BOOK – Unshakeable – Tony Robbins [Book Review]
Unshakeable By Tony Robbins
I would call Unshakeable a summary of Money: Master the Game. The overall ideas are basically the same so read that post for the main topics. There is not as much context and you won’t have the specific allocation percentages and all of the examples, as you would in Money. But for a third the length, it is definitely a good synopsis of Money. And even if you did read Money, Unshakeable is a good as a refresher and to hammer home the point.
The Core Four are described by Tony and are also in Money, but are worth repeating
Core Four: 1. Capping the downside
The first Core Four is best summarized by a Warren Buffet quote for his two rules of investing “Rule 1. Don’t lose money. Rule 2. Never forget rule 1”. Perhaps Mr. Buffet was member of the Fight Club when he was younger?
The primary rationale is that for every percentage point you lose, you will have to earn twice as much to break even. The question is: if you lose 50% of your money, how much would you have to gain to get back to even? Generally most people would say 50%, but you’d actually have to gain back 100%. Here’s the math. Let’s say you have $100K invested (good job BTW). And let’s say the markets get rocked and you lose 50% and now only have $50K (ouch!). If you take that $50K and earn 50%, you’re only back up to $75K. To get back to $100K, you’ll need to earn a 100% return. Crazy isn’t it? That probably makes you re-think your risk profile and tolerances.
Core Four: 2. Asymmetric risk / reward
The second of the Core Four speaks to picking investments that will have larger returns for the risk that you put in. The high profile investors Tony interviewed want at least a 1:3 and ideally a 1:5 risk/reward ratio. That means for every dollar invested, they stand to make 3 or 5 (depending on what that second number is). Why is that important? The ratio basically recognizes that we are all flawed and cannot totally understand all of the complexities of the market. Which means that the ratios themselves have a built in guarantee. If I invest in 5 of something that has a 1:5 risk/reward, I only need for 1 of them to hit their targets before I break even (the rest could go to 0 and I’d still be good). Sounds great right?
Now unlike the first of the Core Four, I actually don’t quite understand how to make that assessment. If you understand I’d appreciate a quick lesson.
Core Four: 3. Asset allocation
Core Four 3 is basically related to diversification. You might have heard of the expression “Don’t put all of your eggs in one basket”, and asset allocation does that for your investments. Most people just invest in stocks, and asset allocation asks you to pick more than just a stock and to also look at other investments such as bonds and real estate. Money actually goes through the specific allocation that Ray Dalio (who I believe has a more profitable investing track record than Warren Buffet) uses for his “all-weather portfolio”.
Bottom line is, make sure that you invest in more than just stocks, which will definitely help you become Unshakable in your financial peace of mind.
Core Four: 4. Giving
The last of the Core Four might be the most important and says that the secret to true wealth is to give! Having a sense of gratitude for what you have and being able to give away what you have will do wonders for your own sense of wealth. It may seem counter intuitive, but if very much works. A simple (and maybe silly) thing that I sometimes do, is that when I buy a tea usually to be able to sit in a coffee shop without them kicking me out, I pull out some extra money and ask the cashier to use it may for the third next person in line and ask the cashier not to say who it is from. I pick third as it gives me time to get away and observe from a distance. The sense of shock and awe from that third person is often priceless and makes me feel happy just thinking about it. That may be silly, but find a form of giving that works for you.
Doing all of the Core Four will definitely help you become Unshakeable. A recommended read for those looking to find financial security, and to recognize the wealth in your life!
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