Grant Cardone: ‘Don’t Be the CEO, Be the Investor’
Written by
Gabrielle Olya
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Gary Dudak
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Many Americans believe that climbing the corporate ladder is the key to building wealth, but Grant Cardone, private equity fund manager and real estate investor, believes there’s a better way.
“You know how many people on the internet want to be the boss? The boss [doesn’t] make any money, the investor does,” Cardone said during an interview with Lewis Howes. “Don’t be the boss, don’t be the CEO — be the investor. Just invest.”
Here’s why Cardone believes it’s better to be an investor than a boss. Plus, check out the investing strategy he learned from Warren Buffett.
Earned vs. Passive Income
Cardone believes that it’s optimal to earn your income passively, rather than through a salary. He gave the example of the CEO of Coca-Cola versus Warren Buffett to illustrate this point.
“The CEO of Coca-Cola made $50 million last year. A lot of money right?,” he said during the interview with Howes. “[But] that’s earned income [so the] government’s going to take half of it. Warren Buffett invested in Coca-Cola. He was paid $508 million last year. That’s passive income.”
Cardone has said that many people focus too much on increasing their earnings, and not enough on increasing their investments.
“The problem is people want to make more money [so they] get a second job. A second job is not the right thing to do,” he previously told GOBankingRates. “The smart thing to do is not add time — it would be to invest the money that you already have. If you’re a journalist during the daytime, and at night, you’re going to go sell soap on the internet or build websites, you’re just working 12-hour, 15-hour days — it doesn’t mean you’re going make more money. Now you have two active flows, but you don’t have any passive flows.”
How To Invest for Wealth Building
Cardone learned the basics of investing for wealth building by studying Buffett.
“Warren [Buffett] is how I got into real estate,” he said during the interview with Howes. “I started buying real estate because I studied the old man. The old man is only invested in stocks. I’m like, I’m not going to do stocks because I don’t like them. But what I wanted to learn from Warren Buffet [was], what was he doing?”
Although Cardone invested in a different asset, he still utilized Buffett’s basic strategy.
“[Buffett] did not buy the cheapest company,” Cardone said. “He didn’t buy low and sell high. […] He bought the best quality at a fair price. He wasn’t looking for the day a stock went down to $1. He’s never done that. He invested in companies that all had cash flow, leaders in their space — Coca-Cola, Apple Computer. He didn’t buy Apple Computer for years until he understood that Apple Computer was a cash-flow company because of iTunes.”
Like Buffett, Cardone believes that investing in assets that produce cash flow — like rental properties — is the key to building wealth.
“Everything [Buffett] buys is really real estate,” Cardone said.
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