"Saving 15% of your paycheck each week" — When Shark Tank star Kevin O'Leary shared the key to building wealth through disciplined investing

Shark Tank investor Kevin O'Leary emphasized the importance of disciplined saving and investing as key strategies for building wealth. During an interview on August 22, 2023, with Erika Kullberg on her podcast, O’Leary was asked about the best way for individuals to make their first $100,000. He responded:

"Saving 15% of your paycheck each week, that's the key, that is really the key."

The Shark Tank investor explained that consistently setting aside a portion of one's income and investing in the market could lead to financial growth over time.

---

Shark Tank Kevin O'Leary's key to wealth

The importance of consistent saving and investing

Kevin O’Leary highlighted how disciplined saving and investing can lead to long-term wealth accumulation. He shared an example from his own life, explaining that his mother used this approach for decades, ultimately amassing significant financial resources. He stated:

"She bought 50% Telco bonds… and 50% in S&P stocks that pay dividends, and she kept that portfolio for 32 years."

According to O'Leary, the approach allowed his mother to generate significant financial growth without exposing herself to too much risk. To show how one can use this technique today, he described how people should continue to invest 15% of their paycheck into an index fund in the stock market.

Despite market fluctuations, he emphasized that historically, long-term investments yield an average return of six to eight percent, allowing assets to grow through compounding. The Shark Tank investor emphasized that returns through compounding are essential if one has to create wealth and that one can achieve $100,000 with it within seven years.

---

Diversification as a risk management strategy

In addition to saving and investing regularly, O'Leary emphasized diversifying the portfolio. He added that his mother stuck to a hard-and-fast allocation rule, never having more than 5% of her assets invested in one stock and no more than 20% invested in one sector. Using this framework, O'Leary detailed how he invests, saying:

"I invest in Europe, I invest in Asia, I invest in North America, and my portfolio pays for my… dividends and interest, and that’s what I live off."

The Shark Tank investor also added that although his venture capital investments in the show are riskier, most of his portfolio is invested in conservative assets. He said that his investments are mostly in the form of treasury bills and dividend-paying stocks, maintaining financial stability with lower-risk assets.

---

Portfolio allocation and banking strategy

Kevin O’Leary also shared insights on portfolio allocation. He explained how his investment distribution evolved in response to interest rate changes. The Shark Tank investor noted:

"I used to be 50/50, 50% stocks, 50% bonds. Then I changed it to 60/40… and then I went to 70/30 for stocks."

He clarified that his current strategy prioritizes large-cap, dividend-paying stocks while maintaining a portion of his wealth in fixed-income investments. Additionally, he advised individuals to diversify their banking relationships to reduce risk exposure. He cautioned against holding excessive cash in a single institution, explaining:

"Make sure your cash is in no more than 20% in any one bank because you never know when the next idiot manager is going to take his bank to zero."

He mentioned that he maintains banking relationships across multiple regions, including the U.S., Canada, and Europe, to minimize financial risk.

---

Tune in to Shark Tank on ABC every Friday at 8 PM ET, or watch on Hulu at your convenience.