Why Kevin O’Leary Thinks Getting to $5 Million From $1 Million Is Easier Than Getting Your First Million
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A famous song lyric by the late Tom Petty says, “The waiting is the hardest part.” That certainly applies to matters of the heart, but it can also apply to investing, where people who were not born rich have a long climb to get their first million. Shark Tank investor Kevin “Mr. Wonderful” O’Leary can imagine it, but he recently said it’s easier to go from $1 million net worth to $5 million. Keep reading to find out why he feels this way.
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Canadian-born Kevin O’Leary was largely unknown outside of business and investment circles when he first appeared on the hit show Shark Tank, where he and the other “sharks” competed against each other to invest in new business ideas. However, O’Leary’s biting wit and knack for making deals on terms that were heavily in his favor earned him equal admiration and respect from the show’s fans.
It also made him an instant celebrity. When that happens, people naturally want to know more about your investing philosophy and how you achieve so much success. In a recent YouTube video, O’Leary elaborated on his success, revealing that the hardest part of any investor’s career is making their first million, which was “almost impossible.” O’Leary’s explanation of why it was so difficult to make the first million may surprise you.
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He said the key to making his first million was “having the discipline not to buy things you don’t need.” This discipline is important because building a solid investment portfolio is a challenge even under the best circumstances. If you build a portfolio with money left over from impulse purchases, such as clothes you bought only because they were on sale, you minimize your chances of success. That’s easier said than done, but it is possible.
O’Leary’s method involves investing in stocks and aiming for an 8% return until you reach your target ($1 million). Once that’s done, the key is to determine your next milestone and keep working toward it with the same discipline. Moving from €1 million to €5 million becomes easier because you have more investment capital.
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Whether you earn 8% per year in passive income through dividends or appreciation on the stocks in your portfolio, having $1 million in savings gives you many more opportunities to grow your wealth. It gives you the freedom to make a number of choices with relatively more risk, but with a much higher benefit, a freedom that you may not have had when you started your savings pot with €5,000.
Imagine if you had a $1 million portfolio in 2005. Buying and holding $2,000 worth of stock like Nvidia or Netflix is an easier decision than if you had only invested $5,000. You have a much larger margin for error investing $2,000, which represents just 0.2% of your $1 million portfolio, as opposed to 40% of your $5,000 savings.
O’Leary advises potential investors to continue putting their money to work after they receive the first $1 million. That’s when the value of a portfolio can grow exponentially. He told Parade Magazine: “This is how I think about my money: as soldiers. I send them to war every day. I want them to take prisoners and come home, so there are more of them.”
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This article Why Kevin O’Leary Thinks Getting to $5 Million From $1 Million Is Easier Than Getting Your First Million originally appeared on Benzinga.com
