Tony Robbins, a well-known writer, speaker, entrepreneur and homemade millionaire Tony Robbins, has a lot of advice for beginners and expert investors. In short, he believes that investing is not that complicated. Robbins simply sticks to the basics consistently and becomes a millionaire in the long run.
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"The most important thing is to start what you have" rather than creating complex strategies designed to beat the stock market," Robbins said. Here are three of the best investment tips Robbins offers, along with some examples based on his advice and personal experience.
For Robbins and nearly all certified financial planners, compound equity is key to the success of long-term investments in mutual funds, individual stocks and bonds. It takes a long time to reap the full benefits of compound interests, so, as Robbins acknowledges, the earlier you can start from the time frame, the better.
Robbins, for example, made his first investment at the age of 18, buying triplets in California. While this particular investment isn't too good for a future millionaire, it sparked his interest in investing in as a young age. As Robbins said, “It put me in the game. If you don’t invest early, you lose.”
There are many financial examples that show the voice of this suggestion, but Robbins refers to the example of two 19-year-olds taking different investment pathways.
The first started investing at the age of 19 and continued to invest $300 a month until the age of 27. At that time, the money simply put it in the account without further contribution. If the market returns 10% per year, which meets its long-term average, the $28,800 invested in those eight years is worth nearly $2 million by the age of 65.
On the other hand, the second didn’t start investing until he was 28, but kept closing $300 a month at 65, with a total donation of $133,200. Which investor do you think will end up getting more money? Perhaps surprisingly, it is the number one investor, i.e., even with a $104,400 donation, collecting a reserve of only about $1.4 million, about 30% lower than the number one investor.
Robbins urges young investors to contribute as much as they can and develop the habit of increasing their contributions regularly. The 401(k) plan is the easiest way to start.
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Another popular investment principle that Robbins believes is diversification. As Robbins said, "You have to be diverse. You can't put all of this in one place."
Owning a mixture of stocks, bonds, real estate investment trusts (REITs) and unrelated asset classes such as precious metals can help reduce portfolio volatility. This is because such different investments are not always connected or moved upward like the S&P 500. As a result, diversification smooths out the ups and downs, downs and potential losses in your portfolio.
In other words, diversification helps ensure that you don’t lose all your money from a bad investment. While it doesn’t guarantee victory, it can prevent you from fishing out the entire account value immediately when buying and selling.
A great place to buy a lot of diversified assets is a simple index fund. With one purchase, your money can be distributed among dozens or even hundreds of companies. You should also consider working with a trust financial advisor who understands your means and needs and need to work in your best interest.
Robbins’ third investment tip is to automate everything. This is mainly a psychological strategy, but it is also practical and has a low management fee.
According to Robbins, if you set up an account to automatically transfer funds to savings and investments, you won’t have a chance to get rid of your socks. Then, this becomes a habit you don't even have to think about - you will automatically build your wealth without having to raise your fingers.
Robbins admits that this is a tough first step for many, but as he says, “It’s hard to do, but if you start automating it and do it regularly, oh my goodness, you’ll have the financial freedom that most people will never have. (More importantly) (you’ll have) peace of mind, you’ll have the power inside, you’ll know that you’ve mastered this area of life.” and “not complex.” ”
However, if you want to invest in your future into a habit that you don’t have to consider, this is a necessary step.
Caitlyn Moorhead contributed to the report in this article.
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This article originally appeared on gobankingrates.com: 3 best investment tips for Tony Robbins to become a millionaire