Unshakeable is the follow-up bestseller from world-renowned personal and financial development guru Tony Robbins. In this book, Robbins discusses the rules and principles of investing and how regular folks like you and I can create true and lasting wealth.
Who should read this?
People who want a solid foundation in building wealth through investing.
Anyone who wants to understand the underlying mechanisms of investing in the market (and how to avoid the bad stuff)
Unshakeable Main Ideas
Quick Summary of Unshakeable
Compound interest rewards those who start early. It’s your money snowball that continues to grow big as it keeps rolling with time. By reinvesting the gains you got from your capital, it amplifies growth by multiple times.
True financial freedom means utilizing compound interest so that money earns while you sleep. Pay yourself first, become the seller/owner not just the mere customer. Set aside a portion of your earnings for savings and investments.
Disciplined saving combined with long-term compound interest is a powerful thing.
There are 4 key rules that all investors should follow. He calls them the Core Four:
- Loss avoidance - Tony mentions that all the billionaires he interviewed for this book shared one common trait—they were adamant in not losing money. Contrary to what most people might think, the truly wealthy people focus on not losing money and not on actually gaining more. In their heads, they understand that if they lose 50%, they have to earn 100% just to make up for that loss. And that typically takes years.
- Asymmetrical Risk/Reward - Tony highlights the fact that wealthy people look for a highly skewed pattern of risk versus reward when choosing their investments. It’s about taking the smallest amount of risk for the maximum upside. For example, they’ll invest in something that could give them a 5-fold return of their initial investment. They’ll be fine with losing that dollar as long as they can potentially get 5 dollars in return. Even if they lose their initial investment (one dollar), they can still invest another one and still “win”. In this scenario, they can be wrong four out of five times but still break even.
- Tax-Efficiency - Compound interest is great for investments, but it can wreak havoc on your assets when the same principle is used for taxes and you don’t pay it at the right time. Both the capital and returns can be badly affected if you don’t get smart about paying taxes on your investments.
- Diversification - Tony shares 4 ways for diversifying effectively: through different asset classes, within asset classes, across markets (countries and currencies included), and across time. The right mix of investments: bonds, stocks, etc., is one of the first things you should focus on. Never put all your eggs in one basket.
Confirmation bias should be actively avoided because it creates a feedback loop that feeds the ego with assumptions (usually wrong) instead of truths based on real facts. Seek advice from smarter people who are well-versed about the topic.
Index funds give you instant and broad diversification while being both tax efficient and cheap. Historically speaking, returns of index funds almost always beat actively managed funds.
Slow and steady wins the race. The same can be said when it comes to investing in the market. Aim for consistent savings set for the long term. While it may be tempting to bet on the hottest market picks, you’re risking a lot for something that’s likely to lose steam and lose.
Money is an amplifier. If you’re a good person, it allows you to help more people. If you’re greedy, more money will make you even more paranoid about it. Real wealth is all about experiencing and sharing the good things in life with others.
My Personal Takeaways and Lessons from Unshakeable
- We should focus on the things we can control. We can control how we save and invest, and how we manage our emotions regardless of how the market performs.
- It’s important to do the right thing at the right time. When it comes to investing, starting as early as you can is recommended because it amplifies the gains from compound interest.
- To be truly wealthy, we should be disciplined enough to save and focus on small, incremental gains. The money you save and invest will “work for you”. This is a hundred times better in the long run in terms of growth potential versus trying to get rich by earning a salary alone.
- The Core Four—Loss avoidance, asymmetrical risk/reward, tax smarts, and diversification should be everyone’s dogma when it comes to long-term investing.
- Focusing on not losing money is better than striving to gain more. When it comes to investing in the market, emotions tends to get the better of us. Greed clouds our judgment. Instead of aiming to win more, focus on not losing money (whether by avoiding picks with high fees, charges, penalty taxes, etc.,) not only because it’s easier, but also because it’s a lot less risky.
- We should focus on small, incremental gains instead of swinging for home runs. The best way to win in market investing is through sustainable long-term results.
My Favorite Quotes from Unshakeable
First, you’ve got to save and invest - become an owner, not just a consumer. Pay yourself first by taking a percentage of your income and having it deducted automatically from your paycheck or bank account. This will build your Freedom Fund: the source of lifetime income that will allow you to never have to work again.
Corrections are just a routine part of the game. Instead of living in fear of them, you and I have to accept them as regular occurrences - like spring, summer, fall, and winter.
The most successful investors take advantage of all that fear and doom, using these tumultuous periods to invest more money at bargain prices.
The pretax figure is phony, whereas the net number doesn’t life. Your goal, and mine, is always to maximize the net.
If you live in fear, you’ve lost the game before it even begins. How can you achieve anything if you’re too scared to take a risk?
The first question that every great investor asks constantly is this:How can I avoid losing money?”
Deciding on the right balance of stocks, bonds, and alternatives is the most important investment decision you’ll ever make.
Many stocks also pay dividends, which are quarterly distributions of profits back to the shareholders. By investing in a stock, you’re making the shift from being a consumer to being an owner.
Rebalance. I’m a big believer in “rebalancing,” which entails bringing your portfolio back to your original asset allocation on a regular basis - say, once a year.
Greed and impatience are dangerous traits when it comes to investing. We all have a tendency to want the biggest and best results as fast as possible, rather than focusing on small, incremental changes that compound over time.
The best way to win the game of investing is to achieve sustainable long-term returns. But it’s enormously tempting to swing for home runs, especially when you think other people are getting rich faster than you!
For investors, confirmation bias is a dangerous predisposition. Your brain is wired to seek out and believe information that validates you owning it. After all, our minds love proof - especially proof of how smart and right we’ve been!
When people dream of becoming rich, they’re not fantasizing about owning millions of pieces of paper with pictures of dead people on them! 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. In other words, it’s the feelings we’re after, not the money itself.
The first tool is what I call “the 90-second rule.” Whenever I start to suffer, I give myself 90 seconds to stop it so that I can return to living in a beautiful state. When you’re in a beautiful state, you can give so much more to everyone you love.
As soon as I feel the tension rising in my body, I catch myself. And the way that I catch myself is really simple: I gently breathe and slow things down. I step out of the situation and start to distance myself from all those stressful thoughts that my brain is generating.
About the Author Tony Robbins
Tony Robbins is a life coach, philanthropist, and life coach. Prior to Unshakeable, he wrote bestsellers Unlimited Power and Awaken the Giant Within.
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