If billionaire Grant Cardone calling the “Oracle of Omaha” Warren Buffett a “coward investor” sounds like fighting words, it’s just hype. Cardone used the phrase to describe an approach to investing that is actually an effective way to earn wealth over time.
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Here’s what it means to be a “coward investor” and how it can prioritize investments that generate steady income.
The Core Idea: Cash Flow Is King
What Cardone is suggesting is that rather than risky stock purchasing, Buffett only invests once he can be sure that a company has solid, reliable and steady cash flow that can produce passive income.
What sounds “cowardly” is actually quite wise, Cardone asserted — it’s only putting your money into companies with a proven record. He suggested that you don’t need to be a billionaire to apply the same principle, either. Seek ways to earn passive income. You might not have Buffett’s billions to invest, but you can smartly invest the dollars you do have.
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Collect Passive Income Through Real Estate Options
Cardone, notably, has made his own fortune in real estate, which encompasses a variety of more traditional cash-flow assets, from rental income to equity to real estate investment trusts.
It’s also one of the more accessible ways of building passive income for the average investor. Some entry points that don’t involve becoming a landlord or property owner include:
- Publicly traded REITs (real estate investment trusts)
- Real estate crowdfunding platforms
These methods enable an investor to earn monthly dividends or benefit in a portion of rental income indirectly.
Earn Steady Returns With High-Yield Savings Accounts
For the truly risk-averse, one of the simplest ways to earn passive income is through a high-yield savings account (HYSA), especially when interest rates are competitive. This ensures your money is not involved in any risky investing and still nets you passive income. Additionally, if you open one with an FDIC-insured bank, up to $250,000 of your money is insured.
Embrace Buffett’s Low-Maintenance Strategy With Index Funds
Cardone agrees with Buffett’s strategy that trying to pick stocks is not a task for the average person. He recommended S&P 500 index funds and exchange traded funds (ETFs) instead, which provide diversified exposure to top U.S. companies.
Even small amounts of money invested consistently in this way can compound your money into long-term wealth.
You can even invest “fractionally” through spare change round-ups or contributions.
You Can Be a Coward Investor Too
So now you know, being a coward investor doesn’t mean you’re bad at investing — it means you prioritize passive income, the kind you don’t have to work hard at or take big risks to obtain.
If you’re not sure where to start, opening an HYSA is a great option, then add an S&P 500 index fund for long-term growth and consider a REIT or crowdfunding platform for extra passive income.
You don’t have to be Warren Buffett or Grant Cardone to invest like them. By focusing on cash-flow-producing assets and simple, proven strategies, everyday people can build wealth.
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This article originally appeared on GOBankingRates.com: Grant Cardone: Why Being a ‘Coward Investor’ Can Make You Rich
