Actor-turned-entrepreneur Ashton Kutcher shares his single best piece of investing advice

Mom's best investing advice

If you know Ashton Kutcher primarily from films and television, it may surprise you to hear that the 38-year-old actor has also quietly built a media empire, cofounded a human-rights organization, and appeared as a guest Shark on "Shark Tank."

He's also built an impressive $250 million portfolio, investing in tech companies such as Skype, Spotify, Uber, and Foursquare, and was recently on the cover of Forbes magazine, featured as one of tech's top investors.

On Chelsea Handler's new Netflix talk show "Chelsea," Kutcher offered up his best investment advice:

Invest in the things that you know. If you drink beer all the time — if you go to microbreweries and you try all kinds of them — you probably know which ones are the best, and my advice is always to invest in what you know.

If you're a stock boy in a grocery store and you see something flying off the shelf, find out who made it. Find out why it's flying off the shelf. Do the investigation necessary to know whether or not it's something that is going to have ultimate value.

He's not the only successful entrepreneur to preach this advice.

Josh Altman, self-made millionaire and the star of Bravo's "Million Dollar Listing Los Angeles," said essentially the same thing when asked about his best investing advice: "Invest in something that you know."

RELATED: 6 simple ways to start investing today

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Actor-turned-entrepreneur Ashton Kutcher shares his single best piece of investing advice

1. Establish an emergency fund 

Before you can do anything, you need actual cash saved. This may seem like common sense, but based on recent data from the department of commerce, the americans save 5.8% of their disposable income on average. Before you begin investing, you should have an emergency cash fund set aside, equal to 3-4 months of your salary. This would cover expenses if you lose your job, experience a medical emergency, need unexpected major repairs, etc. 

Photo: Waiting on Martha

2. Maintain a budget

Saving money is easier said than done. The easiest way to save money each month is to develop a budget to track your income and expenses over time, then you can ultimately establish a projected savings rate that you are comfortable with. Mint is an easy free tool (plus an app) that I personally use. Link up your bank, credit cards and other financial accounts, and it will automatically keep track of your transactions. Mint helps you identify how much you spend each month (and where the money is going).

Photo: Waiting on Martha 

3. Contribute to a 401(k)

Once you have established an emergency fund and have excess cash, the next step is to actually begin the investment process. If your employer offers a 401(k) plan for retirement, and especially if your employer matches contributions, think of this as the easiest way to get started investing. Otherwise you leave free money on the table from your employer. 

Employers offer two options: Traditional (you'll pay taxes on that money only if/when you withdraw it) or Roth (all contributions are made with money you've already been taxed on) options. Do further research or consult a financial advisor about which option is best for you, it will depend on your age and level of income. 

Photo: Waiting on Martha 

4. Establish an IRA 

If your company doesn't offer a 401(k) plan, companies like Charles Schwab, E*Trade and Scottrade can establish your individual retirement accounts (ira) with a traditional or roth option. Next, you'll deposit funds and choose items/funds to invest in. 

I suggest low cost ETFs or mutual funds that track entire sectors of the economy in order to minimize fees and stay diversified. Picking individual stocks is extremely risky, and even people that have years of experience and education get in trouble for doing this." 

Photo: Waiting on Martha 

5. Tuck it away

"hold onto your investments for the long term, especially if you have purchased a mutual fund or etf that is well diversified. Over time, these should grow with the overall economy. Short term investing carries risks, and even the best and brightest can't "time" the stock market. 

Photo: Waiting on Martha 

6. Establish a retail account

If you are not investing for retirement, consider this step (through online brokerage companies like Charles SchwabE*Trade and Scottrade etc.). There are no tax-deffered or tax-deductible benefits to these like a 401(k) or IRA, but you can access the money at any time with no penalty. This is great if you are saving for a major purchase like a home. 401(k)s or IRAs can only be accessed without a penalty at certain ages in preparation for retirement. You can also establish a 529 plan if you are saving for a child's college education. 

Photo: Waiting on Martha 


For him, that means real estate. If he's ever investing outside of the real estate realm, "It's got to be something that I use," he says. "If I like Colgate toothpaste, then I'm going to invest in Colgate. I don't invest in things that I don't use. That's my investment strategy personally, and it's worked for me."

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