How to Make Money Using 12 Billionaires' Investing Secrets New book by Tony Robbins helps those who know little about investing recognize the importance of planning for the future.
By Adam Toren
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Less than half of Americans have money in stocks, but approximately 61 percent of them purchase at least one cup of coffee daily. How do these two statistics relate? If that 61 percent of Americans invested their latte money instead of taking it to Starbucks (or just stashed it away in a savings account), they'd be a big step closer to financial freedom -- a significant value at the core of Tony Robbins's new book, "MONEY Master the Game: 7 Steps to Financial Freedom."
Normally a life coach who focuses on productivity, leadership, and health, Robbins has packed a ton of financial advice into his first ever money-related book. He doesn't chalk all the advice up to his own ingenuity, however -- Robbins met with 12 of the world's top investors to hear their best tips and tricks of the trade and figure out how the average person can succeed in an economy rigged against them. In the midst of the chaos that comes with a book release, I had the opportunity to catch up with Tony Robbins and help him convey bits of his financial blueprint straight to you.
"MONEY" helps those who know little about investing (or perhaps those who are afraid of the idea) recognize the importance of saving for their future -- then, rather than leaving them hanging, the book shows those individuals how to get started. Robbins discusses "latte factor" savings, which is based off the idea of saving unnecessary expenses rather than feeding them forward. For those who are already interested in investing (or have already started), "MONEY" stresses the significance of building a diverse portfolio and avoiding brokers and services that charge particularly high fees. No matter where a reader is in the saving or investing process, he or she can benefit from the advice provided in Robbins's book.
Related: Tony Robbins: How Tax-Savvy Is Your Retirement Plan?
But in the "volatility of today's economy," as Robbins puts it, how is it still possible to not only play the game, but also win? How can individuals new to investing gain a competitive advantage and set themselves apart from those who have played the game for decades? Robbins doesn't tackle these questions alone; instead, he presents them to self-made billionaires like Warren Buffett, Paul Tudor Jones, Sir John Templeton, T. Boone Pickens, and others to see what they have to say. Turns out, these "investment titans" have quite a bit to share.
Billion dollar advice.
It may seem a little obvious, but simply taking action is the first step in succeeding at investing. Legendary oil oracle T. Boone Pickens confesses to Robbins that "too many people say, "Ready? Aim! Aim! . . .' But they never fire." They understand the benefits of investing, but they're too afraid to do so (and even if they come close, it's normally a broker who makes the major decisions for them). In a way, investing genius and philanthropist Sir John Templeton can agree—but he has a little advice for those who are still on the fence. "Not only do you buy at maximum pessimism, but you want to sell at the peak of optimism," he tells Robbins, who's happy to interpret the advice for beginners. "When everyone else thinks the world [is] going to end, it is the right time to invest."
There are virtually endless ways one could begin investing, however, and Robbins admits that the slew of options are more than a little intimidating. "Indexing is the way to go," Robbins says in response to Warren Buffett's advice.
"The goal of the nonprofessional should not be to pick winners ... but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal."
Related: Tony Robbins on the Importance of Being Fearless
Rather than paying off a mutual fund manager, Robbins urges, it's best to invest in "great American business to win over the long term." And when you've finally become a player of the game, "defense [becomes] ten times more important than offense. The wealth you have can be so ephemeral; you have to be very focused on the downside at all times." This is all according to Paul Tudor Jones, who's gone 28 consecutive years without a single loss. Marc Faber seconds this claim: "The most money made is by doing nothing, sitting tight." Though taking some sort of action is crucial to achieving long-term success, sitting tight at the right moments can help to protect what you've built over time.
Kyle Bass, the youngest of Robbins's billionaire interviewees, recommends always ensuring a safety net is there to catch you in case you fall -- a valuable tidbit for those who are nervous about investing. "Taking a swing for the fence with no downside protection is a recipe for disaster," he says. Robbins solidifies Bass's expertise: "[Bass] risked only 6 cents for every dollar of upside potential. That's how you set yourself up to win."
Mary Callahan Erdoes, CEO of the J.P. Morgan Asset Management Division (and manager of over $2.5 trillion in assets), understands that there's no sure-fire way to build the perfect template portfolio for everyone's needs. To make a point, she compares her advice with her three daughters.
"I have three daughters. They're three different ages. They have three different skill sets, and those are going to change over time, and I'm not going to know what they are. One might spend more money than another. One may want to work in an environment where they can earn a lot of money. Another may be more philanthropic in nature. One may have something that happens to her in life, a health issue. One may get married, one may not; one may have children, one may not. Every single permutation will vary over time, which is why even if I started all of them the first day they were born and set out an asset allocation, it would have to change."
Related: Tony Robbins: Know What's Coming for Your Business
Robbins ends "MONEY Master the Game: 7 Steps to Financial Freedom" with a seven-step blueprint to financial success, starting with the decision to become an investor instead of a plain consumer, and ending with "doing it, enjoying it, and sharing it" ("it" being not only your financial assets, but your personal assets as well). By sharing decades' worth of investing background and talking money with some of the globe's most powerful investors, Tony Robbins makes his book into a fantastic resource for both the new and experienced.
