"Don't invest above your means" — When Shark Tank investor Robert Herjavec warned against overextending finances in investing

Robert Herjavec, entrepreneur and Shark Tank investor, discussed the risks of overstretching one's finances when investing during an interview on Good Morning America on April 11, 2023. Jessie, a viewer, asked if the current market downturn, which had been ongoing for a year, was a good time to invest in public stocks.

"Invest a little bit but don't invest above your means," Herjavec replied.

He underscored that investment can be useful, but financial security must take precedence, particularly for those dealing with daily expenses. His statements underscore the significance of prudent investment practices, especially during economic downturns.

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Shark Tank Robert Herjavec’s advice on responsible investing

Financial stability should come before investing

Before making investment decisions, individuals should assess their financial stability. Robert Herjavec highlighted the need for savings before committing funds to the market.

"This is a tough time for a lot of people. A lot of people are out there living paycheck to paycheck. So before you invest, save," he explained.

The Shark Tank investor's comment meant that one should prioritize building a financial cushion before considering investing. Investing with insufficient funds may invite extra financial pressures, especially if market trends result in a loss.

In addition, he emphasized the need for sustainable financial behavior. Without sufficient savings, people are likely to turn to credit or sell investments at a loss if an unforeseen expense occurs.

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Timing the market is challenging

Herjavec also spoke about market fluctuations and the challenge of timing the best investments. He said that even veteran investors cannot always accurately predict market highs and lows.

The Shark Tank investor stated:

"You can't time the top of the market. You can't time the bottom of the market. I don't care who you are."

This observation highlights the uncertainty of market conditions. Trying to purchase stocks at the lowest possible price or sell at the peak is fraught with risks, as market movements are determined by many uncertain variables. Rather than emphasizing market timing, he suggested a strategy called dollar-cost averaging.

"I've tried to time the top of the market or the bottom. I've always lost a ton of money, so I take a little bit of money, I love some stocks, and I buy a little bit every month," he clarified.

The Shark Tank investor's strategy consists of investing a set amount at frequent intervals to minimize the effects of market fluctuations. Investing in stages helps people escape the risks of putting money into a large sum at an unspecified time.

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A measured approach to investing

Robert Herjavec advised that investors should adopt a gradual and measured approach rather than making large, high-risk investments.

"Over 12 months, I want to be in that position," he stated.

This strategy allows investors to successfully manage their cost of money while still being subject to market possibilities. Ongoing investments level out the price fluctuation, serving as a buffer against short-term market drops.

The Shark Tank investor emphasized that sticking to this strategy enables one to remain financially stable as they seek long-term financial progress. Steer clear of overextension to ensure investments are made in line with personal financial conditions instead of subjecting oneself to financial hardship.

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Shark Tank airs Fridays at 8 PM ET on ABC, with episodes available for streaming on Hulu.