Legendary shark Mark Cuban shares some insights to help us invest better.

Who is Mark Cuban?

Known by many as one of the main legendary faces of “Shark Tank”, Mark Cuban is a prolific entrepreneur who’s invested in hundreds of successful companies over the years.

Before his rise to fame, Cuban had founded and sold several startups, which would eventually catapult him to billionaire status. In the year 2000, he further reinforced his unique personal brand by purchasing a majority stake in the Dallas Mavericks for about $285 million. Under his ownership, the team managed to snag an NBA championship in 2011, leading to an estimated increase in value of about $2.3 billion, according to Forbes.

Although Cuban has a long record of financial achievement, in his early 20s, he had always been broke. He slept on the floor of a residence he shared with six others, had his lights turned off frequently and had his credit cards cut off. Despite never having any relevant experience, Cuban began the learning process by securing a sales gig at the tech company ‘Your Business Software’. Challenges did not stop him from mastering the art of management of personal capital.

MicroSolutions made Cuban a millionaire. He sold the business to CompuServe for $6 million in 1990. Five years later, he launched Broadcast.com with a pal, Todd Wagner, which Yahoo purchased in 1999 for $5.7 billion in stock.

Here are some tips that Cuban has which could help anyone in Malaysia or anywhere else in the world achieve personal financial independence.

Safeguard Against Failure

  • Risk management is a big key factor when it comes to investing. Mark Cuban advises to never put more than 5% of your cash into one stock. In fact, if he falls in love with a particular company and his investment begins to grow to more than that amount, he makes it a point to trim that percentage back.
  • On top of this, Mark doesn’t encourage dumping more than 20% into one sector. He had a piece of the pie in the energy market when it collapsed, but he wasn’t as badly affected as many other investors because of this particular rule.
  • According to him, it’s a good idea to put in roughly half of your investments in dividend-paying stocks and the other half in bonds. Mark’s mother was the one who taught him this approach – she believed that if you aren’t getting paid, then you shouldn’t be investing in the first place. Mark never lets his fund managers ever purchase a stock that doesn’t issue a dividend.

Grow Your Knowledge and Sharpen Your Mind

  • Read and ravenously absorb knowledge. You don’t know what you don’t know, and, as Cuban points out, bringing yourself and your organization to a new level requires only one nugget of wisdom. Make it a priority to gain new knowledge on a regular basis.
  • Pick content that challenges the brain. A study from Ghent University showed that learning complex new knowledge, such as another language, substantially slowed down the onset of Alzheimer’s disease more than in the control group. It is good to practice complex problem solving because it tends to lead to mental strength, which you may eventually need as an entrepreneur.
  • Keep up to date on developments in the industry. As markets change and move, new opportunities emerge every day when it comes to business solutions.

Know Your Strengths and Stay Focused

  • One of the most powerful abilities in life and business is the ability to identify your own sets of strengths and weaknesses. Cuban believes that one must know one’s unique advantages and play to these. Identifying strengths and focusing on them can take practice and effort. He claims that most people get an idea, and they get a little bit of traction but then things get tough. From there on, it’s tempting to look for other things to do as opposed to playing to your strengths. However, don’t expect business to be easy. Expect to dig in and work hard.
  • Mark Cuban is an advocate of a sales-driven approach. Focus on honing in on the ability to sell – whether an idea, a product or service. If that’s something you can do, that’s great. If not, develop the skill or find someone that already has that skill.

Take (Calculated) Risks

  • Invest in what you understand. Identify, as O’Leary calls it, the inventory of knowledge. What kind of expert are you? What businesses or goods do you love? Build a portfolio around them.
  • Do the homework. With the Internet, huge amounts of information can be accessed. Use it.
  • Prioritize capital return. Instead of concentrating on how much profit you can generate, decide how easily your investment will be recouped. As an example, “I give $500,000 to someone, and I first find out how the money gets home”.

Negotiate Everything

  • Monthly bills for cables and electricity creeping up? Call to inquire if it is possible to do anything to eliminate them. Is the surgeon’s bill $10,000? Ask for $7,000 with an instant payment option. Do you have useful skills? Suggest a service swap.
  • The second mistake is to assume that money is all about negotiation. The pain of paying too much might fade, but the disappointment of poor value may endure. You possibly won’t recall, years from now, that you overpaid for anything, but you might remember the quality and service you received.

 

 

Do Mark Cuban’s tips resonate with you? Share your thoughts with us in the comments below.

 

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