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Mark Cuban's best investing advice: 'Don't'

July 17,2016 05:12

When Entrepreneur asked him on the set of "Shark Tank" for his best advice to make money investing, he replied: "Don't." "The market could go up for years, and you could think you're well off," he told Entrepreneur, "and then, in a millisecond with ...and more »



Mark
Cuban.

Tim
Sharp/Reuters

Billionaire Mark Cuban doesn't mince words.

When Entrepreneur
asked him on the set of "Shark Tank" for his best advice to make
money investing, he replied: "Don't." 

"The market could go up for years, and you could think you're
well off," he told
Entrepreneur, "and then, in a millisecond with high-frequency
trading, a flash crash can take it all away. That's why you want
to have that money in the mattress, that savings, so you're
protected in case something goes wrong."

The "money in the mattress" he's referring to is a six-month
emergency fund that he recommends
everyone gather. Experts advise keeping
three to nine months' worth of living expenses in an
easily accessible, untouched account in case of an
emergency. "I know it doesn't earn much in the bank,"
Cuban told Entrepreneur, "but you'll sleep a lot better."

However, Cuban's investing advice isn't the same given by most
financial pros. While the consensus is that the ordinary person
shouldn't take on undue risk in order to try and "beat the
market," most agree that some exposure to the market, at the very
least in the form of retirement
accounts, is necessary to keep your money growing fast enough
to beat inflation.

Low-cost index funds (a type of mutual fund pegged to a
specific market index) are also regularly recommended by some of
the wealthiest people around. Experts such as Warren
Buffett,
Charles Schwab, John Bogle, and Charlie Munger agree that
low-cost index funds are the
best way for the average person to invest.

"A low-cost index fund is the most sensible equity investment for
the great majority of investors," Buffett told Bogle in "The
Little Book of Common Sense Investing." "By periodically
investing in an index fund, the know-nothing investor can
actually out-perform most investment professionals."

Whether you feel comfortable investing, Cuban's advice on putting
together an emergency fund before making any other major
decisions with your money is echoed by most experts. Looks like
it's time to start saving.

Kathleen Elkins contributed reporting.

SEE ALSO: Mark Cuban uses these 3 fundamental rules for running all of his businesses

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