Finance Tips from Tony Robbins: Unshakeable

As I wrote in my latest Weekly Rapport, I just finished reading Unshakeable, Tony Robbins’ shorter sequel to Money: Master the Game. It’s filled with a quick, easy-to-comprehend guide to how to handle your finances, no matter your age or life stage. Throughout reading, I took a lot of notes and highlighted most of the important stuff. If you’ve never read or listened or watched Tony Robbins, he will blow you away with his motivational, positive discourse and I guarantee he will get you off your ass to start doing something.

This article is comprised of the most important tidbits I pulled out in reading this book. It’s already an abridged version of Money: Master the Game (which I think everyone should give a try) but since I know we’re all tired and just wanna watch TV and get on with life, here are the key takeaways that you can read in under 400 seconds, ya lazy farts.

“You’re never going to earn you way to financial freedom. The real route to riches is to set aside a portion of your money and invest it, so that it compounds over many years. That’s how you become weathly while you sleep.”

  • If you overpay (in fees) by 1% a year, it will cost you 10 years’ worth of retirement income.
  • Avoid mutual funds
    • 96% of mutual funds failed to beat the market ofver a 15-year period

Defining the different kinds of funds for beginners:

  • Hedge fund = private fund available only to high-net-worth investors (20% of profits go to the manager). Probably not for us common folk
  • Mutual fund = public fund available to anyone. A portfolio of stocks assembled by a team. *Avoid these
  • Index fund = public fund but requires no “active” managers. Funds simply own all the stocks in the index (for example, all 500 stocks in the S&P 500). *Invest in these. These should be the bulk of your financial investment portfolio. Vanguard offers good index funds with low fees and high yields.

In an era of compressed interest rates, you earn nothing when you keep your cash in a Savings Account

The best opportunities come in times of maximum pessimism.

– Sir John Templeton

  • Financial winter comes on average, every year
  • The biggest danger isn’t a correction (a 10% fall in the market peak), or a Bear Market (20% fall), it’s being out of the market
  • Historically, the average correction (10% market cap fall) has lasted only 54 days – less than 2 months
  • Fewer than one in five corrections escalate to the point where they become a bear market
  • On average, bear markets last about a year

The only value of stock forecasters is to make fortune tellers look good.

– Warren Buffett

  • The stock market isn’t looking at today, it always looks to tomorrow, so what’s important isnt where to economy is today, it’s where the economy’s headed
  • If you stay in the market long enough, compounding works its magic and you end up with a healthy return – even if your timing was hopelessly unlucky
  • Excessive fees can destroy two-thirds of your nest egg
  • Pros aren’t really any better at predicting the future than the rest of us
  • The largest expense in your life is taxes

When you look at the results on an after-fee, after-tax basis, over reasonably long periods of time, there’s almost no chance that you end up beating the Index Fund.

– David Swensen

Types of Financial Advisors

  1. Broker = bad
  2. Independent Advisor = bad
  3. Dually Registered Advisor = good
    1. RIA’s (Registered Investment Advisors) don’t accept sales commisions
    2. Make sure he has a CFP on the team
    3. Ask if he is a affiliated with a broker-dealer (shouldn’t be)
    4. Should not own proprietary funds
    5. Ask “Does your firm receive commision from third parties?” (should be no)

Core Principles

  1. Don’t Lose
  2. Invest only in safe deals with a low-risk, high-reward ratio
  3. Tax Efficiency
  4. Diversification
    1. Across asset classes (real estate, stocks, bonds)
    2. Within asset classes (different real estate, different stocks, different bonds)
    3. Across markets, countries, currencies, and across time

Be fearful when others are greedy, and be greedy when others are fearful.

– Warren Buffett

  • Over time the economy and the population grow and workers become more productive, the rising economic tide makes businesses more profitable, which drives up stock prices.
  • “Over the long term, stock market news will be good.”

What are Bonds?

When you buy a bond, you’re making a loan to the government, a company, or some other entity. Bonds are safe and conservative since they have a low interest rates, but they will be paid back to you over time.

  1. Treasury bond = a loan to the federal government
  2. Municipal bond = loan to city, state, county
  3. Corporate bond = loan to Microsoft, for example
  4. High yield/junk bond = loan to a less desirable company

Alternative investments

  • Real Estate Investment Trusts (REITs)
  • Private Equity Funds
  • Master Limited Partnerships (MLPs)
  • Gold
  • Hedge Funds

Core and Explore

  1. Asset Allocation drives returns
    1. Never bet uour future on one country or one asset class
  2. Use Index Funds for the core of your portfolio
  3. Always have a cushion
  4. The Rule of Seven
    1. Have seven years of income set aside for income-producing investments like bonds and MLPs
  5. Explore
  6. Rebalance

Great things are not accomplished by those who yield to trends and fads and popular opinion.

—JACK KEROUAC

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