Mark Cuban didn’t grow up rich.As a kid, he sold stamps door-to-door and even reportedly offered disco lessons to help pay his way through college.
But by 40, he became a billionaire after selling his video portal Broadcast.com to Yahoo for $5.7 billion.Cuban is now worth $5.1 billion himself, and Forbes ranks him an eight (out of 10) on its self-made score — meaning he should be a perfect candidate for telling others how to get rich.
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Cuban aims to do exactly that in an article he published on Business Insider back in 2015, sharing his two tips on getting rich.He starts strong, saying there are no shortcuts to getting rich, and stays on message even to the end of the piece: “I didn’t say this was a get rich quick scheme.This is a get rich path.”
But when you probe a little deeper into his other pieces of advice, much of his strategies rely on fortuitous events no one can control.If they don’t pan out, you could find yourself in a far worse financial situation than when you started.
Here’s how Cuban says you can strike it rich — along with why he’s wrong and what you should plan to do instead.
Keep cash on hand In his post, Cuban says the first step to getting rich is to stop spending.He advises cutting up your credit cards, going so far as to say, “if you use a credit card, you don’t want to be rich.” Cuban’s right to discourage people from leaning heavily on credit cards for day-to-day expenses, but when used correctly, they can also be a great way to maximize your spending power.
The trouble is many people don’t use their cards correctly.
Story continues If you don’t pay your balance in full each month, you could pay upwards of 20% more for your purchases.But if you manage to close out your full balance in one payment cycle, you can take advantage of credit card cash back offers, rewards and discounts on purchases.And you’ll also be working to build your credit score .
But at the core of Cuban’s tip here is solid financial advice: spend less than you earn and save as much as you can.One of the best tools for accomplishing this is dead simple: creating (and most importantly) following a budget .
From there, he suggests sticking your savings in 6-month CDs so your cash is handy whenever you need it.
“You aren’t saving for retirement.You are saving for the moment you need cash,” Cuban writes.“Buy and hold is a sucker’s game for you.”
Learn a business “The second rule for getting rich is getting smart,” Cuban writes.By this he means learning the ins and outs of a business you truly enjoy.
“Find the one you love the best and get a job in the business that supports it.”
According to Cuban, you should wait for “times of uncertainty and change in your business” so you can pounce.This could be tomorrow, decades from now or it could be never.
If your moment does come, what exactly you’re supposed to do is anyone’s guess.Cuban only says that you’ll know because you know your field so well: “You will be ready because you will have been saving up for this moment in time.”
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How to actually get rich in two simple steps Cuban’s get-rich strategy may work for some but it hinges on the hope that you’ll hit a home run on a well-timed opportunity.Perhaps some like the gamble, but there’s a more sure path to riches.
Step One: Save Cuban got this part right: To get rich, save as much as you can.This may mean missing out on things today, like an annual vacation or having to make some tough choices when it comes to your 11 streaming services — but if your goal is future wealth, saving is the best initial action to get there.
And when it comes to saving, remember that not all accounts are created equally.If you want to keep your cash handy, in addition to CDs, you should consider a high-yield savings account .The interest rate on a traditional savings account could be as low as 0.01% a year, while high-yield accounts can be found with up to 5% APY.
Put your money somewhere it’s going to continue working for you rather than sitting stagnant.
Keeping your money in cash might make it possible for you to pounce on potential opportunities as they appear, however you’re also missing out on other chances to grow your funds.
Step Two: Invest If you really want to see your money grow, consider jumping into the stock market .Cuban may consider buy-and-hold a “sucker’s game,” but plenty of people have made themselves rich on that strategy — Warren Buffett included.
The tech-heavy Nasdaq, for example, has enjoyed an average annualized return of 10.4% for the past 30 years, while the S&P 500 gained a cumulative 875% over the same period.
Yes, there will be down periods where some years you’re likely to suffer losses.But if you’re investing with your long-term future in mind, that also provides savvy investors with opportunities to snatch up extra shares at basement prices.
Investors who bought a Nasdaq composite index fund 40 years ago have seen a return of 4,198%.
That being said, there’s no definitive recipe to get rich quick, whether in this summary or via Cuban’s strategy — even Cuban warns there’s no such thing as a shortcut to building your wealth.But at least with regular investing in the stock market, long-term returns are more reliable.
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This article provides information only and should not be construed as advice.It is provided without warranty of any kind.
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