Shark Tank investor Kevin O’Leary doubled down on his belief that true wealth requires at least $5 million in liquid assets.
“You’d be amazed, how many wealthy people that say they’re rich do not have liquidity,” O’Leary said on Fox Business.
O’Leary said he practices what he preaches, keeping at least $5 million of his own wealth in Treasury bills—short-term U.S. government securities that can be quickly converted to cash.
The Canadian businessman argues that true financial security means being able to access your wealth at a moment’s notice, be it to weather an emergency or to seize an investment opportunity. A house, a private business, or illiquid assets may look impressive on paper, but in his view, they don’t count toward real wealth.
Financial experts say the strategy has merit. Tech entrepreneur and FinlyWealth co-founder Abid Salahi told GOBankingRates, “Our data shows that clients with a higher liquidity ratio — typically 20 percent to 30 percent of their total assets—are better equipped to handle financial emergencies and capitalize on investment opportunities.”
O’Leary acknowledges that hitting that number is no small task. “It’s very hard to get five million liquid because in this market that makes you $250,000 a year pretax,” he said. “You have a family of four and poo-poo hits the fan in your world and everybody loses their job, you can sustain a family on 250 pretax. That’s why it’s the magic number.”
This isn’t the first time O’Leary’s made this claim. He had the same sentiments back in November. Even when you are tempted to spend or loan the money, he advises people not to. “That is not what it’s for,” O’Leary continued. “It’s there to guarantee your financial freedom and that of your family for the rest of your life.”
O’Leary is not alone in that thinking. His former Shark Tank co-star Mark Cuban said that the first step to getting rich is having cash available. “You aren’t saving for retirement. You are saving for the moment you need cash,” he wrote on his blog.
In 2020, billionaire investor and Bridgewater Associates founder Ray Dalio declared that “cash is trash,” but by 2023, he had walked back on that position, stating, “Cash offers a good return without price risk. It also keeps my money as dry powder, so cash looks ‘pretty good’ to me.”
O’Leary sees the $5 million threshold not as a finish line, but as a foundation: “I tell all my entrepreneurs, ‘That’s your goal.’ ”
—Amaya Nichole
This article originally appeared on Fast Company’s sister website, Inc.com.
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