In my last blog about investing, ‘The long and short of investing to become a Rich Dad‘, I took the advice from a book called ‘The long and short of it’ by John Kay to set up our simple and low cost investment portfolio. Since then I’ve read another great book about investing called ‘Unshakeable‘ by Tony Robbins. I’m really happy to say that this book supports how we have invested our money – phew!!
In this blog I want to share what I have learnt from ‘Unshakeable’ in terms of how to manage our investments over time. More specifically, when should we buy? when should we sell?
In short, the book gives the following advice:
When to buy? Regularly (starting now) and buy more when everyone else is selling.
When to sell? Not for a long, long time.
I love the direct advice given in the book. Below I’ll discuss how I’m going to use the ‘unshakeable investing’ tips from the book as we manage our own investments over time.
1- When to buy? When there is ‘blood on the streets’
We have already set up our account to invest (buy) a set amount each month. This takes a lot of stress of trying to ‘time the markets’. This is great for investing our regular salary, however, we also get annual bonuses which we want to invest. So when should we invest this?
‘Unshakeable’ says that the best time to invest is when the markets are falling. What?! That’s right, most people panic when markets fall and start selling. The book says that the best investors do the complete opposite. They see a falling market as the best time to start buying!
A falling market is like going to the shops and seeing that there is a massive sale on. The greater the fall, the greater the discounts. So that is the time to go shopping for cheap investments!
Warren Buffett (the world’s best investor):
“Go outside with a bathtub, not a thimble when it is raining gold.”
The books highlights that you only lose money if you sell when the market falls. If you don’t sell then your investments should increase in value as history has shown that markets have always corrected themselves after they have fallen (see US stock market chart opposite). If you don’t believe the stock market will increase over the very long term, then don’t invest in the stock market.
We are now just waiting for the markets to fall. According to the book there has been a correction (markets fall 10% or more) every year! So we’ll look to invest our bonuses when the markets fall.
Our real life example of taking advantage of a falling market:
For us personally, we have been putting this mindset into action but not with the stock market.
We are Brits and have a property in the UK but we live overseas. Since Brexit, the value of the British pound has fallen significantly (over 20%). This means that the money we earn is worth a lot more than before, in pound terms. To take advantage of this we have been using our tracking spreadsheet to work out the maximum we can transfer from our savings to the UK each month. As a result, we are able to pay off a lot more of our mortgage despite there being no change in our salaries. Result!!
2- When to sell? Ideally never
As you would have gathered from the above, the book is very clear that you shouldn’t sell when markets are falling. Even if they fall by a lot.
The book highlights that to invest in the stock market you have to have a long time horizon and be very patient. If you want to make a quick buck or need to use the money to buy something else in the next few years then investing in the stock market isn’t for you.
Another Warren Buffet quote:
“The stock market is a device for transferring money from the impatient to the patient.”
What about the popular phrase “buy low, sell high”? The book covers this as well. Essentially, no one knows when the market is ‘high’. You could sell your stocks when the market is at a record high and then see that the market continues to go higher and higher. ‘Unshakeable’ shows that one of the biggest risks is ‘not being in the market’. If you sell and then markets continue to go up, you could miss out on some of the biggest gains. Therefore, be patient and hold your position and avoid trying to time the market.
Summary of our investments:
Like others, I thought investments was really hard. My assumption was that you’d have to invest in lots of exotic things and try and time when to buy and sell them. Like you see in the movies “buy, buy, buy, sell, sell, sell”. I find it funny that the best advice about investing is to do the easiest thing.
I’m going to continue to read investment books to see if there is anything else we should be doing. I would like to find more about different types of investments.
Going to focus on the other ways to get rich: With our investments largely sorted, I can now focus on the other actions I’m taking from ‘Trying to become a Rich Dad‘. This includes improving this website. I’m also thinking about insurances – not sure I’m going to enjoy reading books about that but I do feel it is important.
Thanks again for reading!
You should also read the following blogs about investing!
- See my first blog about investing: ‘The long and short of investing to become a Rich Dad‘
- See how much you have available to invest by tracking your finances each month. See my blog ‘Monitoring our progress towards becoming a Rich Dad‘. Make sure you subscribe to get your FREE version of the tracking spreadsheet.
Disclaimer: I’m not a personal financial advisor. The actions I have taken are for my own purposes and are using the knowledge I have gained from reading books. Please do not take what I have done above as a direct recommendation for what you should do.
I do, however, recommend that you read the book ‘Unshakeable‘ before you invest. This book provides a lot of information and can help you make your own decisions. If not, it should at least put you in a knowledgeable position when you seek advice on investing.