I’m sure you are reading this and thinking “Larry, I came to your site to learn how to invest, not shop.” That is true, and we have plenty of articles on the subject. Instead, today I wanted you to think a little different about investing.
Because being a smart shopper is the first step to getting rich.
We are soon approaching the season of consumerism — Christmas and the holiday season. What a better time than to talk about shopping than now?
Now is the season if you are great shopper you can find some great deals on gifts for your family, and the things you really need.
Save money on only the things you need.
Don’t buy things you want, otherwise that’s a recipe for disaster.
Mark Cuban, of Broadcast.com and Dallas Mavericks fame, has a slightly different approach to investing than the average person. Especially if you are just starting out and have little invest.
He recommends you don’t invest in the stock market.
Be an efficient consumer instead.
That’s right — one of the top billionaires is saying you shouldn’t invest in the stock market. What Mark is really saying is invest in yourself, and what you know.
Unfortunately, it’s easier for many individuals to spot a great deal on Crest toothpaste than purchasing Procter & Gamble (PG) stock when it’s cheap.
Mark Cuban has stated: “The stock market is for suckers, and if you don’t know who the patsy is, it’s you.” His proposition is as follows…
Let’s say you have $10,000 to $100,000 to invest. The first step he recommends is pay off your debts. In many cases credit cards charge 18-19% interest rates, and it’s almost impossible to get those returns in the market. Paying off debt is a guaranteed return.
The second step Mark recommends, is use the transactional value of cash. What exactly does that mean?
You know you have certain things you need in your household, and can get a better value by buying in bulk. Food, dry goods, clothes, etc. In addition negotiate with any merchant if they’ll give you a discount if you pay via cash.
Mark’s claim is you can get a better return of your money if you get great deals on items, than in many cases investing in the stock market.
Then only after you’ve done all of this you should invest. Mark also states there’s no problem holding cash. It’s important to hold some “dry powder” if and when the stock market tanks.
Readers: What do you think? Does it make sense to maximize your savings when purchasing items first before investing?