Kevin O'Leary's Mum Hid A Portfolio For 55 Years — It Changed How He Invests: Copy His Strategy Here

In a recent interview with Steven Bartlett, Shark Tank US star Kevin O'Leary shared how his investing strategies were shaped by his fiercely independent mother.

O'Leary recalled that his mother started working in an accounting department at a very young age and got paid in cash. Every week, she would take 20% of the money and invest in two asset classes: large-cap stocks that paid dividends and telco bonds. He recalled that 7-year telco bonds paid up to 8% in annualised interest at that time. 'She maintained that portfolio for 55 years,' O'Leary said.

His mother never touched the principal investments but would only spend the dividends and interest earnings. Her disciplined investing approach and regular investment earnings helped her put Kevin and his brother through college, take care of the family, and support her sisters during difficult times.

A Simple Portfolio Allocation Rule

O'Leary highlighted that his mother followed a simple rule: She invested no more than 5% in any one stock or bond in her portfolio and no more than 20% in one sector, ever. So, when a stock allocation went above 5% of her portfolio, she would sell it down to maintain her long-term strategy. This is often referred to as rebalancing portfolios to ensure the allocation of securities is the same as originally planned, despite changes in market dynamics and stock prices. 'This is not genius. This is just diversification,' O'Leary said.

The Shark Tank star saw his mother's portfolio when she passed away, as he was the older brother and the executor of her will. O'Leary believed her mother's financial stature was 'middle-class,' only to be shocked to find that she had saved independent money through a high-performing investment portfolio without ever disclosing it to her partners. 'It was beyond any hedge fund or anything,' he said.

From that day onwards, O'Leary made up his mind to invest in the same way his mother did. However, he slightly tweaked the portfolio allocation strategy to dedicate about one-third of the total investments to real estate, citing durable performance and rapid capital appreciation over the past few decades.

Would O'Leary's Mother Pick Stocks on Her Own?

When Bartlett asked if she would pick the stock herself, Kevin said she 'indexed' by choosing a collection of stocks through mutual funds that paid dividends. Kevin recalled that she had 28 large-cap stocks.

For today's generation, Kevin suggests that people should first sort their budgets to save money that they could invest in index funds. He believes that investing as little as £22 ($30) consistently in the S&P 500 for decades could yield staggering returns due to steady average returns and the power of compounding interest.

The entrepreneur also suggests diversifying portfolios through dividend stock, Treasury bills, and fixed-income instruments for regular earnings that can be used for daily purposes or reinvested in other asset classes. Diversification is important if you want to reduce the impact of market volatility on your portfolio.

Disclaimer: Our digital media content is for informational purposes only and not investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks and past performance doesn't indicate future returns.