"Money unseen is not money spent" — When Shark Tank's Robert Herjavec explained why liquidity matters in real estate and savings

Robert Herjavec, an investor on Shark Tank and a businessman, once highlighted that liquidity plays a critical role in financial decision-making, particularly in real estate investments and savings strategies. During an appearance on Good Morning America on April 11, 2023, he said:

"And again, money unseen is not money spent."

He stressed on the notion that money maintained in long-term investments or retirement funds is less susceptible to being spent spontaneously, which can help to foster financial security. The Shark Tank investor also noted that although real estate is a viable asset, it is not always readily available as a pool of cash.

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The role of liquidity in financial planning and investments according to Shark Tank Robert Herjavec

The long-term nature of real estate investments

Herjavec talked about the concept of real estate as an investment, explaining that the value of property can rise over time. He cited an example of people who bought houses for $200,000 and they were later worth $2 million. He termed this as one of the reasons why most people find real estate to be a solid investment.

He also mentioned that property may not always give liquidity when required. He said:

"A friend of mine was a big real estate guy [who] said to me, if you buy property and you keep it more than 10 years, you will never lose money. The problem is if you need the money during that 10 years, you could be in trouble."

Additionally, Robert Herjavec discussed market conditions and economic uncertainty as factors that can impact real estate liquidity. The Shark Tank investor elaborated:

"We don’t know what’s going to happen. It’s an uncertain time in the economy right now, so don’t put yourself in a position where you need cash and you can’t get to it. A house is not very liquid."

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Understanding liquidity in savings and retirement accounts

Outside of real estate, Herjavec spoke about liquidity in regards to retirement accounts. He emphasized the benefit of investment schemes, particularly for younger working professionals. Herjavec also proposed saving in a 401(k) plan, particularly when employer contributions are matched.

According to US Department of Labor, 401(k) is a retirement savings plan sponsored by an employer that enables employees to contribute a percentage of their income on a pre-tax basis, with some employers matching the contributions. He said in the interview:

"My answer is 401(k) for sure. Match your employer’s contribution. It’s free money, basically."

He also brought attention to the benefits of a Roth retirement plan, where funds in such accounts are exempt from taxation at the time of withdrawal. He implied that diversification of savings, including traditional and Roth accounts, can translate into financial freedom in the long run.

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The importance of keeping funds out of immediate reach

Robert Herjavec reinforced the principle that keeping money in structured investments reduces the likelihood of unnecessary spending. The Shark Tank investor remarked:

"Somebody isn’t sending you to invest, and you’re not going to see that money."

He highlighted how funds set aside in long-term accounts are less accessible, helping individuals maintain disciplined financial habits. Furthermore, Herjavec linked this concept to overall financial security, explaining that investments in retirement accounts and real estate should be balanced with liquid savings.

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