Tony Robbins: 6 ‘Golden Rules’ of Investing That Can Make You Rich
Tony Robbins is an expert on building wealth, but he didn’t get there overnight. He spent years working with and learning from some of the most successful investors of all time — including hedge fund managers Ray Dalio and Paul Tudor Jones.
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Robbins shared the “golden rules” he has learned throughout this process in his latest book, “The Holy Grail of Investing.” Here are six of the most important strategies he covers.
Don’t Lose Money
Robbins’ first golden rule is one you may have heard elsewhere: “Don’t lose money.” It also is Warren Buffett’s famous first rule of investing. It’s one that Robbins re-emphasizes to investors today.
The idea is almost comical. If it was this simple to not lose money when investing, wouldn’t everyone do it? But there’s a deeper wisdom worth investigating.
Robbins and Buffett don’t mean you should invest only in assets like bonds that don’t have much risk. They’re saying you should look for investment opportunities where the odds are significantly in your favor.
For example, maybe you like NVIDIA stock. Instead of buying it in the middle of a hype cycle, Robbins and Buffett would advise waiting until it reaches a fair valuation based on the company’s financials. If you did that, your downside risk would be lower because stocks that drop below their fair value price tend to attract eager investors.
You might need to become more selective with your investments to follow this golden rule.
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Create Three Buckets of Asset Allocation
Robbins says asset allocation is a major difference between the ultra-wealthy and the average investor. He advises creating three separate “buckets” for yourself:
Security
Risk or growth
Dream
Your security bucket will include your home, pension, life insurance policy and any cash or cash equivalents you hold. As the name implies, this bucket gives you peace of mind, as the assets in it aren’t subject to major price fluctuations.
The second bucket is for growth. This includes stocks, high-yield bonds, real estate, commodities and currencies, among other assets. Here, you’re embracing volatility to open the door to better returns.
Lastly, Robbins says to create a dream bucket. This is for you to have fun with. It should contain a very small percentage of your net worth. Having a dream bucket can help you avoid excessive speculating with the rest of your money.
Make Uncorrelated Investments
Robbins learned the value of making uncorrelated investments while working with Dalio. He told Robbins that every investor should hold eight to 12 assets that don’t respond to changing economic situations the same way. He said this can reduce your risk by 80% while increasing your upside.
For example, when interest rates go up, bonds tend to be a great buy while stock prices usually go down. If you invest in both asset classes, you can enjoy positive returns regardless of how interest rates evolve.
Other examples of non-correlated asset classes include:
Artwork and collectibles
Precious metals
Digital assets, such as cryptocurrency and NFTs
Real estate
Mortgage funds
Private equity investments
Note that you shouldn’t invest in uncorrelated assets just for the sake of doing so. You still need to research the investments you’re making to ensure you’re placing smart bets.
Look for Private Equity Opportunities
Robbins is a major investor in private equity opportunities. He owns stakes in pro sports teams, venture capital firms, energy companies and other businesses that you can’t access on the open market.
The reason he invests in these assets and advises others to do the same is they offer better returns than standard market funds like the S&P 500. He gives the example of Guggenheim purchasing the Los Angeles Dodgers for $2 billion and then selling the team’s TV rights for $7 billion soon after. This kind of performance is hard to find in market funds that anyone can purchase.
The issue is that private equity opportunities are often gatekept. You usually need to know the right people to get involved. However, if you can find them, Robbins says they’re often some of the most lucrative investments you can make.
Consider Private Credit Opportunities
Robbins says the ultra-wealthy use private credit opportunities to grow their wealth with minimal risk. This essentially means they lend a company the money it can’t get from a bank for a higher interest rate.
According to Robbins, it’s common for private credit opportunities to offer returns of perhaps 9% annually, and the default rate is extremely low as long as you choose the right partners. Like private equity investments, these opportunities can be hard to find. But they’re worth investigating when you see them.
Focus on Providing Value
Finally, Robbins says the people who are most successful financially focus on delivering more value than their peers. This point is mostly relevant if you’re going to invest in a private opportunity that gives you a direct relationship with the business owners.
Robbins gives the example of a friend who excels at making SaaS (software service) companies more valuable. He says this friend can take any company in that industry and grow it by bringing in the right people, improving the technology and cutting costs.
This friend has become extremely successful financially by proving his excellence and then charging high fees to those who want to invest alongside him. The person earns a 2% management fee annually and 20% of each investor’s profits — which adds up to hundreds of millions of dollars in income.
Robbins is saying that one way to become successful financially is to provide more value to your business partners and co-investors than anyone else. If you can prove that you’re able to do this consistently, the sky is the limit for your financial future.
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