Investment advice from a Billionaire

I have no idea whether Mark Cuban was as wildly open about things before he was a billionaire. I do so love reading about half of his posts though. The other half have very little of interest to me. This most recent one he posted under the title “My investment advice for 2006” is quite interesting. Read it all before you make a true decision on it, but I love it. It’s smart and sound advice. I wish that the advice had come many years ago.

Of course it begins rather wildly.

Every year at this time, everyone and anyone who has a vested interest in selling stocks comes out and talks about how great a year its going to be in the stockmarket. Of course its all nonsense and bullshit. NO ONE knows what the market is going to do.

then after a bit of inspection of the mutual fund arena and commercials for investment brokerage, he gets down to the proverbial brass tacks.

So what to do if you want to invest your money ? What to do if you want to end this year with more than you started with ?

Simple, avoid risk.

How, you might ask? He’ll tell you.

So here is my investment advice for anyone who doesn’t have enough saved to walk away from their job and retire…

1. If interest rates stay where they are or go higher, look at 5 year or shorter maturity vehicles. It doesnt matter if its a bank CD, a money market fund, a tax free fund, treasuries or combinations there of. Bottom line is this, 4plus percent taxed, or up to 6 plus percent tax free equivalent (depending on your tax bracket), is not a bad way to go. If rates go down, do the same thing, evenif you earn a lower rate. At the end of the year, you are guaranteed to have more than you started with.

2. Evaluate your lifestyle. People forget that sometimes the best investment they can make is in wisely buying things they know they will use. If you track what you use and consume, whether its gas vs bus fare, buying bulk quantities or other discretionary spending, you can save more and earn a far greater return than you could in the stock market. If you can save 10pct per month on a hundred dollar per month budget, thats 120 bucks you can put in the bank. Thats the equivalent of earning 12 pct on a 1k dollar investment. If you can cut 100 bucks per month off 1k dollar monthly budget, thats like earning 12 pct on 10k dollars. Thats pretty darn good. Spend smart, put your savings in risk averse, interest earning offerings.

3. Invest in yourself. Do the things that can get you closer to your goals and dreams. It wont come from a brokerage commercial. It will come from preparing yourself , working hard and standing apart from your competition. You Inc is the best stock you can ever buy…if you are willing to do the work.

Of course, these are just the high points of the entry, but overall, I think it’s very sound advice. If I had begun doing some of these things about 7 years ago, I would be in a much better place financially than I am now. I was lucky enough to not have enough money to invest during the dot-com bubble, so I didn’t lose much, but when you don’t have much, any loss is too much.

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About Shane Ede

Shane Ede is an IT guy by day and a Entrepreneurial Blogger by night. You can follow him here on Thatedeguy or over on Twitter and Google+.