Grant Cardone Says To Be Wealthy, Avoid This Common Investing Advice

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Grant Cardone is a popular business guru and investor that has built a billion-dollar empire. And much of his advice goes against traditional investing and wealth-building advice.

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On his website he gave advice on how the middle class can get rich and gave investing advice that many might think unwise. He said wealthy individuals typically concentrate their money in just a few significant investments rather than spreading it across many options.

We’ll break down why this may be true, but some warnings for investors that choose to follow this advice. Plus a few other pieces of advice from Cardone that could help you build wealth faster.

‘Don’t Diversify’

This advice flies in the face of most traditional investing advice. While most financial advisors would say “don’t put all your eggs in one basket,” Cardone said the opposite.

For most investors, diversification helps lower your risk while offering solid return on your investments. But Cardone is suggesting that rich people place a few sizable bets on a very small number of investments to grow their wealth. And honestly, this can be true for some people.

For example, if you’re building a business, the fastest path to growth is to focus on one thing you’re really good at and dedicate your time, money and resources to grow your business quickly.

And if you’re an investor in real estate (as Cardone is), trying to spread your money across rentals, but also traditional investments and savings, can leave a capital shortage as you try to grow your real estate portfolio. It can make more sense to focus on finding real estate deals, improving properties to increase rents and putting your money back into more real estate deals.

While diversification is important to traditional and passive investors, those trying to build wealth quickly may need to focus a bit more.

Warren Buffett vs. Grant Cardone

In his blog post, Cardone quoted the great Warren Buffett who essentially said extensive diversification becomes necessary only when an investor lacks a clear understanding of their actions. And this quote should actually encourage you to diversify, rather than follow Cardone’s advice.

Cardone is an entrepreneur who has built a business off of figuring out all the variables of how marketing works, how real estate works and how to stack the deck in his favor to make more money.

But most investors aren’t going to dedicate 10 hours per day understanding investing.

This means you might not know enough about specific investments to truly follow Cardone’s advice to invest big in a small number of investments.

Instead, you should heed Buffett’s warning and actually diversify your investments to protect against your ignorance of the specifics of any one investment.

Investing in things like mutual funds or index funds allows you to own a wide range of investments within a single fund, without needing to know the specifics of every company. Diversification actually protects you in this instance.

Other Cardone Advice To Build Wealth

In the same blog post, Cardone went on to dissect several money beliefs and “middle class concepts” that he said people have adopted that are keeping them broke.

1. “Money won’t make you happy.” Cardone hates this concept and pushed back against those who adopt it as true. He said those who say this have given up on becoming wealthy.
2. “A penny saved is a penny earned.” Cardone said this is a harmful belief because saving money doesn’t build wealth — investing does. 
3. “Save your money.” Again, he pushed back against savers and encouraged people to invest instead.
4. “Money doesn’t grow on trees.” Cardone explained that “money is printed by man” and that it should be easy to obtain for those building wealth.
5. “Get a good deal when you buy something.” Cardone isn’t a fan of good deals, but said “making big deals makes you rich.” He said people should focus on “value” and not on price (which Buffett would agree).

While this advice might work for some investors and business owners, it shouldn’t be taken as a one-size-fits-all approach.

Cardone is a successful business owner that focuses 100% of his time on investing, growing his business and coaching others. If you don’t have that kind of time and work a traditional job, it might not make sense to narrow your investments and try to “make a big deal.”

Diversification and traditional investing advice can still work for a majority of Americans. Maxing out tax-advantaged accounts, investing in index funds and diversifying can still help you build wealth. But you might not end up in the 1% following this path.

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