Unshakeable: Your Financial Freedom Playbook

by Anthony Robbins

By contrast, if you hold most investments for a year or more, you’ll pay long-term capital gains tax when you sell. The current rate is 20%, which is way lower than the rate you pay on your ordinary income. Simply by being smart about your holding period, you’re saving up to 30% on taxes.

you also need to take into account the effect of inflation. If that comes in at 2% a year, your real return has just dropped from 3% to 1%.

all the billionaires I’ve ever met have one attribute in common: they and their advisors are really smart about taxes!

it’s not what they earn that counts. It’s what they keep.

his biggest advantages in investing money for Yale is that it’s a nonprofit institution and thus exempt from taxes.

“You should maximize your contributions if you’ve got a 401(k), or a 403(b) if you work for a nonprofit. You should take every opportunity to invest in a tax-deferred way.”

tax-advantaged vehicles such as 401(k)s, Roth IRAs, traditional IRAs, private placement life insurance (or PPLI, the “rich man’s Roth”), and 529 plans (for college savings) can help us reach our goals quicker.

before making any investment, I make a point of asking, “How tax efficient is this going to be? And is there any way we could make it more tax efficient?”

Whenever someone tells me about a financial opportunity that seems to offer enticing returns, my response is always the same: “Is that net?”

Your goal, and mine, is always to maximize the net.

CORE PRINCIPLE 4: DIVERSIFICATION

In its essence, it’s what almost everyone knows: don’t put all your eggs in one basket.

Burton Malkiel told me, there are four important ways to diversify effectively:

1. Diversify Across Different Asset Classes. Avoid putting all your money in real estate, stocks, bonds, or any single investment class.

2. Diversify Within Asset Classes. Don’t put all your money in a favorite stock such as Apple, or a single MLP, or one piece of waterfront real est...

3. Diversify Across Markets, Countries, and Currencies Around the World. We live in a global economy, so don’t make the mistake of ...

4. Diversify Across Time. You’re never going to know the right time to buy anything. But if you keep adding to your investments systematically over months and years (in other words, dollar-cost averaging), you...

The principle itself may be simple, but implementing it is another matter! That requires real expertise.

Once a person is comfortable with the idea that a particular approach works—or that he or she understands it well—it’s tempting to become a one-trick pony! As a result, many people end up investing too heavily in one specific area.

The trouble is, everything is cyclical. And what’s hot can now suddenly turn to ice.

Ray Dalio warned me, “It’s almost certain that whatever [asset class] you’re going to put your money in, there will come a day when you will lose 50%–70%.”

Diversification is your insurance policy against that nightmare. It decreases your risk and increases your return, yet it doesn’t cost you extra.

“The holy grail of investing is to have 15 or more good—they don’t have to be great—uncorrelated bets.”

everything comes down to owning an array of attractive assets that don’t move in tandem.

That’s how you ensure survival ...

by owning 15 uncorrelated investments, you can reduce your overall risk “by about 80%,” and “you’ll increase the return-to-risk ratio by a factor of five.

learned that courage was not the absence of fear, but the triumph over it. The brave man is not he who does not feel afraid, but he who conquers that fear. —NELSON MANDELA

You can be unshakeable, too, but this is a gift that only you can give yourself.

When it comes to the areas of your life that matter most—your family, your faith, your health, your finances—you can’t rely on anybody else to tell you what to do. It’s great to get coaching from experts in the field, but you can’t outsource the final decision. You can’t give another person control over your destiny, no matter how sincere or skilled he or she may be.

you can keep your savings in cash—but then you’ll never stand a chance of achieving financial freedom. As Warren Buffett says, “We pay a high price for certainty.”

I’m heartbroken to see that so many millennials aren’t investing. Because let me tell you: 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?

As Shakespeare wrote four centuries ago, “Cowards die many times before their deaths; the valiant ne...

You can take control by educating yourself, studying the market’s long-term patterns, modeling the best investors, and making rational decisions based on an understanding of what’s worked for them over decades. As Warren Buffett says, “Risk comes from not knowing what you’re doing.”

simple rule dictates my buying: be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread. —WARREN BUFFETT

there are two primary ways to prepare for market turmoil.

First, you need the right asset allocation—a fancy term for the proportion of your portfolio that’s invested in different types of assets, including stocks, bonds, real estate, and alternative investments.

Second, you need to be positioned conservatively enough (with some income set aside for a very rainy day), so that you won’t be f...

90% of surviving a bear market comes down to preparation.

What’s the other 10%? That’s all about how you react emotionally in the midst of the storm.

That’s one reason why having a battle-hardened financial advisor can be helpful. It provides an emotional ballast, helping you remain calm so you don’t waver at the worst moment and jump overboard!

One advantage our clients had is that we’d gone to great lengths to educate them in advance, so they wouldn’t be in shock when a crash occurred.

They understood why they owned what they owned, and they knew how these investments were li...

Throughout the crash, we continued to invest heavily in the stock market on behalf of our clients. We took profits from strong asset classes such as bonds and invested the proceeds in weak asset classes such as US small-cap and large-cap stocks, international stocks, and emerging-market stocks. Instead of betting on individual companies, we bought index funds, which gave us instant diversification (at a low cost) across these massively undervalued markets.

as that risk increases, the reward must rise in order for this to be perceived as a fair deal. The additional reward you receive for taking that additional risk is called a risk premium. When experts determine your asset allocation, they evaluate the risk premium for each asset. The riskier an asset seems to be, the greater the rate of return an investor will demand.

I construct a client’s portfolio by combining asset classes, each with different risk characteristics and different rates of return.

The goal? To balance the return you need to achieve with the risk you’...

The beauty of diversification is that it can allow you to achieve a higher return without exposing yourself to greater risk. How come? Because different ...

Stocks

When you buy a stock, you’re not buying a lottery ticket. You’re becoming a part owner of a real operating business.