Illustrated by Elham Atayazar
If getting rich means having a lot of money, saving money should logically help you get there. But self-made millionaires Barbara Corcoran and Grant Cardone disagree.
“I don’t believe in saving money,” Corcoran, a real estate entrepreneur and star of ABC’s “Shark Tank,” recently told CNBC Make It. “I have never saved a penny in my life.”
So how do you build wealth? Spending and investing, Corcoran and Cardon said. Here’s how they do it:
You can think of saving money as parking and leaving it until you need it. But both Corcoran and Cardoon say that if you want to build real wealth, you should keep your money moving.
“True wealth comes through investment,” Cardone told his followers in a video he posted on Twitter. “Invest in what’s next” [create] cash flow. ”
Investing can feel intimidating because you can lose money. However, Cardon said fear could hinder net worth growth. He should save cash and invest it in more income-generating assets instead of being afraid to spend it, he says.
“Cash is not king. Rather, cash flow is king,” Cardon wrote in 2018. Investing in yourself and your business to increase your income is a great way to start, he says. He also recommends investing in assets such as real estate that generate cash flow.
Similarly, Corcoran says spending money on the right things, such as investing in startups and real estate companies, has made her richer and happier.
“Believing that money makes money really works if you share it and spend it willingly. It certainly worked for me, at least,” says Corcoran. “I believe that if you spend money, you will definitely get it back.”
Neither Corcoran nor Cardone got to where they are today out of fear of the worst possible outcome. In fact, Mr. Corcoran says he was on the verge of bankruptcy “for the fifth time” just before he finally came up with his $1 million-in-a-day idea.
She attributes her confidence to her mother, who told her not to worry about money. “You’re wasting your time,” she said.
On the contrary, Kaldon says his parents were scared to invest because they were afraid of losing money.
“They didn’t take the money and invest it because they were afraid of losing it,” he says.
It is natural. Many people have lost their shirts to bad investments. But the stock market has historically rebounded after every major drop, so there’s a good chance you’ll get more money if you invest long-term.
One smart and popular way to get started is to invest in a low-cost index fund. These investment vehicles follow benchmark indices such as the S&P 500 and Vanguard 500 and typically have lower fees than actively managed funds. This is a cheap and efficient way to get a diversified portfolio without taking as much risk as choosing individual stocks.
Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”
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