and evaluate all of your new found options before diving right back into the tables.