Tony Robbins is normally pretty high on my cringe-meter. So it took a fair amount of procrastination to get into his financial book Unshakeable: Your Financial Freedom Playbook. Thankfully the willpower winning out was a good move. It took only the first chapter for me to ‘hear and see’ grinning, fist-bumping Tony as I read further.
The book is a game of two halves as a soccer fan would say. The first section is firmly on a collection of wise approaches to finance from Tony’s interviews with the worlds financial greats. The second half moves firmly into the real deal-breaker; the psychology of the human to investment element.
The 2nd Half
This sets Unshakeable: Your Financial Freedom Playbook apart from the usual personal finance advice and reading that barely touch on what really makes the difference – how we think (or rather over-think) when it comes to investing.The single biggest threat to your financial well-being is your own brain. – Tony Robbins
In this respect tony is eluding to the advice from the great such as Warren Buffet. Can you hold your investments when all around you are predicting doom and the markets are falling? Will you panic and sell, or more optimistically consider it sale day at the Market?David Swensen summed this up neatly, telling me,
“Individuals tend to buy funds that have good performance. And they chase returns. And then, when funds perform poorly, they sell. And so they end up buying high and selling low. And that’s a bad way to make money.”
Here’s the great paradox:
by admitting to yourself that you have no special advantage, you give yourself an enormous advantage!
How come? Because you’ll do so much better than all those overconfident investors who delude themselves into believing they can outperform. When it comes to investing, self-deception may be the biggest expense of all! – Tony Robbins
Tony writes about how how human characteristics can derail our financial freedom journey, along with some tactics (Mindfulness anyone?) to avoid our emotions and ego to undermine our potential.
Robbins has a welcome chapter on the wider lens of ‘wealth’. Is it the money we crave or the vision of the life we can build with money? We have some timely quotes from the Dalia Llama and Ghandi to bring the point home.
The 1st Half
But make no mistake, in Unshakeable: Your Financial Freedom Playbook shares a good deal of financial wisdom in a clear approachable way. Whilst some of the sections appear very USA specific, the core of even those chapters should add context wherever you reside.
The following summary doesn’t do full justice to the book, and I’d highly recommend the book (or audiobook) to get a good grasp of Tony’s writing
The wonder of compound interest – Its time in the game, not money in the game that gives you the greater reward – Compound Interest is a wonder!
Look to Index Funds rather than Managed Funds, both because of the lower fees of Index funds and the risk of the human element in Managed Funds when the markets move. – Twitchy fund managers start panic selling or run out of liquid funds when clients panic in a dropping market.
Manage fees carefully. Fees can eat away at the wonder of Compound Interest dramatically. Over the years the loss over compounding interest can cost you thousands.
Look to manage potential loss rather than seek gains.Remember our math lesson? When you lose 50% on an investment, you need a 100% return just to get back to where you started—and that could easily take you a decade. – Tony Robbins
Robbins also goes into some specific strategies such as diversification and selecting investments. This is great background information, but for me the key message seemed to be not to over-complicate things. Buy Index funds that are diversified (or a number of them to achieve diversification), be in for the long game and never panic sell.
None of these are particularly new ideas, however Robbins put them across convincingly and with a good background to ‘why’.
In short Unshakeable: Your Financial Freedom Playbook is a great read for those who haven’t ventured into investing or are looking to understand more about why people and markets behave the way they do. Maybe not a resource for the experienced investor or day trader investor.
Disclaimer: I’m not a financial advisor of any kind. What I write or say are my own mumblings and opinions not advice!