Grant Cardone offers what I think is good investment advice.
“I would never, ever invest money in a 401(k),” Cardone tells CNBC. “Why would I go to work, have my employer give me another $6,000 a year, and then take that money and send it off to Wall Street, where I can’t even touch it for 30 years? I wouldn’t do that.”
The popular retirement plans are “traps that prevent people from ever having enough,” Cardone writes on his website. “The 401(k) is merely where you kiss your money away for 40 years hoping it grows up.”
Rather than focusing on saving, focus on earning — you can’t save your way to millionaire status, he says.
“Wall Street is telling you to invest little bits, early. They don’t believe in your ability to earn money,” Cardone tells CNBC. “People need to show the ability to produce more revenue — not invest it — first. People get rich because they produce revenue, not because they make little investments over time.”
And don’t just focus on earning — focus on earning big, says Cardone. “Keep stacking that paper until you have a hundred grand in the bank. I know this is very unrealistic for a lot of people, but the reason it’s unrealistic is because you’ve been conditioned to think small.”
Grant is promoting saving the money you earn, but counter to most advice, he says to put the money in a good old-fashioned savings account — where your money is accessible at a moment’s notice — until you have at least $100,000. Then, you can start investing.
“Put your saved money into secured, sacred (untouchable) accounts,” he writes on Entrepreneur. “Never use these accounts for anything, not even an emergency. … To this day, at least twice a year, I am broke because I always invest my surpluses into ventures I cannot access.”
There’s more at the link.
I think Mr. Cardone makes very good points indeed. In recent years, when ZIRP and QE have produced risible returns on investment across the board, many people have found they actually made negative returns by the time they factored in the fees they were being charged by their 401(k) management companies. If we follow Mr. Cardone’s advice, there’s always the risk that we can make a bad investment, but by having so much of a financial cushion to begin with, we’ll be able to absorb it and continue with our other investments. We won’t have all our eggs in one basket. What’s more, if we choose wisely and then lock down our investments so we can’t touch them, we’re much more likely to see success in the longer term.