Billionaire Mark Cuban is the owner of the Dallas Mavericks, an investor on the famous popular show Shark Tank, and co-owner of the media company 2929 Entertainment. His net worth is estimated at $4.7 billion, which he earned primarily through investing in startups over the course of his career.
Cuban has been outspoken with advice that everyday investors can use to build their wealth. In this guide, we’ll look at ten pieces of Mark Cuban investment advice that you can use to become a more successful investor.
Mark Cuban’s Investment History
Mark Cuban got his start by founding a software company called MicroSystems in the mid-1980s and ultimately sold the company for a $2 million profit. Cuban then joined Broadcast.net, which was acquired by Yahoo! just before the dot-com bubble burst. He used the proceeds from these sales to invest in new technology-focused startups throughout the early 2000s, many of which were acquired by larger competitors.
In 2011, Cuban joined as a judge on the ABC show Shark Tank and has invested nearly $20 million through the show. Cuban has also been the majority owner of the Dallas Mavericks NBA team since 2000. He is currently ranked #177 on the Forbes 400 list.
Mark Cuban Investment Advice
Over the years, Cuban has offered investment strategy advice through several interviews. He focuses on ways to invest money outside the stock market and incorporates personal finance as a critical aspect of investing.
Let’s take a closer look at Cuban’s top 10 pieces of investment advice.
1. Pay Off Your Debt
According to Cuban, “the best investment you can make is paying off…whatever debt you have.” He encourages anyone with credit cards to pay off the balances in full each month so that you never accrue interest payments. He also suggests paying off existing credit card debt or personal loans before worrying about investing.
Aside from paying off credit card debt, Cuban advises you to pay off other high-interest debt. When you make payments ahead of time by making more than the minimum payment, you will receive a guaranteed return because of the money you save. Also, it is pretty difficult to beat the returns from paying high-interest debts. If you have student loan debt, also pay it off.
2. Risky Investments Are Okay in Limited Quantities
Cuban has made his career investing in startups, which is inherently risky. While he acknowledges that high-risk investments aren’t suitable for everyone, they can be part of a balanced investment portfolio. Therefore, he suggested taking advantage of investment opportunities.
“If you’re a true adventurer and you really want to throw the Hail Mary, you might take 10 percent and put it in Bitcoin or Ethereum,” says Cuban. However, he suggests that if you make high-risk investments, you should limit your exposure to 10% of your portfolio and treat that money as if you’ve lost it altogether.
Self-made millionaires and billionaires got to where they are by taking calculated risks. Therefore, investing in a completely risky venture is advisable as long as it is only 10% of all your investments. Then develop a benchmark for measuring the performance against that of your other investments.
Finally, if you like adventures, Cuban suggests throwing a hail Mary and putting a 10% investment into Ethereum or Bitcoin. But if you do that, just as with every high-risk investment, you have to pretend that you’ve already lost your money. Cuban said it’s like collecting baseball cards and collecting art.
3. Think of Discounts as Investments
One very unique aspect of advice Cuban offers is about how you spend your money on everyday items. For example, he points out that if you can get a discount on household supplies like toothpaste and toilet paper, buying them in bulk is just as good as putting money into the market. So Cuban recommends becoming a smart shopper and living cheaply.
“Saving 15 percent on $1,000 worth of items you know you will absolutely spend money on is a better return on your money than making 15 percent in a year on a $1,000 investment,” says Cuban, “because you don’t pay taxes on it.”
4. Keep a 6-Month Rainy-Day Fund
Cuban advises everyone to keep at least six months’ worth of income stashed away in a savings account, so you have a safety net in your bank account when you need one. Cuban told Vanity Fair “If you don’t like your job at some point or you get fired or you have to move or something goes wrong, you’re going to need at least six months’ income.”
5. Invest in Learning
While Cuban typically advises against spending money on things you don’t need, he has a soft spot for books. He points out that “spend[ing] $30 to get one idea that could help propel me, make my businesses better — it was a bargain.”
So, spend time browsing bookshops and looking for educational resources that can help you reach your financial goals or become a better investor. One of Cuban’s recommended books is “The Only Investment Guide You’ll Ever Need” by Andrew Tobias. So start investing in learning.
6. When You’re Not Sure, Play It Safe
One of the opinions expressed by Cuban is “the No. 1 rule of investing: When you don’t know what to do, do nothing.” According to this advice, it’s better to sit on the sidelines than blindly throw months of income at an investment you don’t fully understand. As an example, if the market is crashing and you don’t know what to do, Cuban suggests that the best plan of action is to wait and see what happens.
7. Time is Valuable
One smart way to invest your money, according to Cuban, is to spend it in exchange for time. “I can make things happen more quickly by paying a little bit more,” he says, “and that’s important because time is the one asset you can’t own, buy, or get back.”
8. Consider CDs
While most investors would point to the stock market as the best way to invest their money, Cuban isn’t such a believer in the market. “Buy and hold is a sucker’s game,” he says. Also, it’s hard to pick the right stock, the right index fund, or the appropriate mutual fund.
Instead, Cuban suggests putting your money in a Certificate of Deposit (CD) because they’re safe, reliable, and easy to understand. “Those who put their money in CDs sleep well at night and definitely have more money today than they did yesterday.”
9. Take Advantage of Low-Interest Rates
Another far better way Cuban suggests saving money – which, as he is quick to point out, is just as good a way to increase your wealth as investing – is to refinance your mortgage or student loans whenever interest rates drop. While this can be a headache in the short term with no immediate return, it can save you significant amounts of money in the long term.
10. Live Beneath Your Means
Cuban also suggests that you should live frugally. Instead of buying a new car, consider a used vehicle. Instead of moving out on your own at the first opportunity, consider living with your parents for another year or getting a roommate. These changes can add up over a lifetime and earn you more money than any investment could.
Conclusion: Mark Cuban Investment Advice
Mark Cuban has made billions of dollars by investing in startups and being conscientious about how he spends his cash. But, for most people, he suggests that the best way to grow your wealth is to reduce your spending and be alert to non-traditional opportunities to put your money to work for you.