He’s controversial. He’s successful. He knows something (a little) about crypto. He definitely knows how to make money. Here is a summary of Mark Cuban’s investment strategies. Whether you practice these or not, or even agree with them all, they are worth a closer look. A wise person will learn from those who have been successful.
1. Pay off debt before you invest. This point seems wise, for the most part. But what about buying your first home or a second rental property? I think one good approach is to pay off mortgages as quickly as possible. If you can afford a shorter term loan, go for it. Get a fixed rate on mortgages and those that do not have penalties for paying off early.
2. Live beneath your means until you reach your financial goals. Cuban famously lived like a poor college student for many years, even when he could have lived much better. He drove the cheapest car he could find and shared apartment expenses with other guys. This enabled him to save, save, save.
I got married early, so this was difficult. If you all are single, save what you can while you can. I tell my son the same message all the time. He earns money and wants to buy expensive shoes to wear. I said, “ok.” Buy those shoes, but save half of what you earned. Then look into collecting shoes that have value and resell some of them. He sold his second pair of shoes for a profit recently and has several others listed to be sold. My son knows shoes much better than I do. Even while living beneath your means you can still invest and make money.
3. Don’t invest to get out of trouble. You’ve heard it before. Only invest what you can afford to lose. You shouldn’t gamble your grocery or gas money. Neither should you use money to invest with the hopes that things will just work out. Sometimes they do, but too often, they do not.
4. Do not invest in the stock market, unless its an index fund. This one may come as a surprise to many, but this is coming from a man who made money on more secure and profitable investments like real estate and the entertainment industry. Personally, I think that if you specialize in stock trading that you can make some serious money, but it is a gamble. I have done pretty well this past year with the index fund with the symbol FXAIX. I did some research on it first and discovered that it has a very strong history and among the lowest fees of any available.
Cuban has been quoted as saying that if you do buy a stock, do it because you believe in it and stick with it (unless something changes to convince you otherwise).
5. Only take great risks with 10% of your assets. Be more conservative with the rest of your investments. There is a risk with any investment. I think Cuban has taken plenty of risks; I believe that he is talking here about those really high risk projects. Never bet the house on those.
6. When buying crypto, stick with the big ones. I know that many of us will disagree with Cuban here. He is not a crypto expert. (I think that long-time Harvest Farmers or those that got in early on Polkadot, or many other altcoins may beg to differ). We all know that there is serious money to be made beyond Bitcoin and Ethereum; but he is an expert with looking at the big picture, assessing risks, and then making loads of money. Perhaps it would be wise to combine these last two points and only invest 10% of your crypto assets into speculative high risk-high reward projects.
7. Walk away from investments you do not understand. Its hard to fault him on this one. We can get into serious trouble if we throw money and assets around in areas of which we are not familiar just because someone else told us to do it. Stick with your comfort level and educate yourself.
I am by no means a financial expert, but I do believe that the little bit of success I've had has been based on following some of these same principles. I have been even more conservative than Cuban. Perhaps I need to be more aggressive with that other 10%. I will never catch up with him; I do not aspire to. I enjoy my simple and quiet life. But it never hurts to have a little extra financial cushion.