Unshakeable Summary: the 8 best lessons I learned from Tony Robbins
— Tony Robbins
Who is Tony Robbins and why listen to him?
Tony Robbins is probably the #1 motivational speaker in the world.
- People pack stadiums to hear him talk about how to be successful. (Actually, his seminars look more like rock concerts with all the lights and energy.)
- He’s also a bestselling author and has coached people like Bill Clinton and Oprah Winfrey.
- If that’s not enough, he lives in a castle and rides around in his own helicopter.
- And let’s not even mention that private island he bought in Fiji that he built another mansion on, as well as a 5-star tropical resort.
All this is to say: If Tony Robbins isn’t successful, then I don’t know who is! But he wasn’t always in this blessed situation.
At 17 his abusive mom kicked him out of the house. He was working 18 hours every day and still barely made enough money to shelter and feed himself. And he had no idea how he would ever improve his situation.
So what changed his life?
Well, Tony has incredible communication powers. That’s how he made his fortune. He understands what people want and what advice they need to hear to move forward. But he isn’t just a good talker.
He’s always studied successful people like a detective, uncovering the steps that led to their success. First he copies those patterns in his own life and then teaches them to students. And many people—including a few of my personal friends—credit Tony for changing the course of their lives.
So for this book, Tony spent 4 years talking to dozens of billionaires and famous investors. These people have spent their whole lives learning the secrets to building wealth. And Tony got them to spill the exact strategies a regular person like you or me can follow to become financially safe and free, even in our unstable fast-changing modern world.
Even better news: On this page I’ll share with you some of the best lessons I learned from this newest Tony Robbins book. Let’s start with lesson 1…
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1. Don’t believe that investing needs to be risky or complicated
Many people feel overwhelmed just hearing the word “investing.”
- They think investing is incredibly complicated.
- Or they believe it’s risky like gambling.
- Or they’re afraid to make a wrong decision and lose their money.
But when you follow the right investing strategy, there’s no reason to feel overwhelmed or worried. In this book Tony Robbins explains the simple rules for safe and profitable investing. He tells you exactly what to do to grow your wealth and what traps to watch out for to avoid losing money.
This isn’t about gambling to get rich quickly. It’s about creating a rock solid foundation of unshakeable financial security to support you and your family. So you can live and retire with peace of mind.
The best part is, when you follow these strategies, then your money begins to work for you instead of you always needing to work for money. Tony calls it “making money your slave instead of being a slave to money.”
A different personal finance author named Robert Kiyosaki wrote the bestselling book Rich Dad Poor Dad. In that book he shares his story of growing up as a boy in Hawaii with a poor dad (his biological father) and a rich dad (his friend Mike’s father who was a rich entrepreneur). And Robert says the most important lesson he learned from his rich dad was this:
Rich dad explained this point of view over and over, which I call lesson number one: The poor and the middle class work for money. The rich have money work for them.– Robert Kiyosaki, Rich Dad Poor Dad
If you want to learn the basics of investing and personal finance from a different perspective, then definitely go read our summary of Rich Dad Poor Dad by Robert Kiyosaki. It has some good beginner tips for growing wealth, investing in real estate and more.
Investing is for everyone, not just the rich. If you follow the right strategy, then it can be a very simple and safe way to multiply your money.
2. Put your money into index funds for reliable growth
Let’s start at the very beginning.
What is a stock?
A stock is a small part of a company that you can buy and sell. For example, you could buy 0.1% of Disney by buying some Disney stocks. If Disney becomes more successful, then your stock also become more valuable. And in the future you can hopefully sell the stock for a higher price than what you paid and this makes you richer.
Usually, people think of investing as that kind of “stock picking.” They believe you need to choose the right stocks to become rich. And if you choose the wrong stocks, then you lose money.
This type of investing can sound like gambling and to be honest it IS risky. It’s basically like you’re trying to predict the future! And as Tony Robbins writes, “the world is just too complex and fast-changing for anybody to see the future.” Just ask the executives at Kodak and Blockbuster, two companies which appeared to have indestructible monopolies not too long ago! The good news is, you don’t need to pick stocks!
The investing strategy Tony recommends is very different. And this is the same strategy that billionaire investors like Warren Buffet, Ray Dalio and Peter Lynch recommend to their family members. This strategy all centers around index funds.
So, what are Index Funds?
When you put money into something called an index fund, you’re not picking just one stock. You’re actually putting a bit of money into EVERY stock in a market.
For example, have you ever heard of the S&P 500? This is a list of the 500 biggest companies in the US, including Apple, Google, Amazon, etc. So if you were to put money in an S&P 500 index fund, then you’d actually be investing in all those big companies at the same time. Instead of picking one stock, it’s like you’re picking them all equally.
Why would anyone want to use these index funds?
Because the stock market as a whole is VERY predictable. Over the long term, it has always grown. (We’ll talk about market crashes and corrections in a bit, and why you shouldn’t fear them.) So by investing in index funds, you can be assured that your money will reliably grow over time. And you won’t have to stress about trying to picking the right stocks.
Picking individual stocks can be unpredictable and risky, like gambling. It’s very difficult to predict which companies will be successful in the future. Just ask Kodak or Blockbuster! But when you put money into index funds, you’re investing a little into every stock on the market. The overall market has always gone up despite short term crashes.
3. Multiply your money (over decades) with the magic of compound interest
How much could your money grow with index funds? Well, a writer at Investopedia says:
According to historical records, the average annual return for the S&P 500 since its inception in 1928 through 2014 is approximately 10%.– J B Maverick, Investopedia
If you invested in an S&P 500 index fund in the past, your money would have grown by about 10% per year on average. (Which is about 7% after inflation.) Keep in mind this is a long-term average. Some years the stock market grows by 30%, other years it stays about the same size, and other years it many actually shrink by 10, 20 or 40%. Ouch! But in the long term, the average growth is about 10%.
That’s why Tony recommends we view investing as a long-term project. Put your money in for 10, 20, 30 years or longer. If there’s a recession, then you may appear to lose money in the short term. But if you stay calm, keep your money invested in the market, then it WILL eventually recover and your wealth will grow by about 10% per year.
If 10% doesn’t sound like a lot to you, then listen to this real life example Tony shares in the book:
The S&P 500 returned an average of 10.28% a year from 1985 to 2015. (…)
Let’s say you’d invested $50,000 in 1985. How much would it have been worth by 2015?
The answer: $941,613.61. That’s right. Almost a million bucks!
The reason investing can pay off so much in the long term is because of something called compound interest. What’s that?
Well, we’ll first have to explain what interest is. When your money grows through investing, that growth is called “interest.” For example, if you invested $100 last year and it grew by 10%, then you “made 10% interest” and now you have $110.
Let’s continue this example. If you kept that $110 invested, then next year it might grow by another 10% to $121. Notice that this time not only did your initial $100 make money, but that $10 of interest from the first year ALSO made money.
This is called compound interest. It’s when your past interest also starts to earn interest. Basically, your money starts to grow exponentially. While the effect may sound small in our example, over many years this compound interest will actually grow your money a lot faster than you expect. In fact, Albert Einstein is widely rumoured to have called compound interest “the eighth wonder of the world.”
Here’s a simple video explaining how compound interest works visually:
Compound interest is when you earn interest not just from the money you saved, but also from past interest. This effect can make your money “compound” or grow a lot faster than you expect.
4. Avoid mutual funds because they perform worse and cost more than index funds
While we’ve been talking about the wonderful benefits of index funds and compound interest, there’s a catch. Most investors don’t earn nearly as much money as they should. Here’s the bad news from Tony…
While the market returned 10.28% per year, [the research firm] Dalbar found that the average investor made only 3.66% a year over those three decades!
Remember before we said the stock market grew at 10%? And remember how $50,000 invested in 1985 would turn into a million? Well, if you’re only getting 3.6% instead of around 10% returns, then at the end of 30 years, Tony says you’d only end up with about $150,000.
But why is the average investor getting so much of a lower return than they should be? One big reason is mutual funds.
Financial advisers working at banks and investment firms are often pushed to sell mutual funds. Mutual funds have high fees which make the banks a lot of money. You may be shocked to hear that most people providing financial advice are really closer to salespeople. They often make big sales commissions by recommending certain products. And the bad news is the products they make more money recommending are usually not the ones you should be buying. That doesn’t sound like unbiased advice to me!
An actively managed mutual fund works much differently than an index fund. With mutual funds, there is a professional fund manager who picks which stocks will go into the fund. In a perfect world, having an expert pick stocks for you sounds like it should make you more money.
The problem is that mutual funds don’t perform!
They don’t grow your money any faster than a simple index fund. In fact, they usually perform far worse than an index fund, especially when fees are taken into account.
One of the most shocking studies I’ve seen on this topic of mutual fund performance was by an industry expert named Robert Arnott, the founder of Research Affiliates. He studied all 203 actively managed mutual funds with at least $100 million in assets, tracking their returns for the 15 years from 1984 through 1998. And you know what he found? Only 8 of these 203 funds actually beat the S&P 500 index. That’s less than 4%!
That means 96% of the most successful mutual funds run by VERY highly paid professional investors FAILED to beat a simple index fund that can be run automatically by a computer.
Only a tiny percentage of mutual funds beat the overall market. And remember that just because a mutual fund has done well in the past, doesn’t mean it will continue to perform well in the future. As Tony repeated many times in this book, “Today’s winners are often tomorrow’s losers.”
Another big issue with mutual funds are the fees.
Typically, you need to pay 2% or more in fees to use mutual funds. If you’re thinking “well 2% doesn’t sound like much” then you’re right. It doesn’t sound like much which is how banks get away with charging it to most people.
However, when you consider that your average yearly interest after inflation might be 7%, then 2% is like a third of your potential retirement savings! Plus, over 30 or 50 years, compound interest will multiply the effect of this lost growth. When Tony talked to investing legend Jack Bogle, he heard the negative impact of these fees explained clearly:
“Let’s assume the stock market gives a 7% return over 50 years,” [Jack] began. At that rate, because of the power of compounding, “each dollar goes up to 30 dollars.”
But the average fund charges you about 2% per year in costs, which drops your average annual return to 5%. At that rate, “you get 10 dollars. So 10 dollars versus 30 dollars. You put up 100% of the capital, you took 100% of the risk, and you got 33% of the return!”
So what can you do? Listen to the world’s top investors who all recommend investing in index funds.
Index funds have far lower fees, usually less than 0.5%.
Why are index funds so cheap?
- They’re mostly automated. Index funds don’t need to pay a team of bank managers high salaries.
- No sales commissions. The low fees of index funds aren’t very profitable for banks, so financial advisers don’t make big commissions selling them.
- Fewer trading fees. Every time a mutual fund buys or sells a stock, they pay a trading fee. And the more they trade, the more YOU pay. These costs add up, eating into your returns. Index funds on the other hand, buy and hold the same stocks for years and even decades, so there are far less trading fees.
More and more people are catching on to the benefits of index funds over the currently dominant mutual funds. According to the Wall Street Journal, people shifted over $400 billion into index funds in 2016, which was a new record. And I’m sure this will continue to grow.
By the way, another book that enthusiastically promotes the benefits of index funds is Millionaire Teacher by Andrew Hallam. One very useful part of that book is when Andrew explains the sales tricks of financial advisers. Many studies have proven that mutual funds don’t perform as well as index funds. Despite that, advisers will still usually try to convince you that mutual funds are better. Andrew tells us how to best respond to those arguments in his book, so go read our summary of Millionaire Teacher by Andrew Hallam for that.
Studies show that index funds beat 96% of mutual funds in the long term. Plus, mutual funds have fees of 2% or more, which can steal hundreds of thousands of dollars of your potential retirement savings. Index funds usually have fees under 0.5%.
5. Don’t be afraid of market falls because they are normal and predictable
When any market falls by at least 10% from its peak, it’s called a correction—a peculiarly bland and neutral term for an experience that most people relish about as much as dental surgery! When a market falls by at least 20% from its peak, it’s called a bear market.
It’s easy for us to sit here and imagine we will stay calm during the next market correction or crash. However, when you wake up one morning and see that you’ve lost 30% of your life savings overnight, then emotions start to take over. When the market start going down, most people begin feeling worried and anxious.
The problem is that when fear takes over, that’s when people make their worst investing decisions. Decisions that may totally derail their long-term investing success. If you make a decision out of fear, like selling all your index funds because the market is going down, then you will lose.
The best say to remain sane and rational is to learn about history and learn about the reality of the markets. The first fact of reality is that market corrections have happened once a year on average since 1900.
Yet if you turn on the TV during a correction, the talking heads are moaning about how this is the end. It happens every time. The attention-hungry news outlets inevitably start guessing that it’s the beginning of the next great depression. Well, to be fair that’s their job. Scare people so their eyes are glued permanently on the news. Then they sell your attention to advertisers to pay their mortgages. That’s their job.
The next fact of reality is that 1 in 5 corrections turn into a bear market. Bear markets happen every 3-5 years on average. Remember a bear market is when the market falls 20% or more from it’s peak.
The best antidote to fear is knowing that these corrections and bear markets happen very predictably. It’s not a question of IF another one will happen, it’s just a question of WHEN. We know how often they happen, we just don’t know the exact dates.
So there’s no reason to change your investment strategy the next time the market goes down. Because it’s always bounced back after every correction and bear market. Always.
When the market falls by 10%, it’s called a correction. These have happened once a year since 1900. When the market falls by 20% or more, it’s called a bear market. These happen every 3-5 years on average. These market falls are very predictable, so don’t feel worried or abandon your investment strategy the next time one happens.
6. Don’t sell your stocks if there is a market crash, whatever you do
Do you remember the big financial crisis in 2008? Institutions like the Lehman Brothers were going bankrupt, billions of dollars were being spent by the government to bail out big banks and people were losing their houses left and right. The stock market took a nosedive. From October 2007 to March 2009, the S&P 500 market lost about 50% of its value.
Yet look at what happened next.
Starting in March 2009 and over the next 7 years, the economy bounced back. The S&P 500 more than tripled in value, earning back every dollar it lost in the crisis, then shooting to new peaks.
That’s why the worst thing you could have done in 2009 was sold your stocks or investment funds. The best thing you could have done was hold onto your investments until the market recovered. Just like it always has.
Bear markets don’t last. On average, they last about a year. (…)
In more than a third of bear markets, the index plunged by more than 40%. I’m not going to sugarcoat this. If you’re someone who panics, sells everything in the midst of this mayhem, and locks in a loss of more than 40%, you’re going to feel like a grizzly bear mauled you for real.
Obviously, the future isn’t going to be exactly like the past, but when we look at the past you will see familiar patterns repeating for hundreds of years. Bear markets have happened many times before, despite the talking heads on the news stations claiming every time that “this time it’s different” somehow.
If you do what Tony recommends and stay in the market over the long term—10, 20, 30 years—then these market falls will only be short-term setbacks. The money you lose temporarily will come back if you just stay in the market and wait a few years.
In the book, Tony reinforces this point with this quote from Nobel prize winning economist Harry Markowitz:
“The biggest mistake that the small investor makes is to buy when the market is going up on the assumption that the market will go up further—and sell when the market is going down on the assumption that it’s going to go down further.”– Harry Markowitz
In fact, during crashes the smartest investors are usually busy BUYING tons of investments! They view a market correction or crash as the best time to buy more investments because it’s like every company has gone on sales, just like food goes on sale at the supermarket.
For example, in 2009 Warren Buffet bought a railroad company called BNSF for $26.5 billion. A lot of people couldn’t believe he was spending billions of dollars in the middle of an economic crash. But Buffet knows what he’s doing.
Today that railroad company has turned into one of his most profitable deals. Revenues have gone up over 58% since he bought it and he’s made almost all his money back in just a few years. Now people say he basically stole the company because of how cheap he bought it for. Yet this has always been part of his strategy. In 2009 he said:
“A simple rule dictates my buying: be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread.”– Warren Buffet
If you sell while the markets are crashing, then you are most likely “locking in” your losses. However, if you keep you money in the markets, then your wealth will recover in 1-3 years. In fact, during market crashes top investors like Warren Buffett are busy buying lots of new investments because the prices are low!
7. Avoid losing money even during crashes through diversification
Most people believe top investors are obsessed with making money. Tony Robbins says this is not true. After talking to so many of them, he found that the best investors are obsessed with NOT losing money. Warren Buffett even has a famous line:
“Rule number one: never lose money. Rule number two: never forget rule number one.”– Warren Buffet
One of the best ways to avoid losing money is through diversification. Diversification means having your money in many different types of investments, so when the value of one goes down, the value of others remains the same or even grows.
We’ve all heard that you “shouldn’t put all your eggs in one basket.” Why? Because if you fall then you break all your eggs. And if all your money is in one type of investment, then you can lose it more easily also.
Diversification is an admission that you don’t know which particular asset class, which stock or bond, or which country will do best. So you own a bit of everything!
For example, from the years 2000 to 2009, the US stock market grew by just 1.4% per year on average. Many people call that “the lost decade” because if all your money was in US stocks, you would have lost 10 years of growth!
Yet during the same time, international stocks grew 3.9% per year and emerging-market stocks grew 16.2% per year. This means if your money was spread around the world, then you money would still have grown. It wouldn’t have been a lost decade for you. That’s why diversification is so powerful.
Here are a few good ways you can diversify:
- Use index funds. With index funds, you’re not betting your money on one company, but you’re spreading it across the entire market.
- Choose different types of investments. Like a variety of stocks, bonds, real estate, etc. As the billionaire Ray Dalio warned Tony, “It’s almost certain that whatever asset class you’re going to put your money in, there will come a day when you will lose 50%–70%.”
- Spread your money across many countries and economies. You never know when one country’s growth will stall. For example, in the 1980s the Japanese stock market looked unstoppable, then it suddenly fell and hasn’t really grown for 30 years. Any investors who kept all their money inside Japan can’t be very satisfied.
- Buy investments over time. Nobody really knows when the cheapest time to buy an investment is, but if you purchase your investments over time, then at least you can avoid spending all your money at the most expensive time. (This is also called dollar cost averaging.)
Diversification is a great way to avoid losing money. This means to spread your investments out over many different markets and countries. Also buy different types of investments, like bonds and real estate. This allows your wealth to keep growing even when one part of the economy has a setback.
8. Achieve true emotional wealth through growth, giving and gratitude
At the end of the book, Tony shifts gears. He spends a lot of time giving this solid advice for how to improve your finances, but now Tony wants us to see a deeper truth. Tony believes this is the most important part of the book.
What we really want are the emotions we associate with money: for example, the sense of freedom, security, or comfort we believe money will give us, or the joy that comes from sharing our wealth.
Many people get money, but they don’t feel different. In fact, some of the richest people in the world live in constant worry and fear that they could lose everything. They don’t feel satisfied or peaceful when they wake up in the morning. Is that really the wealth most of us imagine?
Well, Tony says to really feel wealthy, we must take care of our emotions. He shares with us 3 ways to do this:
First, Tony says we must keep growing. Everything in life is either growing or it’s dying. So to avoid feeling miserable and unfulfilled, we must aim for growth. (Considering we are called Growth.me, you’re on the right website for this!)
Phil Knight who founded Nike also said that “Life is growth. You grow or you die.” Although Phil is a billionaire today, he says the most meaningful times of his life were when he was struggling to grow Nike, like the years he was selling shoes from the trunk of his car at running events. If you’re interested in an inspirational story of entrepreneurship, then I highly recommend you read our summary of Phil Knight’s autobiography called Shoe Dog.
Second, Tony says we have to give. Giving our money, our time or our attention to others. Sharing with others brings true meaning to most people’s lives. Maybe the reason why modern people often feel life is meaningless is because we are more focused on consuming than giving.
Viktor Frankl was an influential psychologist who survived the Nazi concentration camps of World War 2. In those camps, everything was stripped away from the Jewish prisoners—their families, their belongings and even their identities. Then they were forced to work in great suffering, never knowing when they would die. Viktor Frankl witnessed that the prisoners who were able to find meaning in the middle of this hell were the ones who survived.
According to Frankl, one of the 3 main sources of meaning for people is relating and caring for others. Frankl was able to stop multiple prisoners committing suicide by reminding them they had family members probably waiting for them to come home. Frankl wrote a life-changing book about his experiences in the camps that also provides lessons for how to find meaning in your own life. So go read our summary of Man’s Search For Meaning by Viktor Frankl as soon as you can.
Tony Robbins says he has realized there are 2 ways we can live: in suffering states or in beautiful states like joy and love.
Of course, we all want to live in beautiful states, right? Who would choose to feel angry, sad or hopeless? But Tony says this is exactly what we do whenever we slip into a suffering state. Hey says good events don’t put you into a beautiful state. Bad events don’t put you into a suffering state. It’s YOU who chooses to feel the way you do.
What I’ve come to realize is that the single most important decision in life is this: Are you committed to being happy, no matter what happens to you?
Will you commit to enjoying life not only when everything goes your way but also when everything goes against you, when injustice happens, when someone screws you over, when you lose something or someone you love, or when nobody seems to understand or appreciate you? Unless we make this definitive decision to stop suffering and live in a beautiful state, our survival minds will create suffering whenever our desires, expectations, or preferences are not met. What a waste of so much of our lives!
When Tony Robbins feels himself slipping into a suffering state, first he breathes and slows down. This creates some distance between him and the thoughts that are pulling him into suffering. Then he redirects his focus to gratitude and appreciation.
Rarely do we stop to enjoy all the good things in life. We take them for granted and obsess over our current problems or what we lack. However, when you can slow down and feel grateful for what you have—shelter, a friend, a lover, a family member, safety, technology—whatever it is, then you almost immediately go into a beautiful state.
“To overcome fear, the best thing is to be overwhelmingly grateful.”– Sir John Templeton
And here’s a video of Tony Robbins guiding you through a meditation that will let you access a beautiful state whenever you want:
People don’t really want money. They want the feelings money can bring them like freedom and security. Yet many people who become rich still live with fear of losing it all. So the real key is emotional wealth, which you achieve through aiming for growth, giving to others and choosing to focus on gratitude.
Okay, that’s all for this summary of Tony’s latest book about money. I hope you’ve learned some important truths about investing that will make you much wealthier in the future.
If you like Tony Robbins, then I think you’ll also enjoy the teachings of Napoleon Hill, who wrote a few of the classic books in the self help or success genre. So next go read our summary of Think and Grow Rich by Napoleon Hill. That book is based on interviews with over 500 millionaires including Henry Ford and Thomas Edison. Napoleon Hill shares how to overcome the most common blocks to wealth like lack of motivation and fear of criticism.