Financial freedom is a goal that most of us shoot for. Yet only a small percentage of people will ever get there.
“Say yes!” “Say Yes!” “SAY YES!” It was nearing midnight. Tony Robbins had been on stage for nearly 12 hours – nonstop – motivating an audience of 14,000 raving fans. “SAAAAAY Yes!” was the mantra that Robbins used to put the crowd in a peak state getting them to believe that they can do anything. Hearing 14,000 people scream at the top of their lungs, unforgettable!
I was lucky enough to see Tony Robbins at Unleash the Power Within, a.k.a. UPW. Folks from 70 countries convened on the Prudential Center in Newark, New Jersey, for a 50 hour, four-day immersion learning experience designed to help you unlock and unleash the forces inside that can help you break through any limit and create the quality of life you desire.
Robbins is especially interesting to me because he’s entered the financial services industry. In the last couple of years he has come out with two books about money. His first book was Money Master the Game: 7 Simple Steps to Financial Freedom. While it was a decent read, seven simple steps should not take 600 pages to explain. His most recent book, “Unshakeable” is like a short story compared to Money Master the Game.
Unshakeable condenses the mindset and skillset of several of the top world-class investors. The book gives you simple rules and actionable steps to follow.
Here are a few I’d like to highlight.
Instead of focusing on the homerun investments, try focusing on minimizing losses. Warren Buffett is often quoted on his two rules for investing. Rule #1 is to never lose money. Rule #2 is to never forget the first rule. Why is this so important to understand? The math is simple, but eye-opening. If you have $1,000 and lose 50 percent in the market, you are now down to $500. If the market goes back up another 50 percent you are not back at your original $1,000, you are only back at $750. You’d need the market to go up 100 percent to get you back to even. Investors have a tendency to chase gains. Chasing massive gains leads to taking massive losses. Focus on avoiding the losses or on safer options with limited downside.
Look for low-risk, high-reward investments. While there’s no 100% safe investment, you can certainly minimize risk. According to Robbins, the smartest investors look for only high-reward, low-risk investments for their capital. It’s called an asymmetric risk/reward ratio. In his book, Robbins references legendary hedge fund investor Paul Tudor Jones’ formula for success. Jones’ has a set rule to only invest in something that he can expect to make five times his initial money from. With that rule, he can fail four out of five times, and with the one success, he’ll still be at break- even. But if his research is thorough and he is successful three times out of five, he’ll more than double his money!
Use an investing checklist. As with any technique that involves humans, the likely reason for failure is the human element. The roots of the problem go back to our evolution; 10,000 years ago, if you ran into a lion on the Serengeti, you dropped everything and ran. However, that same reaction applied to investments can be disastrous. We often react to losing money as if it’s life-threatening. We go into survival mode, which usually results in us selling at the worst point or not noticing an incredible opportunity. Having a checklist or set of preset rules will not only protect you, it will help identify opportunities. When everyone else is getting fearful, you need to get greedy. And when everyone else is getting greedy, get fearful. Using a checklist like a manual. Keep your irrational brain in check by making sure you have a fixed set of rules for investing that you follow at all times.
Watch for hidden fees. Seventy-one percent of Americans think that there are no fees in their 401(k); 92 percent have no idea what they are paying. Fees will kill you over the long haul. Know where they hide and avoid unnecessary fees.
Financial freedom is a goal that most of us shoot for. Yet only a small percentage of people will ever get there. Unshakeable has refined lessons that are simple and easy to understand. The result is a financial freedom playbook that I strongly suggest you read. I listed just a few of the tangible tips this book offers. However, the most important skill to have if you want to acquire wealth is your mindset, which was a large part of the focus of UPW.
Imagine if you had the knowledge that no matter what happened in the economy, the stock market or the real estate market that you would not only survive but thrive. You need to know in your heart, mind and soul that you’ll always be prosperous. You need to be unshakeable. “SAAAAAY YES!”
This post originally appeared in the Old Colony Memorial.