Investing is not as difficult as you may think. However, due to this simplistic nature, many plunge into investing – or “investing” (they thought they invest on something – which is actually not) – and 90 percent of them, even more, lose their money.
So, knowledge and proper education (self-education plays a big role here!) about investing is mandatory. The next question is, where to learn to invest from?
I have several mentors that I follow for years for their advice on investing – but here’s one person that I overlook all this time: Shark Tank’s Kevin O’Leary.
O’Leary knows about investing. Mr. Wonderful, O’Leary’s nickname, is actually the Co-founder and Chairman of an investment firm, O’Leary Funds – as well as other business ventures.
I think he has ‘sufficient’ credentials for us to learn from about investing.
So, what’s O’Leary’s rules on investing? It’s very straightforward and downright simple really – so simple that it’s outrageous why people can’t just copy-and-paste his advice and be a successful investor. That’s exactly what I’m doing right now, and here are the three rules to live by.
Rule #1: Never own things that don’t give dividends
Over the last 40 years, 71 percent of market’s returns comes from dividends, not capital gain. So, O’Leary’s number one rule for investing is: Invest for dividends – not capital gain.
So always invest on stocks, businesses, real estates, etc. that give dividends (or cash flows), not capital gain (get the differences between purchase price and sales price.)
Rule #2: Diversify
O’Leary never own more than 5 percent on business ventures. This is very useful especially when the market is volatile, and the economy is uncertain.
In layman’s term, when you invest your money, never put all of your money in an investment or two; always limit yourself a certain amount, and when you hit that amount, find new opportunities to invest in.
Rule #3: Preserve capital
O’Leary wanted to create a new ETF in the market because he wants preservation of his capital while aiming to yield dividends more for a long period.
In other words, when you invest, always try to keep your capital intact, while acquiring new capital via the dividends that will yield more dividends. Rinse and repeat.
Here’s the video interview that talks the three rules in depth:
So, there you go – 3 rules to live by if you want to invest the Mr. Wonderful way. Those are pretty simple to follow but difficult to master – it take years for O’Leary, so be sure that you have the patience and perseverance to do it.
As you’ve seen, the Rules don’t fit well in any get-rich-quick game; on a contrary, the rules are for the long-term game. I don’t know what about you, but for me, aiming for the long term is more prudent, safe and profitable; just my kind of investing style.
Are you investing the Mr. Wonderful way? If so, please share your experience; if not, please share your reasons.