If being 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’m just not a believer in saving money,” Corcoran, a real estate entrepreneur and star of ABC’s “Shark Tank,” recently told CNBC Make It. “I’ve never saved a dime my whole life.”
Cardone, CEO of Cardone Capital and author of “The 10X Rule,” agrees. “Saving, saving, saving won’t bring you wealth,” he said in a recent tweet.
So how do you build wealth? Spending and investing, Corcoran and Cardone say. Here’s how they do it.
‘Cash flow is king’
You can think of saving money as parking it and leaving it until you need it. But Corcoran and Cardone both say you should keep your money moving if you want to build real wealth.
“True wealth is through investing,” Cardone told his followers in a video posted to Twitter. “Invest in things that [create] cash flow.”
Investing can be intimidating because of the potential to lose money. But Cardone says fear could hold you back from growing your net worth. Instead of saving your cash and being too afraid to spend it, he says you should invest it in assets that will generate more income for you.
“Cash is not king; rather, cash flow is king,” Cardone wrote in 2018. Investing in yourself or your business to grow your income are great ways to start, he says. He also recommends investing in assets like real estate that produce cash flow.
Similarly, Corcoran says spending her money on the right things — like investments in startups and her real estate firm — made her both richer and happier.
“Believing that money makes money, if you’re willing to share it and spend it, really works, or at least it has certainly worked for me,” Corcoran says. “I really believe if you spend money it comes back to you.”
Don’t let fear get in your way
Neither Corcoran nor Cardone got to where they are today by being afraid of the worst possible outcomes. In fact, Corcoran says she was about to go bankrupt “for the fifth time” right before she thought of an idea that wound up making her $1 million in a single day.
She attributes her confidence to her mother, who told her not to worry about the money. “It’s a waste of time,” she said.
On the contrary, Cardone says his parents were afraid to invest because they were afraid to lose money.
“They didn’t take money and leverage it into investments because they were terrified of losing their money,” he says.
That’s understandable — plenty of people have lost their shirts on bad investments. But the stock market has historically recovered from every major dip, so if you invest long-term, there’s a good chance you’ll see your money grow.
One smart and popular way to get started is by investing in low-cost index funds. These investment vehicles follow a benchmark index like the S&P 500 or the Vanguard 500, and typically have fewer fees than actively managed funds. It’s a cheap and efficient way to get a diversified portfolio without as much risk as picking individual stocks.
