'Shark Tank' star Kevin O'Leary says you're not rich unless you have $5 million in liquid assets

• Kevin O'Leary says you need at least $5 million in liquid assets to be genuinely wealthy.
• The "Shark Tank" investor said people aren't rich if their money is "tied up" in cars and homes.
• O'Leary previously said that hitting the $5 million mark is the "true definition of success."

You could own a row of Bel Air mansions, a fleet of Bugattis, and a closet full of Birkin bags and still not be wealthy in Kevin O'Leary's eyes.

"You're not rich if it's all tied up in real estate, you're not rich if it's in jewelry and in cars and in boats and all that stuff," the "Shark Tank" investor told Fox Business' "Varney & Co." this week.

The O'Leary Ventures founder and self-proclaimed "Mr. Wonderful" said that many wealthy people lack a sufficient "safety net" as they don't have enough assets that can quickly be converted into cash.

The "magic number" is $5 million in liquid assets, he said, as that should yield around 5% a year or $250,000 in pre-tax income — enough to provide for a family of four if the "poo-poo hits the fan in your world and everybody loses their job."

O'Leary said he personally keeps at least that much in Treasury bills, a form of highly liquid US government debt. He minted his fortune in part by cofounding SoftKey in the mid-1980s, acquiring The Learning Company, then selling the combined business to Mattel for $4.2 billion in 1999.

During another interview late last year, O'Leary said that securing $5 million in liquid assets was the "true definition of success." He underlined the difficulty of saving that much as "you're always tempted to buy a watch with it, or to lend it out to somebody, or help your cousin open a restaurant or whatever."

"That is not what it's for," O'Leary continued. "It's there to guarantee your financial freedom and that of your family for the rest of your life."

O'Leary has been preaching the importance of having cash in the bank for years. In his 2012 book, "Cold Hard Truth on Men, Women & Money," he wrote: "You aren't really living within your means until you've saved three months' salary as a protective cushion, and that's on top of all other non-liquid assets."

Without that safety net, he continued, "you're just one major illness, one job loss or one big market correction away from penury, or from losing your house, or worse."

O'Leary is far from alone in emphasizing the importance of liquidity. Warren Buffett — who mandates his Berkshire Hathaway conglomerate keep at least $30 billion in liquid reserves — wrote in his 2010 shareholder letter that "having loads of liquidity, though, lets us sleep well," and means that during crises he's "equipped both financially and emotionally to play offense while others scramble for survival."

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