We will be presenting 3 key tips for beginner investors and everyone who would like to start investing in the stock market, presented by the greatest coach of all time - Tony Robbins.
Here is what Tony said about investing:
The average person thinks finance is so complex because frankly the industry tries to make it sound complex. They use words that you don't know so you don't know what to do... What happens is we just give them our money and say deal with it.
1. You need to know that you can't wait until you have a ton of money to start investing.
If you can invest in business, even a small amount, you can grow. It doesn’t matter how small it is, the important thing is to automate it.
You got to take a percentage of what you earn and pretend it's a tax. You should not waste that money. It automatically goes straight to the investment account and you never see it as money you can spend. When you save 20% and you compound it, the numbers are incredible. And then the problem is: If you do that first step, but you don't do the second step which is:
2. Become an insider and understand the rules of the money game. I'll give you 2 or 3 of the Myths, really fast:
2.1. One, the myth that someone says give me your money and I'm going to beat the market. Over any ten year period of time, 96% of the mutual funds will not even match the market.
Warren Buffet flat out used to confirm the same trend. 96% of his money, all that money does not go with any mutual fund, it goes straight into the index.
What the index is you get a piece of all the largest companies in the world but it costs almost nothing to get in. You hire someone because you are thinking "I have a family, I have a business, I have a life, I'm not an investor- I'm going to hire someone who's a professional, it makes sense they would do better than me."
Unfortunately that's wrong.
Only 4% of the mutual funds will beat the market. 4% chance of finding the right mutual fund, the chance is so slim that it will happen.
2.2. And, the second myth is after getting terrible performance, people think "Maybe, fees don't really matter" or they'll tell you it's only 1%. And on Forbes, it says the average fee is 3.12%,
1% versus 3% is a big difference. And it really matters - just like you grow by compounding, your fees also compound. If you have 3 people and one gets 1% fees, another 2% the other 3%, and they all get the same return. And, they start out with 100,000 dollars at 35, accumulating for 30 years until they are 65 years old. If it is average 7% compounded, they all get 7% return and when they go to retire, the person who had 1% in fees is going have 574,000 dollars. The person who had 3% in fees will have only 224,000 dollars. This is 77% less money!
If I said to you: "Here's the deal, let's do an investment. You put up all the money, you put up all the money, you put up all the risk, I'll put up no money and I'll put up no risk. If you lose I win, and if you win I win and if you win, over the life of the time I'll get 60% of what you earn." That's a mutual fund with 3%.
3. Instead, you could own the stock market – invest in the S&P500, you could own a piece of all 500 big companies through like the Vanguard 500 and you get the best of all the business - Apple, Exxon, etc… All these companies – you invest into and it cost you only .17%. And if you go to a normal mutual fund you might own the same companies for 3.17%. That's like buying a Honda Accord for $20,000 in the first scenario or $350,000 in the second for the same car.
That happens every day with finances because people don't know how to look at this so when they read the book Money Master the Game: 7 Simple Steps to Financial Freedom that will never happen to them again.
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