Unshakeable (Your Financial Freedom Playbook) by Tony Robbins – Book Summary
Unshakeable by Tony Robbins is a book where he has summarized the book – “Money: The game” in short. He writes down the trade secrets which he learned from the best in the market like Peter Guber, Paul Jones, Jim Rohn, and many others. This is based on personal finance aiming to help non-financial people to understand how to, with whom to invest. Tony Robbins with this book Unshakeble tries to simplify the world of investing for people like you & me.
To begin with Unshakeable means “one having unwavering confidence even in the storm”.When others are afraid we have to take advantage of the turmoil swirling around us. Tony says that the borrowers are rewarded while the savers are punished.
One of the greatest lessons that the author has received is that money masters don’t predict the future to win the game but have control over the things that they control. Tony mentions that nobody can predict the financial markets accurately & consistently about where they are heading.
The most important part of investing the fees associated with the investing instrument. Like in the mutual funds charging around 2-3% as the fees and can result in taking away 10 years worth money from the investment corpus and studies show that 96 % mutual funds fail to beat the market & we end up paying fees for the failure. Index funds are self-operated funds which are cumulative of top-performing companies in the market
Investing is basically the matter of smart asset allocation and knowing how much money to be invested in the different asset classes Tony mentions that we cannot win this game until we emotionally fortify ourselves from the market ups & downs and stay in the game for the long term.
Winter is coming .. but when ?
We observe the pattern of the season and plant the crops in accordance at the right time hence taking advantage of it is an important skill. The effect of compounding is the way for financial freedom
The earliest we take advantage of compounding interest the more benefits it will reap for us and sooner we will be having the financial freedom that we are looking for.
Tony says that most people fail to take advantage of compounding interest and think earning higher income will lead to financial freedom which is a big misconception. The real secret is keeping some money aside from the income & letting compound over years that is making money while sleeping.
The corpus that one should look for financial retirement is 20 times the current income we are drawing out & to achieve this one should start saving at least around 15-20% from their income.
Then the next question arises: where should we put our money in ?? The author says that a savings account is one of the worst places to put money in as it eats away its value over time.
The ability to find & stick to the strategy throughout time is what separates the money master from the rest. Most of the people are paralyzed by the fear thus afraid of even dipping the toe in the waters. People are terrified that the market will wash away all the hard-earned savings.
Tony realized certain facts from the investing experts
- On average, corrections have occurred about once a year since 1900
- Less than 20% of all corrections turn into a bear market
- Nobody can predict consistently whether the market will rise or fall
- The stock market rises over time despite many short term setbacks
- Historically ever bear markets have happened every three to five years
- Bear markets become bull market and the pessimist become an optimist
- The greatest danger is being out of the market
you lose money or make the money in the market it’s all because of the decisions you made
Hidden fees & Half-Truths
Most people want, regardless of how much money they have today is freedom, Freedom to do what they & whenever they want. Fees can destroy about 2% of the corpus per year cost, which results in a drop of annual returns to 5%
Most of us think that if we want the financial freedom mutual fund is the option but then the question comes which one to select as there are too many options available to invest in, But the trouble is that it is more lucrative for Wall Street compared to the consumers in general.
Fund managers try to add value by predicting which companies will perform but in reality they aren’t any better at predicting the future compared to the rest of us. Fund Managers trade-in & out of the stocks having plenty of opportunities to make decisions & more the decision to make, more the chances to mess up.
Whenever we make big profits in the market through funds this is accompanied by the transaction fees followed up by the taxes which takes away our majority of the profits and takes a hit in the returns of the funds.
Tony suggests that people should take the passive approach by taking in index funds that eliminate all the trading activity. As these are the autopilot funds that self manage having very low transaction cost & tax bills and also saving on the fees for the managing funds that are given out from our pocket to teams and people with Ivy League degrees. In this book it is also mentioned to keep some cash in hand for the conditions of market fall.
The book Unshakeable also cites the example where the index funds have continuously outperformed the actively managed funds. The research conducted by Robert Arnott shows that mutual funds with $100 million in assets and tracking the returns only 8 of the 203 funds have managed to beat the S&P 500 index. Mutual fund companies are notorious & open lots of funds in hopes that a few of them might outperform.
Warren Buffet has also instructed people to stay invested in index funds to avoid the drains of returns due to the fees which also supports the claim made by Tony.
Who Can you Really Trust
A survey conducted in 2016 by the Certified Financial Planner Board of Standard found that 60 % of respondents believe that financial advisors act in their companies’ best interest rather than the consumer’s best interest.
The major problem as Tony mentions is that the financial planner works in a system that is beyond their control and has tremendous powerful financial incentives to focus on maximizing the profits above all. This is the system that richly awards the employees who put their employer’s interest first and then theirs and at last the client’s interest at third.
Regardless of the title 90% of the financial advisors in America are just brokers. A broker might be required to produce sales of at least $500,000 annually. So if they calling themselves financial advisors or private wealth managers if it helps in sales so be it. But it does not mean that they are dishonest? Not all but it means that they work for the house.
A vanguard study shows that an advisor brings in the total value of 3.75% on average but then it is compensated by the taxes and managing charges.
All the financial advisors fall into three category
Seven questions to ask the Advisor when selecting one
- Are you registered investment advisor ?: If the answer is no then, this advisor is a broker, the best option is to say goodbye
- Are you Affiliated with a Broker-Dealer ? : If they say yes, then you are dealing with someone who can act as a broker and can steer you to specific investment which has a higher incentive for then
- Does your firm offer proprietary Mutual funds or separately ? : you want this answer to be no if yes, then watch your wallet
- Do you receive any third party commission for referring to any particular investment ? : you need to know that the advisor has no third party related incentives for suggesting the investments
- What is their Philosophy for investing ? : This will help you to understand whether or not the advisor believes that he/she can beat the market by picking individual stocks or actively managed funds.
- What Financial planning services do you offer beyond investment strategy & portfolio Management ? : Investment will suit you with the needs & depending upon that stage of life you are at, but advisors are not legally allowed to provide with the legal advice due to the broker status. You would want someone who can help you with all the aspects of investment along with legal help.
- Where will my money be held? : A fiduciary advisor should always use a third-party custodian to hold your funds. Also sign a power of attorney giving the advisor to manage the money. The advisor should not be able to withdraw the money which will protect you from the danger of getting fleeced.
The Four Cores of Unshakeables
After studying successful people for 4 years Tony says that he observed that these people are not just lucky. They have a different set of beliefs but also do things differently. Knowing the principle is not enough but the execution is everything.
The 5:1 strategy , assuming the you have in total of $ 5 Million to invest in five different investment. As $ 1 Million in each so the investment should be such that even if four investment fails the fifth investment should be capable enough to earn back amount of $ 5 Million back.
All the successful people live and are obsessed with the principals. These are mentioned in the book they are as follows
- Don’t Lose money
- Asymmetric Risk: successful people look for asymmetric risk /reward rather than an investment opportunity, asymmetric risk. Meaning the reward vastly outweighs the risk.using the strategy of 5:1
- Tax Efficiency: Taxes can wipe out about 30 % of the value from the returns of the investment corpus. Which can be by simply being smart about the holding period.
- Diversification: Diversify across different asset class, Diversify within Asset classes, Diversify across different countries market, Diversify across the time
The Famous Ray Dalio mentions that owing around 15 % unrelated investment can reduce the risk by 80%.
Slay the Bear to be Unshakeable
Tony says that if we live in fear, we have lost the game before it begins. How can we achieve anything if we are afraid ?Risk comes from not knowing what we are doing.
The Unshakeable book mentions that we need to understand the bear market is to serve us. If we can manage to keep our cool, we will actually accelerate the journey of financial freedom. All begins with creating a diversified portfolio that can prosper through thick & thin.
We need to be positioned conservatively enough with some cash aside to get through the rainy day. Do not touch the stocks & sell it, so that emotions do not get the best of us. Instead of betting on individual companies, index funds should be brought as it provides diversification at a lower cost.
The next thing to keep a financial cushion is to invest in bonds. So that funds are not raised when the market is crashing. Bonds are kind of loans given to the government or companies which have lower risk & returns compared to stocks.
This make sense to conservative investors who are retired and cannot take the risk of volatility of stocks. While the aggressive investor can put a portion into stock to provide balance during the volatility in stocks.
The type of asset to be owned should match the your financial goal. You accomplish and the design of the portfolio should in that way.
Things to keep in mind when creating the portfolio
- Asset Allocation drives the return
- Use Index funds as the core of the investment
- Always have some money stacked aside
- Explore additional strategies that have chances of outperforming
- Rebalance the portfolio Regularly
Silencing the Enemy within
After learning all the techniques there is still one thing that can mess up the things that are our selves. The single biggest threat to our financial well being is our own brains.
Our brains are wired to avoid pains & we yearn for whatever is immediate rewards. Neuroscientists have found that the process of financial losses is the same parts that respond to mortal threats.
Paul trader has created a system to silence the enemy with which were as follows
- Before investing decide on the trade whether the trade is hard to trade. Meaning is it a trade that everyone would not do ?
- Checking in the investment whether it gave asymmetrical risk to reward
- What is the entry point to invest in ? & where is the exit point?
Tony says that success in the stock market greatly depends on 80% of psychology & 20% mechanics.
To sum up, make simple rules & procedures that will make investing easier for longer-term & trade less. Less trade will result in lower transaction costs & fees. Diversify globally to reduce this risk, take control of fears, or else that can derail investments during the bear markets.
Real Wealth of Being Unshakeable
In the last chapter, the ultimate prize is to be financially rich & emotionally rich. The single decision that can change lives is to take action consistently. Financial freedom is about living magnificent lives in our own terms.
How to Achieve Anything?
- The first step to achieving anything we want is to focus
- The second step is to go beyond hunger, drive & desire and consistently take massive action
- The Third Step is Grace – Acknowledging the grace in your lives.The more you seem to have it, and you will be amazed to see how deep sense of appreciation. It bring more grace into our lives
But along the way we should also learn the art of fulfillment. That can be done by keep growing and progress leads to happiness. We are driven by the desire to contribute, the moment we stop feeling of a deep sense of contribution.We can never truly we fulfilled.
Tony mentions that most live in mediocrity because our brain tries to choose the least resistance path as it designed for survival. The mental & emotional state in which you live is ultimately the result of where you choose to focus your thoughts. Either you master your mind or the mind masters you.This alone determines whether we live in a sad or happy state.
In the end when the psychological shift from scarcity to abundance that brings a glorious sense of freedom. Everyone has to right to live their magnificent life they desire.
The book Unshakeable touches all the aspects that are needed to be a long term successful investor. The book mentions strategies to conquer the fears during the market crash and along the way also helping to select the financial planner in simple words.Learning and mastering the aspects mentioned in the book will surely make you Unshakeable.
- Successful investors create systems & rules for investing and to stick to it.
- Learning to control emotions is important for being a good investor and a happy life.
- Each individual can be a successful investor provided the work is done for it.
Tony Robbins started services as a ” performance coach”. and gained wide exposure, selling his Personal Power self-help audiotapes and began career as Motivational speaker. Along the career when worked with best like Hugh Jackman, Serena Williams, PitBull, Steve Wynn.Tony then transitioned in to the world of finance and helped thousands of people to build the financial portfolio and retire with stability.
Book Recommended For
Any Individual who is looking to start to invest in stock markets and is confused not knowing where to start from. A person who is looking to understand complex finance but in simple words.
Score – 7/10
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