Rethinking Your Investment Strategy: Why 15% May Not Be Enough

When it comes to building wealth, many people believe that investing 15% of their income is a solid strategy. However, Grant Cardone, a renowned private equity fund manager and real estate investor, challenges this notion. He argues that if you truly want to accumulate wealth, you need to think bigger—much bigger.

The 40% Investment Rule

Cardone advocates for investing 40% of your income. His rationale is straightforward: if you can allocate a significant portion of your earnings to taxes, you can certainly do the same for your investments. “If they figured out how to pay the government 40% [in taxes], they can figure out how to start investing in assets at 40%,” he states. This perspective encourages individuals to prioritize their financial future just as they do their tax obligations.

The Importance of Asset Prioritization

Investing 40% of your income requires a shift in mindset. Cardone emphasizes the need to cut down on unnecessary expenses and prioritize investments. “Invest 40% in assets before any spending,” he advises. This approach not only fosters a habit of saving but also ensures that your money is working for you rather than against you.

How to Afford Investing 40%

You might be wondering how to make such a significant investment feasible. Cardone suggests starting with a clear investment goal and working backward to determine how much you need to earn. For instance, if your goal is to invest $2,000 a month, you should aim to earn around $5,000 monthly. This strategy helps you understand the income level necessary to meet your investment objectives.

Exploring Additional Income Streams

To reach that income target, consider exploring side hustles or enhancing your skills for a potential pay raise. The gig economy offers numerous opportunities, from freelancing to consulting, that can supplement your primary income and help you achieve your investment goals.

The Power of Real Estate Investments

One of Cardone’s key recommendations is to channel that 40% into income-producing real estate. Unlike stocks or cryptocurrencies, real estate offers the dual benefits of passive income and tax advantages. “If I buy stocks, I don’t get any write-offs,” Cardone explains. “But if I buy real estate that produces income, I would have a write-off. And this is what all the wealthy people do.”

Alternative Investment Options

If purchasing a property outright seems daunting, consider alternatives like fractional shares of real estate or Real Estate Investment Trusts (REITs). These options allow you to invest in real estate without the hefty price tag of full ownership, making it easier to diversify your investment portfolio.

Consistency Over Amount

While setting aside 40% of your income for investments may seem challenging, Cardone emphasizes that consistency is more important than the amount. “Whether you do it with $2,000, $20,000, or $20 million, it’s the same money,” he asserts. The key is to prioritize assets over expenditures, creating a sustainable habit of investing that can lead to significant wealth accumulation over time.

Conclusion

In a world where financial literacy is more crucial than ever, Grant Cardone’s insights serve as a wake-up call for those relying on the traditional 15% investment rule. By committing to invest 40% of your income, prioritizing assets, and exploring additional income streams, you can set yourself on a path to financial freedom. Remember, it’s not just about how much you invest, but how consistently you do it. Start today, and watch your wealth grow.

For more tips on saving and investing, check out Clever Ways To Save Money That Actually Work in 2025.