What Tony Robbins gets wrong about money
And what to do instead.
“I thought you were a fan?!”
Like I told you two weeks ago, Tony changed my life in more ways than I can explain.
But in August of 2019, I attended Tony’s flagship money seminar - Wealth Mastery.
In fact, I met hundreds of you there.
At the time, I was working for an investment bank, writing a weekly newsletter to over 100,000 readers on business, investing & sovereignty.
So when Tony Robbins gave us his secret sauce to financial freedom, I was pretty shocked - to say the least.
You see, Tony Robbins divides his assets into two buckets: risk and security.
The risk bucket is dedicated to investments that increase in value through capital gains - like stocks, real estate, gold, crypto, etc.
The security bucket is for investments that are principal-protected and earn a safe yearly income - mostly bonds and certificates of deposit.
[There’s technically a third bucket - the dream bucket. The vintage Rolex, Aston Martin, or Gulfstream IV all go in there.]
Now, here's the kicker: your security bucket is supposed to earn 6% per year.
In other words - you need to invest in safe bonds that generate 6% per year so that you can achieve financial freedom with peace of mind.
This number - 6% - then determines exactly HOW MUCH money you really need to accumulate and WHEN you’re going to be financially independent.
But here’s the problem - 6% is a fantasy.
No safe government bond in the world today yields 6%.
Instead, they earn closer to 0%.
Buying them today no longer gives you a risk-free return. Instead, you get return-free risk.
This strategy may have worked 15 years ago. But today, it’s outdated.
In fact, bonds are the one asset you absolutely don’t want to own today - especially not if you want security.
[So if you were at the seminar and walked out more confused than before you walked in - I get it.]
“OK - so what am I supposed to do then!?”
You can still keep your risk and security buckets (and dream bucket 🛩️ of course).
You just need to:
take more calculated risk
pick your investments like you pick your partners (i.e., be selective)
and change how you live off your money.
Let’s look at some specifics:
If you want to continue earning a regular passive income, consider investments other than bonds.
For example, I’m personally looking at low-income real estate next week in a part of town that’s being completely re-built. The units sell for $19,000 and rent for $420/month (80% of which is guaranteed by the French government).
This leverages low-interest rates, inflation (which erodes the mortgage away), and structurally unique deals (e.g. a specific type of renter supported by the state).
I’m not normally a real estate fanatic, but in some cases, the headaches & the risks can be justified.
If an investment you’re looking at doesn’t earn at least 15% per year, don’t invest.
Yes, that includes real estate. With COVID, central bankers have exploded the money supply in the economy, which pushes up the minimum “hurdle rate” your investments should earn to be justified.
In order to not destroy wealth, you need to own assets that:
have strong pricing power (e.g. tech monopolies),
have a positive expected return in a high-inflation environment (e.g. bitcoin) or
can compound at at least 15% annually - either through smart capital allocation and scale (e.g some stocks and private businesses) or unique deal structures (e.g. real estate).
If you’re not getting high enough cash yields, consider moving your investments to growth rather than cash flow - and living off your capital gains rather than income (more on this in another newsletter).
Rapid-Fire Best Insights
Most insightful quote I read this week:
If you didn’t fully catch that - no problem. In short - in 15 years, medicine might give you one year back for every year you live.
So yes, you may never die. Or you might age, but very slowly. Cool, huh?
Naturally, I bought the book Why We Age - And Why We Don’t Have To.
And speaking of health, here’s a short primer on Why you haven’t been vaccinated already.
On the topic of vaccines - this one hurt more than I would have liked:
Anything else I think you should know:
This weekend I’m finishing the 75 hard challenge together with some of you.
If you are with me in the group - congratulations!
As a quick reminder - every day, for 75 days, we:
Worked out twice
Stuck to a strict diet (with no cheat meals and no alcohol)
Read 10 pages
Drank a gallon of water (3.7L)
I learned more about myself than I thought I would, including:
All your taste buds are just habits. If you don’t drink alcohol for two months, you won’t even desire it anymore. The same applies to eating junk food, sugary things, scrolling social media, etc.
When you stop reinforcing a habit for long enough, you won’t crave it anymore.
Treating your body like a temple intrinsically boosts your a) self-confidence and b) certainty in life - all from within.
I’ve also re-discovered a new, deep respect for my muscles, digestive system, back - and maybe most importantly, my sleep.
You don’t need alcohol to socialize. If you need to drink to have a good time, you’re probably spending time with the wrong people.
Changing your life isn’t as hard as you think.
I initially called the challenge “masochistic” - but 75 days in, I couldn’t think of going back.
There’s something inherently gratifying about knowing you’re doing something hard.
When you discipline yourself to do what’s right - not what’s easy - the benefits ripple into every part of your life.
It doesn’t feel difficult anymore - it becomes part of who you are.
If you’re thinking of jumping on the challenge, I couldn’t recommend it enough.
For some of us, the challenge continues with the next phase. If you want to learn more about it, just listen to this.
Speak to you next week.