Everyone wants to know the secret to making money, especially when $100,000 is on the line. The usual suspects are stocks, real estate, or the next big startup. But billionaire entrepreneur Mark Cuban had a much less glamorous answer when asked where he would put $100,000.
His first move wouldn’t be chasing the next hot investment. He would pay off debt, stock up on everyday essentials, and keep whatever remained in the bank, waiting for a better opportunity.
“First I pay off all my credit card debt and evaluate paying off any other debt I have. What I have left I put in the bank,” Cuban said in a November 2010 Forbes interview.
Then came the unexpected part. Cuban argued that buying everyday products in bulk could deliver a better guaranteed return than almost any conventional investment.
“Saving 30% to 50% buying in bulk — replenishable items from toothpaste to soup, or whatever I use a lot of — is the best guaranteed return on investment you can get anywhere,” he said.
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Cuban says the savings come before the speculation
Cuban’s approach starts with reducing financial obligations before looking for ways to grow wealth. Paying off credit card debt can eliminate interest costs that eat into a person’s finances, while reviewing household spending can reveal opportunities to save without taking on investment risk.
The bulk-buying strategy works best for products that won’t go to waste and would have been purchased anyway. A 30% discount on regularly used essentials can reduce future expenses, though the savings depend on the actual price, storage costs, and whether the products get used before they expire.
The potential savings can add up quickly. A household spending $2,000 a year on everyday essentials would save $600 to $1,000 if bulk purchases reduced those costs by the 30% to 50% range Cuban described. That money could stay in the bank rather than go toward future household bills.
Check the price per ounce before buying
Bulk packaging doesn’t automatically mean a better deal. Comparing the unit price, which shows how much a product costs per ounce or another standard measure, can help shoppers figure out whether a larger package actually saves money.
Walmart displays unit prices on many product listings online, making it easier to compare different package sizes. For example, Walmart lists a three-pack of Crest Premium Plus Scope Outlast toothpaste, with 5.2 ounces per tube, for $8.97, or 57.5 cents per ounce.
A 48-pack of Campbell’s Condensed Chicken Noodle Soup is listed at $69.77, or 13.5 cents per ounce. Prices and availability can change.
The important part is to buy products that will actually get used. Toothpaste is a practical bulk purchase for someone who uses it every day, provided the price per ounce beats the alternatives. Soup makes sense for someone who regularly eats it, but buying dozens of cans that end up sitting untouched in a pantry defeats the purpose.
The same principle applies to other household staples. Buying more only creates value when the lower unit price translates into real savings, rather than extra spending on things that weren’t needed in the first place.
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Why Cuban wanted the rest sitting in the bank
After paying off debt and finding savings in his budget, Cuban said he would keep the remaining money accessible rather than rush to invest it.
“Why? Because then it’s available for when I get a good opportunity,” he explained in the Forbes interview.
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Cuban pointed to the opportunities that can emerge when the economy changes or asset prices fall.
“Every five years or so there is a bubble bursting or amazing deals available because of a change in the economy,” he said.
Holding cash can give investors the flexibility to act when stocks, real estate, or businesses become available at lower prices. It also avoids the need to sell other investments to raise money at an inconvenient time.
But keeping cash on the sidelines has tradeoffs. Money that earns little or no interest can lose purchasing power to inflation, and market declines don’t guarantee that every asset will become a bargain.
Cuban’s comments reflect his own approach to liquidity and opportunity, rather than a strategy that guarantees the same outcome for everyone.
Cash offers Cuban something beyond returns
Cuban also emphasized the peace of mind that comes with having money readily available.
“Cash is king — and works far better than Ambien when you want a good night’s sleep every night,” he said.
His message wasn’t simply to buy toothpaste and soup instead of stocks. It was to get rid of costly debt, cut expenses wherever possible, and preserve enough cash to take advantage of opportunities when they arise.
The advice appeared in Forbes in November 2010, when Cuban was discussing what he would do with $100,000. It offers a snapshot of his thinking at the time, not a current forecast for the stock market or a guarantee that holding cash will outperform investing.
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