July 8, 2020

What I learned about money from Kevin O’Leary

Another book sale, another 10 – 15 new books in my collection. It’s a sickness really but a good thing I suppose – I feel like every time I pick up a few new books to add to my library, I am absorbing more collective knowledge that I can draw from and inspire my writing.

Kevin O’Leary is probably someone you know – he’s on Dragon’s Den and on Shark Tank (though I know him mostly from Shark Tank). On Shark Tank, he is, and I hate to admit it but in his words, he has the most creative deals. While most of the sharks tend to offer straight up cash for a percentage of companies, Kevin is often offering deals such as loans, or a cut of each of the sales or some combination of the above. It might also be his TV personality (though I think he may be like this in real life too) but he is often the one dropping harsh truths on people when they are either not cut out to be an entrepreneur, lie about their numbers or hide something such as investment rounds or large debts during the entrepreneur’s pitches.

All that said, I was excited to see what Kevin had to say about money – it’s a subject that I’m quite interested in (I mean who isn’t interested in the subject) and I wanted to figure out how to change some of the mindset and values that I have around money given that I was not very good at managing it when I was younger. Like his TV personality, Kevin’s book offers some harsh truths about money that I thoroughly enjoyed.

Don’t spend too much. Mostly save. Always invest.

A quote that is quite similar to a quote from Michael Pollan’s book ‘Food Rules’ which offers a similar simple takeaway for how you should be eating food. This basically sums up the book but with other books and things that I absorb, I want to get at the key tactics to do the above.

If you want to start saving money, you need to first figure out where you are at

What’s the first thing that you do when you are lost? You pull up a map (or I suppose your phone) and figure out where you are and then where you need to get to. You wouldn’t just randomly start walking somewhere without figuring out where you are or where you need to be because you may end up staying lost or traveling in the wrong direction and then having to backtrack. It’s the same with money. If you want to save 10% of your money, you need to understand how much you are making and what you are spending and then adjusting those two numbers to get to the goal you set.

Your investment portfolio should change with your age

In short, when you are younger, you can take a few more risky investments (ones that have high risk / high reward) because you have the time to hold for a long time and make them pay off. As you get older, you should be investing in more conservative investments as you do not have the time (or the money) to make risky investments where you can lose a significant portion of your wealth. Similar to The Millionaire Teacher, a good rule of thumb is to match your portfolio’s investments in safe / conservative investments with your age (i.e., if you are 20, 20% of your portfolio should be say in bonds and if you are 50, then 50% of your portfolio should be in bonds).

Money and family

  • Get a prenup – get a good lawyer to help you draft it up and protect your wealth
  • If you want to get your kid out of your basement or home, charge them rent and treat them like how any landlord would treat a bad tenant (cut off their AC, change their locks)
  • If you lend money to family, friends or relatives, don’t expect to get it back – you may not be able to decline the first request but after you have lent money to them, you can tell them that you have already lent them money and decline
  • Minimize your baby’s expenses – your baby doesnt need fancy clothing (especially if they are going to grow out of them), you do not need fancy or expensive baby toiletries, you do not need fancy toys and you should strengthen your no’s if you go to a toy or candy store. Kevin’s wife, before entering a store with lots of tempting items for their children, would stop their children before going into the store and tell them what they were here for and what they were purchasing. Anything else was out of the question. I think this is a great way to set expectations for children up front.

Again, I like Kevin’s no nonsense approach to talking about money. It’s something that I rarely talk about with my friends (sometimes we talk about investments) but we don’t really talk about the ugly side of debt, lending money, mortgages, expenses of children or parents and other things so I appreciate that I was able to learn from Kevin’s experience on the matters.


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