Mark Cuban Says These 5 'Safe' Investments Aren't Actually Safe

Everybody hopes to find good investments that are also safe. But some things that appear to be low risk may hide dangers, according to Mark Cuban.

The billionaire business mogul has long warned that some investments carry risks that may not be obvious. Before you start investing, exercise some caution with the following places to put your money.

Products that are too complex

Some investments and other money products might be too complex for you to pursue, according to Cuban. That may be true even if the investment is a worthwhile option for some people.

Many years ago in a blog post, Cuban offered this viewpoint on complex products: "If you don't fully understand the risks of an investment you are contemplating, it's ok to do nothing."

In such situations, he suggested that you simply take the safer, more certain option and "put your money in the bank."

Cryptocurrency

Cuban isn't necessarily against investing in cryptocurrency. But he is skeptical of any notion that Bitcoin and other digital currencies are safe.

If you are a "true adventurer" who wants to throw a "Hail Mary," perhaps putting up to 10% in crypto might be for you, Cuban once said in a Vanity Fair video.

However, he then added, "But if you do that, you've gotta pretend you've already lost your money."

In other words, investing in crypto may have a potential upside, but it is not safe. Instead, it comes with a boatload of risk.

Hot stocks your broker recommends

If you work with a stock broker, it can be tempting to blindly follow their recommendations. After all, they are the expert, so following such advice can be pretty safe, right?

Cuban disagrees. In a 2007 blog post, he famously referred to the stock market as "probably the worst investment vehicle out there."

Perhaps he was exaggerating. But there is no mistaking his disdain for following the advice of a broker.

"Why invest your money in something because a broker told you to?" he wrote. "If the broker had a clue, he/she wouldn't be a broker, they would be on a beach somewhere."

Anything that feels like a shortcut

Many of us dream of getting rich quickly and safely. But Cuban says most people are not going to find a secure, fast path to riches.

Cuban wrote emphatically on his Blog Maverick site: "There are no shortcuts. NONE."

In that light, you should never trust anyone who promises you a sure thing. As Cuban wrote, "If a deal is a great deal, they aren't going to share it with you."

Businesses that are easy to copy

If you love a restaurant chain or clothing brand, it can be tempting to view those companies as safe investments. After all, if the brand captivates you, odds are good that it has the same effect on many others.

But that doesn't mean your favorite brands are good, safe investments. In the past, Cuban has talked about the danger of investing in businesses that are easy to copy.

"Don't invest in the restaurant, don't invest in the clothing label, don't invest in the liquor company... or music," Cuban once said on Shannon Sharpe's Club Shay Shay podcast. "That is the death!"

What should you do with your money instead?

Cuban's underlying message is that many investments that appear safe on the surface may hold unseen risks.

If you are looking for true safety, you might be better off adopting the old slogan "cash is king" and beginning to focus on ways to build your pile of savings.

One surefire, safe way to increase savings is to become a more careful shopper.

As Cuban has written in the past, "You will get a better return on your money by being a smart shopper and taking advantage of cash, quantity, or other types of discounts than you will in the stock market."

The safety of keeping things simple

In other words, Cuban's bottom line is to keep things simple. He suggests that living smartly and frugally will get you further ahead than taking risky gambles on complicated investments.

He urges folks to avoid hedge funds and high-cost mutual funds and to instead look for inexpensive, vanilla ways to build wealth.

In an interview with Money magazine, Cuban said, "Saving money and putting some into a low-cost mutual fund... and living as inexpensively as you possibly can, will pay off dividends."

Bottom line

Some seemingly safe investments may hold hidden risks that can put your financial fitness in jeopardy, according to Cuban.

So, do your homework before you sink your cash into any investment. And if you need guidance, consider working with a financial advisor or other money professional.

This article is for informational purposes only and should not be considered investment advice.

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Author Details

Chris Kissell

Chris Kissell focuses on Medicare, Social Security, and retirement planning. He helps older adults understand benefit changes, health care costs, inflation, and income decisions so they can protect their finances and approach retirement with greater confidence.