Shark Tank's Kevin O'Leary Declares The Best Advice He Ever Received From His Mom: 'Spend The Interest, Never The Principal.'

Canadian business owner and investor Kevin O'Leary, also known as Mr Wonderful from his time on Shark Tank, has shared the best investing advice he's ever received from his mother. Here's what he shared. 

In a social media post, successful investor O'Leary shared his investment principles and revealed that the most profound investment advice he ever received was from his mother. In a video clip, O'Leary recalls his mother taking him and his brother to the bank to buy bonds. O'Leary explained that his mother said, "Boys, never spend the principal, only the interest." 

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This simple yet powerful advice has guided O’Leary throughout his successful financial career, a testament to the wisdom of his mother’s words. Back then, O'Leary admits he had no idea what she was talking about, but now, this advice is all he does today and carries him through his successful financial career. 

O'Leary emphasizes that everything you touch needs to generate yield, whether from your fixed income or equity. Whatever capital is generated, O'Leary takes and disperses it to his family and the charities that he has committed to. 

"I view my portfolio, my trust and my positions as a chicken on a spit dripping cash. Everything has to generate yield," said O'Leary. 

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On Social Media, O'Leary shared some additional investment principles he stands by. The first principle is never investing in a security or a stock that doesn't pay dividends or interest. Instead, he recommends investing in exchange-traded funds (ETFs) which are short-term government bonds with meager fees and yields anywhere between 1.9% and 2.1%. 

What sets O'Leary's method of investing apart is his focus on investments that produce cash flow because "Cash flow is king, my friends." Most of O'Leary's family wealth comes from two ETFs: ALPS O'Shares US Quality Dividend ETF OUSA and ALPS O'Shares US Small-Cap Quality Dividend ETF OUSM. These investments have proven to be successful, providing a steady income stream. Other recommended short-term investment options that aspiring investors may want to consider are the Ascent Income Fund, which has a historical yield of 12.1%, and BaseCamp Alpine Notes. 

If you've just started investing, you must be consistent and don't try to time the market. O'Leary explains, "You have to get used to volatility — the market going up and down. But don't try and time it." O'Leary reveals that he would obsessively check his portfolio every hour until the closing bell when he first started investing. He admits that this was a waste of his time and energy and that you need to be consistently in the market to see actual growth. 

This leads perfectly to his next principle: always save a consistent portion of your income. The ideal number for O'Leary is adjusting your lifestyle to save 15% of your income for retirement. In addition to being consistent with how much money you save monthly, O’Leary recommends using this principle when investing. You should be consistent with investing: "Once you start putting money into investments, don't stop," O'Leary advises. He also emphasizes that investing is a long-term game.     

The final investing principle that O'Leary shared was to always spend the interest, not the principal. This is because reinvesting the interest makes your money work for you, and you'll find it will grow your principal, which ends up paying you more. O'Leary's mother's advice emphasizes that your principal should always remain invested.        

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