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Financial Wisdom - Tony Robbins

The Rules of Tony Robbins

Tony Robbins is a motivational speaker and author of bestselling books, i.e. "Unlimited Power" and "Awaken the Giant Within". He has also dabbled in multiple investments and spent years learning from the gurus such as Ray Dalio. 

Here are some of his ideas:

Don't Lose Money

Very similar to what Warren Buffet's rule #1, the advice of not losing money is to not pay the full price in the first place. That means waiting for the price (if you are buying a certain share of a good company) to drop to a certain level before jumping in. Another way to looks at this to evaluate to see if the odds are significantly in your favor before jumping in - this applies to investment as well as day-to0day spending. It's common sense to wait for a sale (11.11 or or the day after Thanksgiving), if it is something that can wait. 

Create 3 buckets of Asset Allocation

According to Tony, asset allocation is the difference between the wealthy and the average investor. Each person should set up 3 major buckets for this: Security, Growth and Dream

Security - this is for the home, life insurance, 6-12 months emergency fund. 

Growth - this is for investments, i.e. equities, bonds, REITS. There could be some volatility and risk for this in exchange for potentially higher returns. 

Dream - this is for something you can have fun with - the funds for the vacation or the side-hustle. 

Make Uncorrelated Investments

From Ray Dalio, Tony learnt that one should be hold different, uncorrelated assets in order to reduce risk while still be able to be on the upside during various economic conditions.  One good example are bonds and equities which is usually the opposite of each other - when equities go down, bonds will (in most cases, anyway) go up.  Holding both will allow one to have a more balanced approach. 

Some other types of "investments" that fall into this category: precious metals, fine wines, crypto, real estate, etc. It will take some research to get into this but diversification is the key to capital resilience. 

Look for Opportunities in Private Equity

This is the same principle as explained in " The Richest Man in Babylon". In the book, Arkad was advised to keep 10% of wages in a safe place and when the opportunity shows up, to use a portion of the savings and invest.  Tony shares this because he is an investor in pro sports teams, e-sports teams, venture capital firms, etc. If done well, private equity will offer much better returns versus the typical 8-10% equity and 4-6% bonds in the long term.

The only drawback is that these opportunities are few and far in between...and likely fall into the category of "chance of a lifetime". 

Private Credit

Similar to private equity where one owns a portion of the company, private credit means that you lend money to a company (which for one reason or another, cannot borrow from the bank). Returns from this type of loans can be high (up to 9% annually) with low default rate if you choose wisely. Again, these don't come by too often and only if you already have sufficient disposable savings in the first place. 

Providing Value

According to Tony Robbins, the most successful people are those who focus on providing value more than their peers. This echoes the answer that Jack Welch (former CEO of GE) gave when asked how to be successful. A person who adds value means joining the team and helps improve the processes, reduce cost and increase sales, as seen by the results. As and when these are observed by others in the company or industry, the person will be asked to add value in a larger scale, either by being promoted to a large team or getting a bigger portfolio. 








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