‘How much space does toothpaste take?’: Mark Cuban says this is the ‘best way’ to get a return on $50K — thinks you'll have 'more cash' using this method than battling big hedge funds

Vishesh Raisinghani
‘How much space does toothpaste take?’: Mark Cuban says this is the ‘best way’ to get a return on $50K — thinks you'll have 'more cash' using this method than battling big hedge funds
‘How much space does toothpaste take?’: Mark Cuban says this is the ‘best way’ to get a return on $50K — thinks you'll have 'more cash' using this method than battling big hedge funds

Billionaire entrepreneur Mark Cuban has some unusual advice for investors: stock up on toothpaste. “How much space does toothpaste take?” he asked in an interview.

It’s difficult to imagine the owner of the Dallas Mavericks stocking up on bulk packs of toothpaste, but he insists this is the “best way” to get a return on your cash. Here’s how Cuban said he would deploy $50,000 — and why he believes it’s a better way to make money than battling with hedge funds on the stock market.

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Step 1: Pay off credit

“The first thing I would do is pay off all your credit cards,” said Cuban. “Because that’s costing you 18%.”

Interest rates have moved a lot higher than that in recent months. The average credit card interest rate is currently 27.81%, according to Forbes Advisor. Americans collectively owe $1.08 trillion on their credit cards, according to the latest data from the Federal Reserve Bank of New York.

Even if you’re earning double-digit returns on the stock market, expensive debt can hold you back from achieving your financial goals and securing your future.

Step 2: Buy in bulk

Cuban insists that spending $50,000 on bulk purchases for essential items is probably smarter than investing in stocks. He calls this the “transactional value of cash.”

“A lot of people say you’re losing money to inflation when you just have cash in the bank. Completely disagree,” he said. “I know I’m buying a bunch of toothpaste for my family. I know all the consumables that I have. I can take my cash and go get a better value.”

LendingTree, an online lending marketplace, analyzed the impact of bulk buying across 30 common household products, ranging from paper towels to batteries. It found that the average consumer could save, on average, 27% on these essential items, simply by stocking up when discounts were available.

Read more: Rich young Americans have lost confidence in the stock market — and are betting on these 3 assets instead. Get in now for strong long-term tailwinds

Step 3: Figure out your budget

Creating a budget and sticking to it, the "Shark Tank" judge believes, is a better way to extract value from your cash. He advises taking the time to analyze your spending habits and make adjustments to save some money.

Just by spending conservatively, he said, “you can make a better return and end up with more cash than trying to fight the John Paulsons of the world.”

New York-based hedge fund manager John Paulson made $15 billion betting against subprime mortgages in 2007, in a move that has been described as the “greatest trade ever.” Ordinary investors don’t have access to sophisticated trades like this, but that doesn’t mean they can’t make a decent return on their money.

Paying off debt, buying essentials in bulk and setting a budget are all great. But savings don’t compound and no one becomes wealthy just by saving.

It doesn't have to be complicated. Instead, a simple index fund should help most savers boost their wealth over time. In fact, between January 1994 and September 2023, the S&P 500 index has outperformed the Credit Suisse Hedge Fund Index by 2.8% on average each year. So, David certainly has a shot against Goliath.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.

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