The ‘Holy Grail’ of Investing and How To Actually Achieve It, According to Tony Robbins
Written by
Sean Bryant
Edited by
Caitlyn Moorhead
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Are you looking for an investment strategy that will allow you to earn returns like the wealthy? Traditionally, the best investments have been reserved for the elite. However, Tony Robbins, famed best-selling author and investor, believes there is a strategy for the everyday person to unlock the same type of investing gains.
In this article, we’ll explore the “holy grail of investing” and how you can actually achieve it, according to Tony Robbins.
The Holy Grail of Investing: Diversification
According to Robbins, the holy grail of investing is diversification. Traditional investing principles say the higher the risk, the higher the reward. However, constantly exposing your portfolio to risks can keep you from reaching consistent, steady returns.
For example, let’s say you are investing in a stock that you feel can triple in value. What happens if the company goes bankrupt? Although you might have bought the stock at a low value, you missed out on consistent returns from more stable options.
Another example would be heavily investing in a certain sector. Let’s say that you believe that the tech sector will experience rapid growth. As a result, you put all of your investments into tech stocks. Now, let’s say that the government decided to heavily regulate the tech industry, causing widespread losses. Since you didn’t purchase any other investments, your portfolio will likely drop in value.
As Robbins said, “Diversification is the only free lunch.” He believes holding 8-12 uncorrelated investments that you believe will reduce risk by 80% and get the same upside is the best way to build wealth through investing.
How To Achieve Diversification Like the Wealthy
Historically, portfolio diversification has been completed with a mix of stocks and bonds. However, this strategy isn’t foolproof. In 2008, both stocks and bonds went down. Pursuing total market stocks and ETFs also isn’t the best strategy. Although holding those items can simplify your investing strategy, you could leave money on the table.
Robbins suggests that private investments are the best way to build wealth and ultimately diversify a portfolio. Alternative investments like private equity, private credit, and real estate offer returns far exceeding traditional stock market investments. Robbins says the wealthy invest 46% of their money in alternative investments, compared to 29% in public markets.
It’s been very difficult to access the private equity market in the past unless you have connections or an endless amount of wealth. Today, you can invest in private equity firms as a limited partner. This gives you access to every fund they own instead of just one company, unlocking ultimate diversification.
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