Go Banking Rates | Cameron Huddleston
The New York Times No. 1 best-selling author behind “MONEY: Master the Game,” Tony Robbins, wasn’t born into wealth. He and his family struggled with money when he was younger. But, over the years, the entrepreneur built a fortune as a life and business strategist. Robbins has helped more than 50 million people with his audio and video programs and seminars, written five best-selling books and coached CEOs, celebrities, professional athletes and U.S. presidents. Robbins has shared some of his best money advice over the years. Read on to see what he has to say about life, money and your personal and professional goals.
1. Be an Investor
Robbins has said that if you want to reach your financial goals faster, you have to make investing a habit. “You have to become an investor — no matter how small the amount — so you can tap into the power of compounding,” he wrote on LinkedIn.
In an interview with Inc. Magazine, Robbins told the story of a UPS driver who made $14,000 a year but retired with $71 million because he saved 20 percent a year. That habit of saving and the power of compounding interest created lasting wealth, Robbins said.
If you think you can’t afford to invest, Robbins recommends looking for expenses you can cut. Investing that money will “ensure you have more than enough when you need it most,” he wrote.
2. Don’t Lose Money
This is the single most important rule of investing, Robbins told GOBankingRates.com. “While so many of us are focused on making money, the most successful investors on the planet are obsessed with not losing it.”
He’s right. In fact, his advice echoes that of investing great Warren Buffett, whose No. 1 rule is to never lose money.
3. Take Small Risks for Big Rewards
“While there is no such thing as a riskless return, every money master in the world will tell you, without exception, one of the most vital components of your portfolio is to find investments with asymmetric risk and reward,” said Robbins.
To do that, you should use the five-to-one rule. “For every dollar you risk, you have the potential to make five,” he said. “You can be wrong four out of five times, but as long as you are right that fifth time, you will break even. It’s all about finding ways to take small risks for big rewards.”
4. It’s What You Keep, Not What You Earn, That Matters
“When it comes to our investments, we have been taught to focus on returns,” Robbins told GOBankingRates.com. “But it’s not what you earn that matters, it’s what you keep. And if your portfolio isn’t tax efficient, then you may not be keeping as much as you should be.”
In fact, he said taxes can dramatically erode your earnings over time if you haven’t structured your portfolio with tax-advantaged investments. You might consider working with a professional, such as a chartered financial analyst or certified financial planner, to do this.
5. Diversify to Reduce Risk and Maximize Returns
Most investors know that diversifying your portfolio helps reduce your risk because you’re not putting all of your money into a single investment. But diversification doesn’t mean investing in a random selection of stocks and bonds, said Robbins.
One way to get the diversification you need is to invest in low-fee index funds. “With these types of funds, you will have the broadest exposure to the largest numbers of securities for the lowest cost,” he said.
6. Replace Expensive Mutual Funds With Low-Cost Index Funds
Robbins not only touts index funds because of the diversification they offer but also because they have lower fees than mutual funds. Why do fees matter? Because they eat away at the returns in your retirement account and leave you with less money.
In an article in Business Insider, Robbins points out that, according to a 2011 Forbes article, the average cost of owning a mutual fund is 3.17 percent per year. An index fund that tracks the S&P 500 has a fee of about 0.14 percent.
“By simply removing expensive mutual funds from your life and replacing them with low-cost index funds, you will have made a major step in recouping up to 70 percent of your potential future nest egg,” he wrote.
7. Stop Mindless Spending
Want to stretch the value of a dollar? Then you need to “spend on things that dramatically enhance your quality of life, and stop mindless spending that doesn’t add any value to your life,” Robbins told GOBankingRates.com.
Think of how your spending on things you don’t need to enjoy life can quickly add up, he said. For example, spending $40 a week to go out to dinner instead of enjoying a low-cost gathering at home with friends can add up to more than $2,000 a year. If you invested that money instead, and earned an annual 8 percent over 40 years, you’d have more than a half million dollars, he said.
8. Focus on What You Can Control
If you want to succeed, Robbins has said that you need to stop focusing on what you can’t control and instead focus on what you can. He wrote on LinkedIn that he learned he could control his future by improving himself.
“I could find a way to serve, a way to do more, a way to become better, a way to add value to the marketplace,” he wrote.
If you invest in yourself so that you can add value to the marketplace, you can earn more. And the more you earn, the more you can invest, he wrote.
9. Focus on Results Instead of To-Do Lists
When Robbins was asked by LinkedIn to share his secrets for being more productive, he said people should ditch their to-do lists. You’d think an authority on leadership and performance would advocate a method for keeping track of what needs to be done. But he wrote, “The biggest problem with to-do lists is that focusing only on what you need to get done does not guarantee that you’re actually making any real progress.”
Figure out what you want then focus all of your activities on making progress toward that result.
“To continue to manage your life by a to-do list only invites the continuing imbalance and frustration that comes from knowing you’re working hard, but that you’re not making progress in all the areas of your life that truly matter,” Robbins wrote.
10. Knowledge Is Not Power, Execution Is
It’s important to always be learning. And Robbins does that himself by seeking out people who break the norms and demonstrate what is possible. But you have to take what you’ve learned and put it into practice.
“Just make a little bit of progress each day or each week, and before you know it, your path to financial freedom will be realized,” he wrote in early 2015 in an opinion piece for MarketWatch.
11. Notice What’s Working and Not Working
As a business and life strategist, Robbins asks people to examine what they want in life. Part of the process of figuring out what results you want involves noticing what is and isn’t working.
“When it’s not working, change your approach. And keep changing until you finally achieve what you’re committed to,” he told Success magazine.
This can apply to all aspects of your life, including your finances. If your efforts to cut spending to save more aren’t working, try another approach. If your attempts to eliminate your debt are backfiring, look for another strategy. The key is to learn from your mistakes.
12. Model Strategies That Work
To achieve what you want in business or life, Robbins advocates modeling someone who has already achieved that goal.
“They’ve got a set of strategies that they apply and those strategies work,” he told Success magazine. “You don’t need to reinvent the wheel to succeed.”
13. Raise Your Standards
The way you see yourself might be what’s holding you back from financial success. You might be saying to yourself that you’re not the type of person who can succeed, who can’t get ahead, who can’t be rich. The way you live is based on who you think you are.
“Once you lock in on that identity, your brain finds a way to keep you there,” said Robbins in one of his motivational videos. But if you raise your standards, you can change your life.
“Lasting change is different than a goal,” he said. “You don’t always get your goals, but you always get your standards.” When you decide something is a must for you and raise the standard, you will find a way to achieve what you want.
To raise your standards, take a look at your limitations and ask when you decided to accept that limitation. Then identify yourself in a new way. “You’ll find a way to make that standard real,” said Robbins.
14. Be Resourceful
When people fail to achieve their goals, most say it’s because of a lack of resources, Robbins said in one of his seminars. They might say they didn’t have the support, the money or the time. But that belief keeps them from being able to lead.
“What leaders do is they find a way to maximize whatever resources they have as little as they may be,” said Robbins. They are resourceful.
“Resourcefulness is the ultimate resource,” he said. It’s the fuel that takes an idea in your head and turns it into something.
15. Don’t Sabotage Your Financial Success
The No. 1 thing that keeps people from achieving what they want financially is self-sabotage, said Robbins. They sabotage their own financial success because, on some level, they believe it will lead to more pain than pleasure. They focus on the negative aspects of money — worrying, for example, about the taxes they’ll have to pay as they earn more.
“To eliminate financial self-sabotage, you must change your core beliefs about money,” said Robbins in one of his instructional videos. Instead, he said you should think about the pain not having money has caused you. Write it down, then write down the positive things money offers to motivate you to change your mindset.
16. Use Fear to Move Yourself Forward
Everyone has something they’re afraid of doing. Robbins said you don’t have to get rid of that fear, but you need to use it to move yourself forward.
“The easiest way to deal with the fear of failure is to be more fearful of not taking action,” said Robbins during a Business Insider Facebook Live chat. Be afraid of settling for a life that’s far below what you deserve and desire, he said.
17. You Need a Business Map, Not a Business Plan
If you have a business, you need more than just a plan that can become obsolete in a few years as the market changes.
“The only true competitive advantage in today’s changing market is not just having a business plan, but also a business map that can take you from where you are to where you want to be in the shortest amount of time,” Robbins wrote on LinkedIn.
To create a map, Robbins wrote that you have to frame your business in terms of seeing opportunities and threats and knowing what your business needs to grow and be a dominant force in the market.
18. Ask the Right Questions to Get Results
In his book “MONEY: Master the Game,” Robbins writes that successful people ask the right questions. For example, Microsoft founder Bill Gates didn’t ask how he could build the best software but rather how he could create the operating system that will control all computers.
“To get results, you can’t just ask the question once, you have to become obsessed with finding its greatest answer(s),” Robbins wrote.
Average people often ask questions that lead them to focus on roadblocks rather than solutions, such as “Why is this happening to me?” But Robbins writes that he asks how he can make things better. “Are you aware of what you focus on most; your primary question in life?,” he wrote. “Whatever it is, it will shape, mold, and direct your life.”
19. Money Doesn’t Create Meaning in Life
For someone who has made a lot of money in life, Robbins doesn’t think it’s what gives him — or any of us — meaning.
“People can equate their net worth with their self worth,” he wrote on LinkedIn. “Their identity is married so deeply to their bank statements and quarterly portfolio reports that they’ve forgotten that money is simply a vehicle for trying to meet our needs, almost all of which are not financial.”
But if you want to feel like your life has meaning, it’s not about what you get with money but what you give. “Money will always leave you empty unless it comes from a contribution you’ve made,” he wrote. “And if you’re looking for significance from money, it’s a high price to pay.”
20. The Secret to Happiness is Progress
“Progress equals happiness,“ Robbins said in a motivational video. “If we can make progress on a regular basis, we can feel alive.”
To make progress, though, you can’t just expect it to happen. You have to look at your life in a different way. “You have to say ‘I’ve got to take control of this process and not just hope it’s going to work out,’” he said.
This post first appeared in the Go Banking Rates.
- Money-Wasting Habits When Buying Gas
- The single most effective way to get rich
- 9 Ways To Make Money While Traveling
- Behind the Plunge: Five Factors Driving Stocks Lower