In “Unshakeable: Your Financial Freedom Playbook”, Tony Robbins shares tips from financial gurus like Warren Buffett, Alan Greenspan and David Swensen, on the rules of the financial game, the key players and their agenda, and how the average person can ride the financial storm to build your financial freedom. In this summary, we’ll outline some of the key highlights from Unshakeable, including the rules of the financial game, the key players and their agenda, and how you can ride the financial storm to arrive safely at your desired destination.
Over 7 years, Tony Robbins interviewed 50 top financial minds, self-made billionaires and legendary investors like Warren Buffett, Alan Greenspan, David Swensen, Ray Dalio, Jack Bogle, Mary Callahan Erdoes, etc. This culminated in an earlier book “Money: Master the Game”. In “Unshakeable”, published in 2017, Tony Robbins focuses on the current market fears and realities, and what the average person can do to build your financial freedom.
What if you knew that no matter what happens to the economy, you’ll be financially secure, and have more than enough for yourself, your loved ones and your contributions? That deep sense of peace and freedom is what being “unshakeable” means. It gives you control and puts you in the driver seat. Let’s take a quick look at some of these points.
Know the Financial Rules
Most of us have irrational fears of the financial markets, due to ignorance or mis-information. To win the game, you must know the rules. In the book, Tony Robbins shares many facts and figures about the financial markets, which are fundamental to our understanding of the financial markets. In our full 14-page Unshakeable book summary, we distill the key financial concepts, 7 “freedom facts”, and important knowledge about the financial products and the key players. Here’s a big-picture overview of some of the ideas:
KNOW THE FACTS
• Fund types. There are 3 main types of funds in the markets: Hedge funds (for high net-worth clients), mutual funds (the most common funds in the market) and index funds (which simply buy and hold all the stocks in an index). A key recommendation in the book is to go for index funds rather than “actively-managed funds”, which include hedge funds and mutual funds. [Get more details from the book / full summary].
• The key to financial freedom is to leverage the power of compounding. To illustrate this, consider these 2 scenarios: Simply by starting earlier, you can harness the power of compounding to build a larger nest egg with a fraction of the capital. In short, you can retire comfortably even with a small income. In the book / full summary, we touch on how you can start to leverage on the power of compounding and build your retirement funds.
• The book also covers 7 “Freedom Facts” which can free you from much of the irrational fear and anxiety about financial markets. In a nutshell, corrections (market falling ≥10% from the peak) happen about once a year, and a bear market (market falling ≥20% from the peak) occurs every 3-5 years. Yet, every bear market in US history has been followed by a bull market, and the stock market always improves in the long run so long as the economy continues to grow and expand. In addition, no one (not even Buffett or Greenspan) can steadily predict if the market will rise or fall. The key message is this: rather than follow media hype and inaccurate expert predictions, know that short-term market fluctuations are unpredictable but a routine part of the market; instead, focus on capturing long-term market returns.
KNOW YOUR COSTS
In the book, Tony Robbins explains why you may be losing huge amounts of your investment to funds that overcharge and underperform. In a nutshell, most actively-managed funds charge about 2% p.a.—when you apply the power of compounding, these can add up to erode a whopping 2/3 of your financial gains! To make it worse, the real cost is often higher than 2%, due to the impact of taxes and other hidden costs/inefficiencies. Tony Robbins also covers the the 401(k) plans in the USA in some detail, to show that the true cost of a mutual fund could be 3.17% a year (for a non-taxable account) and 4.17% (for a taxable account), or even higher.
Such high costs are supposedly justified because the funds are managed by “professionals” who should deliver better than market returns. Yet, a study shows that only 4% of the funds actually do that, i.e. 96% of the funds are draining your fees and hard-earned money without adding value. Another key recommendation in the book is to analyze your 401(k) plan and switch (or encourage your employer to switch) to better options (e.g. index funds) if need be. In our full 14-page summary, we elaborate more on these costs/charges, why these actively-managed funds are so costly but ineffective, how index funds can yield much better returns, and how all these impact the 401(k) plans in the USA.
KNOW WHO TO TRUST
In the book / full summary, we explain the differences between the 3 key types of Financial advisors (FAs): Brokers (which make up 90% of all FAs in America), Registered Investment Advisors or RIAs (which make up only 10% of the FAs), and Dually Registered Advisors (who are registered RIAs but also brokers). In a nutshell, FAs can offer great value in your investments, taxes, insurance etc., but most FAs in the market are not obliged to act in your best interest; instead, they are incentivised by financial firms to sell expensive products with good commissions.
The best option is an RIA who’s a true fiduciary—someone who’ll put your interest first, and has the necessary skills/experience. Check out the book or our full summary on criteria and questions to use for identifying the right FA(s) for you.
Your Unshakeable Playbook
The 2nd part of the book covers the strategies you can use to build your wealth for financial freedom. Essentially, Tony Robbins shares (a) the “Core Four” strategy that the greatest investors use to guide their investment decisions, and (b) how you can prepare for the next bear market to weather the storm or even leverage the opportunities.
Essentially, you shouldn’t enter an investment only if it meets all the Core Four criteria, which are covered in more detail in the book and our full summary. Surviving a bear market is 90% preparation and 10% staying calm during the storm. Essentially, you should prepare for the bear market using the “Core and Explore” principles: have a diversified, customized asset allocation mix that matches your goals, build up a financial cushion, use index funds for the core of your portfolio, and explore other stocks and alternatives at the margins, and rebalance your portfolio regularly.
Mastering the Psychology of Wealth
Neuroscientists found that the parts of our brain that process financial losses are the same ones that deal with mortal threats. When we’re hit with a financial crisis, we our fight-freeze-flee instinct kicks in, and we make poor financial decisions. The book explains 6 common psychological mistakes and how to counter them: confirmation bias & endowment effect, recency bias, overconfidence, greed & impatience, home bias, negativity bias & loss aversion. During market turmoil, we’re flooded by fear of potential losses. You can get a detailed overview from our full summary.
While the principles in the book can help you to build a large nest egg to retire comfortably, money is just the means to an end. Fundamentally, all of us desire an amazing life; we want to be rich because of the emotions associated with money, e.g. freedom, respect, security. Money is a powerful enabler, but a truly rich and fulfilling life comes from mastering both our internal world (with the Art of Fulfilment) and our external world (with the Science of Achievement). Tony Robbins ends the book by reminding us that can choose to transform your life instantly, just by mastering your focus and state of mind, and he shares a few simple techniques to do so.
Other Details in “Unshakeable”
The book is written in a conversational style, like having a chat with Robbins. Robbins recommends that you use additional resources such as:
• Free podcasts and videos at www.unshakeable.com (including a free mobile app to work how much you need to save and invest to reach your financial goals);
• Analyze your 401(k) plans and fees at Abk’s website www.ShowMeTheFees.com; and
• Get a non-obligatory assessment from one of Creative Planning’s wealth managers at www.getasecondopinion.com. [Note: Robbins has shared a disclaimer that he has a vested interest with the company, since he’s a board member and Chief of Investor Psychology with Creative Planning.]
Strengthen your financial knowledge and be truly unshakeable in a financial storm!