Although the economy and stock market has improved since the 2008 financial crisis, we’re still living in crazy financial times. In fact, many people are still reeling from the 2008 financial crisis. Meanwhile, the U.S. Is experiencing historically low interest rates, and some countries even have negative interest rates.
That’s enough to make anyone feel uncertain. But Tony Robbins is convinced that you can be unshakeable during volatile times.
In his book “Unshakeable: Your Financial Freedom Playbook,” the millionaire life and business strategist aims to show people how they can get over their fears and achieve financial success by taking advice from the smartest financial minds.
“Really, what makes this advice unshakeable is that it’s Warren Buffett’s advice, it’s Ray Dalio’s advice, it’s Carl Icahn’s advice, it’s David Swensen at Yale,” he said in a recent interview with GOBankingRates. “It’s the smartest men and women in the world telling you this is what to do.”
If you want to be set financially and be able to sleep at night no matter how volatile things are, take a page out of Robbins’ book. Follow this advice from him and other experts — and watch your wealth grow.
EDUCATE YOURSELF BEFORE YOU DO ANYTHING
The first thing people need to do to set themselves up for financial success and become unshakeable is educate themselves, said Robbins. “You’ve got to understand the fundamentals,” he said.
One of the most important things you can understand is that the stock market typically rises over time, despite smaller setbacks. “Last year … we saw a $2.3 trillion meltdown,” said Robbins. But, how did the year end up? With noticeable gains in the major indexes.
This wasn’t a one-time occurrence, either.
“In the last century — century and a half — how many unbelievably painful, difficult situations have happened to the world economy, to the U.S. Economy?” Said Robbins. “We’ve gone through world wars, we’ve gone through depressions, we’ve gone through recessions, we’ve gone through global crises related to bird flu. We’ve gone through the elements of Brexit. There’s always going to be a crisis. Across all of that time there’s been overall only one direction of these markets — and that has been up through time.”
As your investing and building your wealth, understand there will be bumps along the way. As Robbins points out in “Unshakeable,” there’s been a market correction — at least a 10 percent drop from its peak — every year since 1900. But, on average, corrections last less than two months. And less than one in five become a bear market, which is a drop of at least 20 percent from the market high.
“Once you understand that the vast majority of corrections aren’t that bad, it’s easier to keep calm and resist the temptation to hit the eject button at the first sign of turbulence,” Robbins writes. When you’re educated, you won’t react based on fear.
Related: 10 Fears That Are Keeping You From Being Rich
GET IN THE GAME — AND STAY IN
You can’t just earn your way to financial freedom. You have to invest.
“Whether it’s saving 10 percent or 15 and 20 or 5, you’ve got to get in the game, and you’ve got to become an owner — an investor,” said Robbins.
So instead of stashing your cash in a savings account that’s earning a low interest rate, invest in stocks. “The single best place to compound money over many years is in the stock market,” Robbins wrote in his book.
Once you’re in the game, stay in it — even when the market drops. “The biggest danger isn’t a correction or a bear market,” Robbins writes. “It’s being out of the market.”
If you cash out when the market drops, you could miss out on a chance to earn back your losses if you don’t get back in at the right time. And the chances of getting back in at the right time are next to none.
“If you’re going to try to time the market, you can forget it,” said Robbins. “[Billionaire investor] Warren Buffett told me, ‘Tony, you know market timers and market forecasters. Their only purpose is to make fortune tellers look good.’ It’s absurd.”
Find Out: 20 Things You Should Do in a Falling Stock Market
AUTOMATE YOUR SAVINGS
You might be thinking it’s easy for Robbins to say investing is the key to financial freedom. He’s a millionaire, after all. Not everyone has much money to invest.
But you don’t have to be rich to invest. However, you might need to change how you handle your money. “You have to make the first decision — the most important decision of your financial life — that is to become an owner instead of a consumer,” he said.
You can do this by paying yourself first instead of spending your money when you get it. Robbins recommends having a percentage of your income automatically deducted from your paycheck or bank account. You can start small, then increase the amount you’re setting aside with every raise or bonus you receive.
“This will build your Freedom Fund — the source of lifetime income that will allow you to never have to work again,” Robbins writes in “Unshakeable.”
TAP INTO THE POWER OF COMPOUNDING
Even if you can invest only a small amount, you can build wealth thanks to the power of compounding. When you invest, your money grows because it’s earning interest. Thanks to compounding, your interest earns interest.
The sooner you start investing — even if it’s a small amount — the more your money can grow. “Over time, this force can turn a modest sum of money into a massive fortune,” Robbins writes.
Consider this example: Someone who invests $300 a month starting at age 19 and earns 10 percent annually will have $3.5 million at age 65, Robbins writes. But if he waits until age 27 to start investing $300 per month and earns 10 percent annually, he’ll have about $1.58 million. That’s nearly $2 million less because he waited just eight years to start investing.
Find Out: How to Save Your First $100,000
DIVERSIFY TO PROTECT YOURSELF
After you make the decision to put your money in the market, you need to decide where to put it. As Robbins said, you should invest in stocks. However, “you don’t want everything in the stock market,” he said.
You need an asset allocation that will protect your money during downturns. “So if the market goes down 50 percent, you don’t go down 50 percent,” Robbins said. You do this through diversification.
By diversifying your portfolio, you have a mix of investments, such as stocks, bonds and other securities. And within each asset class, you have different types of investments, such as stocks of U.S. Companies, foreign companies, large and small companies.
Robbins recommends getting help from a registered investment advisor who is a fiduciary, someone who is legally obliged to put the client’s interests first.
TAKE ADVANTAGE OF MARKET CORRECTIONS
Another way to grow your money is to profit when others are panicking.
“When the market is crashing through the floor, people will give you their house, they’ll give you their stocks for next to nothing,” said Robbins. “They just want out. Those are the greatest opportunities in your life.”
Why? You can buy shares when the prices are lower. And you can profit when the share prices bounce back.
Robbins writes in “Unshakeable” that six of the 10 best days in the market over the past 20 years happened within two weeks of the 10 worst days. Those who got out of the market during those downturns missed out on opportunities to make more money.
“Yes, there’s going to be some significant corrections,” Robbins said about the stock market. “Your job should be to take advantage of that.”
SAY GOODBYE TO UNNECESSARY FEES
If you invest to grow your wealth, make sure hefty fees aren’t eating away at that wealth. But as Robbins writes in his book, many people don’t realize they’re paying fees to invest.
Most mutual funds are actively managed, meaning they’re run by people who buy and sell the assets that are in the funds. The funds charge fees to pay the managers and cover other costs. So if you’re investing in mutual funds inside a 401k or retirement account that also charges fees, you could be paying 3 percent to 4 percent. To top it off, many actively managed funds don’t perform better than the market. So, paying high fees doesn’t necessarily mean you’re getting better returns, Robbins writes.
To pay less in fees, try investing in low-cost index funds instead of actively managed funds. These funds are designed to track major indexes, such as the S&P 500.
Also, pay attention to fees charged by your 401k or retirement plan administrator. Visit ShowMeTheFees.com to see how the fees on your 401k compare. Then, let your employer know if you think your plan’s fees are too high.
“Every 1 percent you pay above what’s required — which is roughly 1 percent or less — is 10 years of income you give up,” said Robbins. By reducing the fees you’ll pay, you’ll get to keep more of your money and build your fortune.
This article originally appeared on GoBankingRates.com.
