Money Tips For Millennials from Tony Robbins’ Unshakeable
We’ve heard time and time again that us much-maligned Millennials are going to be the first generation to end up poorer than our parents. With the upswing of the gig- and sharing-economy, with unstable careers still suffering from recession era setbacks, and with the price of property inflating beyond the capacity of first-time buyers, it seems like the financial odds are stacked against us. Even if we completely stop buying avocado toast.
You may feel like you’re too broke to even start thinking about taking out a pension or making some clever investments, but there are still some simple ways that you can prepare for your financial future. Tony Robbins, known to one and all as the high-energy, mega-popular life coach, has just released a new book on exactly this topic: Unshakeable. If you don’t have time to read the whole thing, you should still check out the key insights on the Blinkist app. Even if you’re not a fan, the book contains some really simple, applicable financial tips that can simplify murky money matters. I’m not at all financially-minded, but I found these recommendations a solid starting point for looking after the future of my bank account.
1. Start as early as possible
As with most things, the sooner you start, the higher the chance that you can make a success of it. Even if you don’t have much (read: any) extra dosh to play with, you can still tweak your choices to make the most of what’s in your pay packet. The sooner you start investing a small portion of your income, the sooner compound interest can start to accrue.
For example, if you invest $3,600 into a savings account every year from the age of 19, according to average US return rates, by the time you turn 35 you’ll be looking at an investment of $106,782. If you start when you’re 27, you’ll have had less time to build up compound interest and as a result will be sitting on a nest egg less than half of that value.
2. Focus on losing, not winning
“Rule number one: never lose money. Rule number two: never forget rule number one.” – Warren Buffett
How can you tell a good investment from a bad one? How do you know if you’ll gain or lose money? High-end investors have been doing homework for years on how to crack the formula, and they’ve come up with a simple rule: ignore big risky bets and focus on not losing money. Of course, all investments entail a little risk, but if you try to focus yours in more robust markets you’re less likely to be affected by trading fluctuations. By trying to understand how difficult it would be to recoup any losses should the investment not go according to plan, you can make safer bests with limited chances of a downside.
3. Know your taxes
Know how much your state or country will tax you on short- (investments less than a year old) or long-term (investments over a year old) capital gains — it varies hugely from place to place. Depending on where you live, it might make more sense for you to cash out an investment before a year has elapsed. Also be sure to look into mutual funds which are made up of stocks, bonds, and other assets. Know the difference between net and gross sums so that if someone tells you that a certain investment has provided a high return, you can confidently ask whether that amount is the net sum, which is the total after taxes and fees, or the gross sum – the amount before those deductions have been made. Obviously, the former is a better indicator of the true quality of the investment.
Here comes a pair of time-worn adages: “Don’t put all your eggs in one basket”, and “variety is the spice of life”. If you can maintain a healthy investment portfolio, you’re less likely to be negatively affected by market changes or sudden falls in stock. So don’t invest all your capital in one type of asset just in case there’s a crash in that particular market. Staying diverse also means investing on a regular basis and keeping informed on market trends so that you can capitalize on upticks. And don’t forget: markets are global, so you don’t always have to invest close to home.
5. Use a checklist
Keep yourself disciplined with a checklist. I mean, who doesn’t love a good list? As humans, we tend to act on instinct and with investments, it’s usually best to reign in those urges and to put manners on your gut feelings. If you panic when it looks like a stock is about to crash, you run the risk of making poor decisions. So come up with a contingency plan and stick to it. By referring to a list of criteria every time you’re dealing with an unexpected situation, you’re more likely to make the right decision. The same way pilots have a strict checklist of processes when they run into emergencies, having a good list will help you make cool-headed decisions and keep your investment portfolio flying!
You may not feel like you’re at the investment stage yet, but keeping these tips in mind and being clever about your income can help you make wiser, more lucrative decisions in the future. Read the key insights from Unshakeable right now on Blinkist, and prepare to make a mint!