This article is an excerpt from the Shortform book guide to "Money: Master the Game" by Tony Robbins. Shortform has the world's best summaries and analyses of books you should be reading.
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What are the three best investment strategies that the top investors use? How can these strategies help you achieve financial independence?
In Money: Master the Game, Tony Robbins asserts that investing is the smartest way to get rich. By using what he learned from his relationships with billionaires Ray Dalio, Warren Buffet, and Carl Icahn, Robbins summarized his investing advice into three main strategies: making a plan, creating steady gains while minimizing losses, and finding a fiduciary financial advisor.
Continue reading to learn the most important principles of investing, according to Robbins.
The Best Investment Strategies
You might be in a good mindset to start your journey to financial stability, but it’s not enough—because thinking and feeling positively won’t work unless you take effective action. You need to start a great investment plan to start your road to a wealthy lifestyle. As an investor, you use your money to generate passive income by buying assets—stocks, bonds, and commodities—that offer dividends as the market rises.
(Shortform note: In The Millionaire Fastlane, MJ DeMarco recommends switching from a consumption mindset to a producer’s mindset by constantly asking yourself about the things you buy. For example, ask “What value does this provide me? How did the company market it to me?” about common items like your shampoo, your choice of phone and laptop, or your clothing. This will get you used to thinking like a businessperson rather than a consumer.)
Below we’ll explain how to plan your financial future and start saving. Then we’ll explore the three best investing strategies that top investors follow, according to Robbins.
#1: Make a Plan
Robbins explains that most people end up without enough money because they never make a plan. Afraid to look at their finances, they simply hope that things will work out and tell themselves that financial skills are too far above them. However, this mentality leads to uncertain outcomes: If nobody steers the ship, there’s no telling where you might end up. To ensure a positive outcome, your first investment strategy is to make a plan and follow through with three key commitments: Focus relentlessly, commit completely, and embrace serendipity.
#2: Create Steady Gains While Minimizing Losses
Once you’ve developed a plan, the next step is to learn from those who’ve proven their skill—in this case, America’s top billionaire investors. After meeting with many top investors, Robbins advocates for building an investment portfolio that mimics the market and minimizes losses while growing steadily over time. While it’s not accessible for everyone to meet with America’s top investors like Robbins does, you can still easily learn from their success. This great investment strategy implements three principles: play the long game, diversify your assets, and mitigate your downside.
#3: Find a Fiduciary
Additionally, Robbins recommends working with a fiduciary. Wealthy investors have financial teams to help them, and the average investor can mimic this investing strategy by finding a reliable fiduciary. You wouldn’t want to be your own doctor, and the markets are at least as complex as medicine—hence the need for a full-time professional to help steward your finances.
A fiduciary is a financial professional with a legal responsibility to act in your best interest. You pay them directly via fees, and they cannot work for commission. This prevents a conflict of interest—whereas brokers work for commissions that incentivize them to sell you more expensive products. Your fiduciary will help you build your portfolio, and allowing them to guide you helps you take your emotions out of the game. If you get too wrapped up in the stressful fluctuations of investing, you might make bad decisions. The more you can depend on a trusted financial professional to help you, the more you’ll avoid making irrational, emotionally driven mistakes.
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Here's what you'll find in our full Money: Master the Game summary :
- Tony Robbins’s approach to changing your money mindset and financial strategy
- Why money is not the end goal, but rather a tool
- Why you should play the long game rather than trying to get rich quick
Great post