The FASTEST Way To $ 1 Million Dollars | Grant Cardone

I live off the yield and the dividends. I never touch the investment. I know exactly what I'm going to bring in, and I have the discipline not to spend more than I'm bringing in every month. That's it. It's a very simple philosophy in life. The more you make, the more of a lavish lifestyle you can have, but you never touch the principal. And if you can pay down your debts, because you've got to be debt-free by the time you're 60 years old.

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Most of us, if you're anything like me, you've spent your entire career earning money and never learning how to create wealth. Number one, write this down: three things, and then I'm going to invite my friend Kevin O'Leary in to talk to us to give us his angle on the fastest way to get to a million dollars. Number one: three things you got to know about money. Okay? We'll dig in deep this week.

Number one: you got to earn it. You got to get it. How do I get it? How do I get some? Uh, redneck in me just like get some. Number two: how do I keep it once I get it? Number three: most people never learn this one. Jay-Z learned it. He learned how to get it; he learned how to keep it; he learned how to elevate it; and then he learned how to multiply. And that's why he killed a billion. You're not gonna kill a billion dollars or a hundred million earning money. You're gonna do it because you learned how to create wealth and get money to multiply.

The third thing is the thing that all of us here, all of us that want to create wealth for ourselves, for whatever reason, for your family, for yourself, for your reputation, for your ego, for the boat, whatever it is, to create real wealth, you need to learn how to multiply. Let's get Mr. Kevin O'Leary here. This guy is a super stud. You've seen him on CNBC, you see him on ABC, you see him on goddamn where is he not? He's everywhere. One of the best. They actually just finished shooting. They finished the shooting, Jared's telling me.

One of the—he's definitely the best-looking shark of all the sharks. He is the smartest shark of all the sharks. He is the best investor of all the sharks. And he is my friend, Kevin O'Leary. Good to see you here, my friend.

Kevin O'Leary: Great to be here, Grant. Really great.

Grant: So Kevin, thanks for taking your time. I appreciate it. Always good. You know I always enjoyed chopping it up with you. Um, what do you say, Kevin, is the difference between the earner and the investor?

Kevin O'Leary: There's a few rules that I've observed over 30 years of investing where people make big mistakes and also are very successful because they avoid them. The earner learns how to take a portion of what they earn and invest it. And I'll tell you a story that I like to tell that I learned from my mother.

Now way back, she was not, you know, an analyst or portfolio manager or anything like that. She used to take 20 percent of her income when she worked in a clothing factory, and she bought telco bonds, and she bought S&P 500 stocks that paid dividends. She had that portfolio for 52 years. Back in those days, the bonds earned 6 to 7 percent. She liked telco bonds because she thought people turned their heat off rather than not be able to talk to each other.

Back in those days, in the late 50s and 60s with telephones, you had to pay your bill, and telco bonds were safe as banks, and that's what happened. So over that 52 years, she kept that a secret account from both of her husbands. She'd be married twice, and I learned about all this after she passed away.

I'm the older brother, and my younger brother, Shane, I got a call from the executor at the, you know, the state and was passing that to me, a lawyer, and said, "You got to come down here; your mother died a very wealthy woman." I said, "No way; we're a middle-class family." He said, "Way, get down here and see this portfolio. 52 years of compound dividends and interest. She only ever took out what the interest or the dividend was; she never touched the principal."

She died, and I always wondered where she had cash to put me through college and help extended family members. It wasn't that she was frugal; it was just she took that 20 percent of earnings, and she didn't buy crap; she invested it, and that was the difference. So many people today don't have that basic instinct to take some portion of what they earn and invest it because the market gives you 7 to 8 percent year in, year out.

Some years are different, but it consistently does that your entire life.

Grant: God works. You got to tell me what it was worth. You can't keep me hanging like this, man.

Kevin O'Leary: No, she died. I won't say that because I've told the story so many times, but it was one poop load of money. And you know what I did with it? Because I'd already—I was very fortunate at that time. I had already had some great liquidity, so I distributed it to, you know, some of my family members that had not learned the rule of saving and investing.

So Kevin, would you rather be—just for this conversation, you and I didn't plan any of this—we're just talking here. So would you rather be a big earner or a small investor?

Kevin O'Leary: Small investor all day long. I have this thing called "know your nut," Grant. Listen to this. And I do this with really wealthy people too: know your nut. You don't need a computer; you don't need a phone; you don't need anything. You need a piece of paper and a pencil. Listen to this.

I ask them: just show me all of your income over a 90 day period and on another sheet of paper what you spend in that 90 day period. I don't want computers; I just want you to think about how you make it. And even really wealthy people spend beyond their means. It's incredible—the boats, the cars, the girls, the restaurants—all the stuff that they're burning cash on that they're not putting back into the market.

And the whole idea is that you got to start thinking about what happens when you turn 60 and 65. You got to start putting money away and build that nut, that nest egg. If you don't know your nut, you're going to go bankrupt. That's what's going to happen, or you're going to end up with nothing when you're old because you're burning more cash than you got.

Grant: Yeah. And Kevin, would you rather earn income or passive income? Passive income. She's, because I hear some people say—I heard one guy say, "A big social media guys, there's no such thing as passive income." I'm like, "I got a million dollars at that last month." Like, if it's not real, I don't know how it got to my account because I didn't trade time for it.

Kevin O'Leary: And well, I think the philosophical way to look at this is when you have money working for you all night long, you're sleeping, and it's out there doing its thing, either giving you interest or a dividend, or it's in a capital that is growing because you're invested in a business; that was money. You had two choices: you could have spent it on something like, you know, cars or something and just pissed it away, or you put it to work in the market which is making you 7-8% in perpetuity and sometimes more.

And so it's really about having the discipline to put money aside. I'm very fortunate now. I've invested in a lot of good businesses and most of my wealth is because I invested in things that became more valuable and sometimes very short periods of time.

And I don't need to work; I do it because I like to, but I don't waste money. I know my nut. I know exactly what I burn, and I never burn more than I'm bringing home—never.

Grant: And then so when you buy the red watch, what are you wearing today?

Kevin O'Leary: Oh, thank you for bringing that up! This is a steel blackface Daytona with a red band. I just got back from shooting Shark Tank; it's one of my favorite Shark Tank watches. Okay, by the way, this watch is up, Grant, just so you know, since I bought it, 114.

Grant: I know that.

Kevin O'Leary: Yeah, but it's not up because you're not going to sell it, so what does it matter?

Grant: No, I know, but I mean my portfolio of watches is an asset class to me. It's like buying art, and I mark to mark my portfolio of watches. I'm anal about it. Every night I look at what my watch collection's worth.

Now, my wife thinks I'm nuts when I bring home another watch and I show her my portfolio. It's not going to be for me. My son thinks he's going to get these, but I've told everybody in my family I'm burying all these watches in my casket with me because I'm going to need them where I'm going. We're no time where time does not exist.

So now, if you're 25 years old, let's take Kevin O'Leary at 25. You're not on—you're not on Shark Tank; nobody knows you; you don't have a name. Would you have your attention today?

Kevin O'Leary: You wouldn't be buying Rolexes, right?

Grant: No, no. This—so this is a luxury that I can afford today and it's a disease. Watch collecting is a disease. I mean, I'm afflicted.

Kevin O'Leary: Yesterday, $1,000.

Grant: What kind of principles would you have?

Kevin O'Leary: First of all, do you believe it's real? If you were 25 and broke, whether you live in Canada or America, that you could become a millionaire in America today?

Kevin O'Leary: Yeah, I did that; that's exactly what I did. I didn't become a millionaire in Canada; I moved to Boston years ago and I worked real hard. But, you know, I had that discipline back then. I didn't want to be an employee. I don't know how to do that; I don't know how to work for people. Never could, always got fired.

I just can't do it, and so I started my own business and I worked like hell, and we sold it for $4.2 billion—that was years ago, years ago in Boston. And that was my first, you know, crack at the whip, if you want to call it that. And then I retired for three years, went around the world, but everywhere I got back to work, and you know, I've been very fortunate since then. I've had many winners and many losers, but the point is you got to believe in yourself, and you've got to focus on investing. You've got to put capital to work and let it grow.

Grant: Yeah, but you're not making any money putting in the bank.

Kevin O'Leary: Yeah, in the beginning though, like how important is it for the individual to make a commitment? And not just to a job doing a good job getting better at their job, but like, "Okay, I'm going to create wealth for myself." Is that an important step to make?

Kevin O'Leary: It's the most important step. And the way you do that is you have the discipline to put aside between ten and twenty percent of what—you know, I don't care if you make fifty grand. If you make fifty-two thousand five hundred, that’s the average income in America. You take ten percent of that each month and you invest in the market—the stock market, an index. I don't care what you buy, and by the time you're 65 years old, you will have about a million and a half dollars in the bank, and that's your nest egg. That's if you do nothing else except save 10 percent.

You have to have the discipline of doing that, but I tell everybody that all the time. Now you may do much better, but if you just let the market do its thing and you have the discipline not to spend that money, everybody can save ten percent of what they're making. Everybody can. Everybody—they just don't have the discipline to do it. And if you don't do that, I don't care if you're 40 years old, you got to start doing that. The market's a wonderful thing, Grant; it's a wonderful thing. I live with it every day. I put money to work.

Grant: What do you like better: the real estate that I invest in or the stock market that you talk about every day?

Kevin O'Leary: I do both. I have a pretty big real estate.

Grant: How big?

Kevin O'Leary: Well, it's 31% of the portfolio right now. It's a little less because I've invested in a bunch of other stuff too, but it's always the core. I own a lot of real estate now. Real estate is a wonderful thing, but you know, it can cost you money if it's just land, it could cost you money if it's residential and you're not renting it out. But it's an asset class that has never let America down—ever. So you want to own some land, you want to own some buildings, you want to own some apartments, you can do all that, and you do that well.

But I'm—I'm that—that's a 30—that's a third. That's a good nut. I do a lot of other things too, but real estate—you know, you're a sophisticated guy.

Grant: You're a sophisticated guy.

Kevin O'Leary: I'm just a simple man.

Grant: No, but listen, you're the one—you know how you know when somebody's sophisticated? When they know how to read the French wines. We were having dinner over at Circling Surf Club, and I said, "Kevin, I can't read this wine list; can you?" And he's like, "Oh, I mean, how do you say it? How do you do all your French and stuff?"

Kevin O'Leary: Now the Chevallier de Testa—that's what I am. And I know wines. I sell wines. I've got a pretty big wine business. I've got 3,000 acres in California and Sonoma and Walla Walla Valley that I own or lease. I make wine. I mean, that's my whole thing. But, you know, I'll tell you something, Grant. The whole idea is putting aside money for yourself. That's the key. That's the key. It's so important; it's like everything.

Yeah, you know, if you study, if you go back to the 1920s when the big—the big collapsed, what was that called? The Great Depression. If you look at what the wealthy were doing at that time, as much as 40% of their income was going to investing and saving.

Grant: Are you already drinking today? Dang, man, no. That's a little t.

Kevin O'Leary: You got the life. Um, so that I saw that. I went and studied wealthy people back for the last 80 years, and I'm like, "These people are packing away 20% in bad times—40%." But they weren't just saving and debating; they were doing what your mom was doing—buying things that paid a dividend.

How do people invest today when all these dividend stocks are gone? AT&T pays nothing; General Motors pays nothing; the banks paid zero, one, two, .0012. What would you be invested in for those that want income on a monthly basis?

Kevin O'Leary: So I use the ETF market—exchange traded funds. Actually, that's—I don't buy individual stocks. I find ETFs. There's many of them out there right now. The S&P 500 is paying about 1.8% dividend yield, but it's also appreciating in value 7-8% a year—sometimes, the last couple of years, much better than that. So, you know, I—I—there's so many of them; they're inexpensive, and you can—you can download an app on your phone to do it.

There's so many of those. Here's the difference: right now, a bank account, a savings account is yielding 21 basis points—that's .21%. Inflation is 2.2%. You're making nothing. You're losing 2% a year in a bank.

Now, people think, "Oh, that's safe; I can put my money in the bank," but I don't think it's that safe because it's losing 2% a year in value. Either you buy real estate or you buy stocks. You have to buy assets. You got to decide what you're going to do. I prefer assets because I learned from my mother that produce some kind of interest or dividend.

I live off the yield and the dividends. I never touch the investment; I don't sell it. I've owned these things for decades. And then each month, I know my nut. I know exactly what I'm going to bring in, and I have the discipline not to spend more than I'm bringing in every month. That's—it’s a very simple philosophy on life. The more you make, the more of a lavish lifestyle you can have, but you never touch the principal.

And if you can pay down your debts, because you've got to be debt-free by the time you're 60 years old.

Grant: So you're saying you live off the dividend or the passive income, not the earned income. Am I right?

Kevin O'Leary: You don’t. You don’t. It's the passive income. I take that earned income after tax and I invest it, right? So I invested it, and that's how I grow my nut. That's how I grow my nuts.

Grant: So your earned income is the money you invest, and the passive income is the money you can buy the Rolex with.

Kevin O'Leary: Exactly, exactly. And I know my nut. Every month, I mark to market what I own. I see the cash coming in on the past investments.

So all of this stuff—we got a bunch of houses. I love real estate. I got to pay for all those too and maintain them. But I know my nut; I never spend more than I'm bringing in. It's—I learned that from my mother when I was 18 years old, and I've never, ever, ever, ever, ever gone over what I make bringing in. That's a really bad outcome. Really bad.

Last thing before we go to our VIPs and we do a little Q&A and let those guys ask you questions. Um, what advice would you have the person out there that’s like, "Man, I could never be a millionaire. I'll never be wealthy. I'll never get rich. Those times are over. The opportunities are over. They're gone." What advice would you give that person?

Kevin O'Leary: That's simply not true. That's simply not true! It's just not true that you don't die a millionaire. You have to have the dis—every person listening right now can be a millionaire. I say a million five if they just took 10% of what they make on an average salary and put it away. You start when you're 22 years old.

It's—the hardest part—and I teach my kids this too—the hardest part is don't buy crap you don't need. 15 pairs of jeans? You don't need 40 sneakers, you don't need a lot of crap you bought that should be in the market making money for you. That's the whole idea, and that's the hardest part. But everybody can die a millionaire if they learn to put aside 10% in the market, not a savings account.

That's not going to do it for you; 21 basis one ain't going to work. Either you buy real estate or you buy stocks and bonds. They've both been good investments for 200 years.

Grant: And how much—last thing is, how much do you think is enough? Like, what should people's real target be to be truly wealthy, financially free? Do you think there's a number that gets you there?

Kevin O'Leary: It's your lifestyle decision. You can live off a million and a half dollars if you're frugal. You can do it; there's a way—you absolutely can do that. If you want to have a more lavish lifestyle, you work harder, you save more in your early years. Most people live within their means. It depends how lavish you want to be.

I love the nut—the number I like—that I strove for for so long when I was young. I told my dad this and my mother, "If only I could figure out a way to put five million dollars aside," and I worked like hell to get that first five. The rest was real easy after that. I mean, I don't—I mean, because once you have money, you can make money; that's the whole point.

Grant: Yeah, how critical do you think having that target locked in on? Like, even though it was a fantasy to you, you didn't know how to get there, you didn't know the mechanics, but you locked in on that five million. How important was that?

Kevin O'Leary: You gotta have that locked in number because it—for you know what happens is you're thinking about buying something and you got your nut; you got your number. You say to yourself, "Do I really need this piece of crap?" And the answer is no. I'm going to put it towards my target.

I mean, you're teaching the right disciplines here. I don't care if your target's a million bucks; I don't care if it's 500,000. You gotta hit your target, and the way you do it is you have the discipline not to spend money on crap you don't need.

Grant: Yeah, so locking on the target so the belt doesn't look as—the belt, the trip, the car, you don't need that stuff. Once you hit your target, you set a new one. You say, "I want more."

I mean, look, that's the American way. If you like that video, wait—did you see my next one? Don't forget to click right over here and subscribe.