Tony Robbins is an expert in building wealth, but he didn't get there overnight. He spent years working with and learning from some of the most successful investors of all time, including hedge fund managers Ray Dalio and Paul Tudor Jones.
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In his latest book, The Holy Grail of Investing, Robbins shared the “golden rules” he learned through this process. Here are his six of the most important strategies he covers.
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don't lose money
Robbins' first golden rule, which you may have heard somewhere before, is “don't lose money.” This is also Warren Buffett's famous first rule of investing. This is something Robbins reiterated to investors today.
The idea is almost comical. If it were this easy to avoid losing money investing, wouldn't everyone do it? But there is deeper wisdom worth exploring.
Robbins and Buffett aren't saying you should only invest in assets like bonds that don't have a lot of risk. They argue that you should look for investment opportunities where the odds are significantly in your favor.
For example, you might like NVIDIA stock. Rather than buying the company in the middle of a hype cycle, Robbins and Buffett would advise waiting until the company reaches a fair valuation based on its financials. That way, downside risk is lower because stocks below fair value prices tend to attract more enthusiastic investors.
To follow this golden rule, you may need to be more selective with your investments.
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Create three buckets for asset allocation
Robbins says asset allocation is the key difference between the ultra-high net worth and the average investor. He advises creating his three separate “buckets” for himself.
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safety
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Risk or growth?
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dream
Your security bucket includes your home, pensions, life insurance policies, and any cash or cash equivalents you hold. As the name suggests, this bucket provides peace of mind as the assets within it are not subject to large price fluctuations.
The second bucket is for growth. This includes stocks, high-yield bonds, real estate, commodities, currencies, and more. Here you are accepting volatility to open the door to better returns.
Finally, Robbins says he makes the bucket of dreams. This is for your enjoyment. It should include a small portion of your net worth. Having a dream bucket allows you to avoid excessive speculation with the remaining money.
Make uncorrelated investments
While working with Dalio, Robbins learned the value of making uncorrelated investments. He told Robbins that every investor should own eight to 12 assets that don't react in the same way to changes in economic conditions. He said this allows him to increase upside while reducing risk by 80%.
For example, when interest rates rise, stocks typically fall, but bonds tend to be bought. By investing in both asset classes, you can enjoy positive returns no matter how interest rates change.
Other examples of uncorrelated asset classes include:
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artwork and collectibles
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precious metal
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Digital assets such as cryptocurrencies and NFTs
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real estate
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mortgage fund
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private equity investment
Please note that you should not invest just for the sake of investing in uncorrelated assets. To make smart bets, you need to research the investments you are making.
Find private equity opportunities
Robbins is a leading investor in private equity opportunities. He owns stock in professional sports teams, venture capital firms, energy companies, and other companies not accessible on the public market.
The reason he invests in these assets and advises others to do the same is because they provide better returns than standard market funds like the S&P 500. He cites the example of Guggenheim buying the Los Angeles Dodgers for his $2 billion and then selling the team's television rights for his $2 billion. 7 billion soon after. This kind of performance is rarely seen in market funds that anyone can purchase.
The problem is that private equity opportunities are often guarded. Usually, you need to know the right people to participate. But if you can find it, Robbins says, it's often some of the most lucrative investments you can make.
Consider private credit opportunities
Robbins says the ultra-wealthy are taking advantage of private credit opportunities to grow their wealth while minimizing risk. This essentially means lending money to businesses at a higher interest rate that they cannot borrow from banks.
Robbins says it's typical for private credit opportunities to have returns of perhaps 9% per year, with very low default rates as long as you choose the right partner. As with private equity investing, these opportunities can be difficult to find. But if you see one, it's worth investigating.
Focus on delivering value
Finally, Robbins says the most financially successful people focus on providing more value than others. This point is primarily relevant when investing in private opportunities where you have a direct relationship with business owners.
Robbins cites the example of a friend who excels at driving value for SaaS (software as a service) companies. This friend says that any company in its industry can grow by hiring the right people, improving technology, and cutting costs.
This friend became very successful financially by proving his excellence and charging high fees to those who wanted to invest with him. This person receives a 2% annual management fee and his 20% of each investor's profits, adding up to hundreds of millions of dollars in income.
Robbins says one way to be financially successful is to provide more value to your business partners and co-investors than anyone else. If you can prove that you can do this consistently, your financial future is limitless.
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