Tony Robbins says NO to Real Estate....

41 Replies

On his current cross country tour, "The Burning Down The House Tour", no that's not the right name, that's somebody else's tour; its the "All Weather Tour"; says that real estate should NOT be part of your investment portfolio.

He says that your portfolio should look like this:

Stocks 30%

Medium Term Treasuries 15%

Long Term Treasuries 40%

Gold 7.5%

Commodities 7.5%  

You'll notice NO real estate.

I was reading elsewhere that money market funds, bank CDs, and 30 day T-Bills have all failed to keep pace with inflation over the last 25 years.

And over the last 25 years inflation has averaged 2.2%, gold has averaged 5%, oil has averaged 6.5%, Bonds have averaged 7%, Stocks have averaged 9.6% and real estate has averaged 9.8%.

How many Bigger Pocket member's portfolio looks exactly like Tony Robbins?

I am 99.999% invested in RE.  I have a minute investment in stocks. I like to be able to drive by and see my investments.

Tony Robbins may be a great motivational speaker, but that doesn't make him a financial planner, does it? 

That said, I don't think his allocation is unreasonable for someone who already has millions and needs to put it somewhere.

But to build wealth starting with not much capital, RE is the way to go, IMHO

@David Krulac  next time you see Tony you should ask him how big is AUM is what does his track record look like over the past 10 years.  I'd suspect the answer is 0 and no record.

For the record, I used to work for the IRS and the two things that every "wealthy" person had on their 1040s were real estate and farms.  While rich people (lawyers, doctors...) paid the most in tax and had little assets.

@Jean Bolger  

I agree, except that I think real estate is for everybody, beginners, experienced and seasoned investors.

@Jean Bolger  - I agree with you too. Tony Robbins is a phenomenal motivational speaker but I'm not too sure about his track record/ competency on financial matters. Remember that Tony made his millions selling motivational books, tapes, courses etc - NOT in the stock or property markets. 

The allocations mentioned above relate to an 'all weather' portfolio Robbins has worked with famed investor Ray Dalio (Bridgewater) to develop. The portfolio is designed to cope with: inflation, deflation, rising economic growth, slowing economic growth. 

Different investors have different risk profiles. From that point of view, I can see how an allocation to an 'all weather' strategy could benefit a more risk averse investor, but am sceptical that an investment in an 'all weather' portfolio alone, would lead to significant wealth creation.

PS - Check out the reviews of Robbins book on Amazon. There are some concerns about the 'independence' of some of the recommendations made.

@David Krulac  just wondered if you knew why he doesn't want people invested in real estate as part of their portfolio?   We are diversified, but real estate is a large portion.    

Don't ask Kobe Bryant for marriage advice or to be your life coach... but he could probably help you with your basketball skills.  Don't ask Tom Cruz for similar advice, or any besides acting, but he is an excellent actor. Likewise, Tony Robbins is a super motivator and those who are so inclined to use his methods of motivation should use them to excel at whatever they see fit, including REAL ESTATE! After all you can't be a Guru of everything.

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Originally posted by @Jean Bolger :

Tony Robbins may be a great motivational speaker, but that doesn't make him a financial planner, does it? 

That said, I don't think his allocation is unreasonable for someone who already has millions and needs to put it somewhere.

But to build wealth starting with not much capital, RE is the way to go, IMHO

@Lynn M.  

I'm speculating that in his opinion real estate is NOT "an all weather" investment due to the crash of 2008.

Robert Kiyosaki is a great motivational speaker as well as Tony Robbins, do all of the above comments also apply to RK?

I find it stunning anyone with a brain would be recommending having 40% long term treasury bonds.  Perhaps 40% for a retiree in a bond ladder but 40% in long term treasury bonds for all investors?  

@David Krulac  Which is funny as 2008 is when we saw the biggest benefits of our real estate investment, when our stocks and 401K crashed and the world seemed very scary, but the one rental we had left at the time was still chugging away, paying us a check every month.  Before that, my husband pushed for more and more stocks, selling off our investment properties except for the one I wouldn't let him sell.  He didn't want the headaches involved with them, tenant issues, repairs, liability, when he could make just as much or more in the stock market.   In 2008, after seeing how solid that one rental was, we actually started buying investment properties again and have been very happy with the results.   

Never met the man, or had any of his courses/ material.

Have made myself a self-made multimillionaire by investing in real estate.

Worked for me....

Looks like he is preparing for the big crash. It would take quite a few million to get enough income to live off that though.

Given a certain 'bias' posting in a real estate forum, I'm not surprised at everyone's preference to real estate-related investments. 

On the day the stock market crashed (the Great Recession; you may have read about it!) I was feeling kinda low until a friend asked me, "Gee, Rick, do you own a lot if stick?" 

Didn't own a single stock in my portfolio. I felt better immediately. 

Real estate has been the one constant in my life that I understand. I own several different note portfolios, a number of rentals, half a hedge fund and part of another. I've weathered four big real estate economic storms and stayed afloat. 

Paper works for me because I understand title and the collateral. 

As for a Tony Robbins, a bit of "Inside Baseball" if you wish. Tony was initially hired as the spokesman for fellow marketer Greg Renker (Guthy-Renker). Greg is truly a marketing genius of the sort that don't post on these forums. He and his partner needed a someone to be the front man for their product inspired by Napoleon Hill's 'Think and Grow Rich'.

Tony's an odd-looking duck in person but very charismatic, of course. He has an ability to captivate audiences whether live or recorded and has influenced many to take risks they thought impossible before. 

That being said, I'd be reluctant yo take investment advise from the man. And don't get me started about RK. 

My big gripe about the info product marketing people is that, essentially, they are teachers and not deal makers. For them to make money, they need students who they can monetize.

The "customer" of real estate and lending are those who've found evergreen ways to monetize the benefits of use, control, lending, appreciation, etc. 

I only had one teacher from college life who invested in real estate, and he had more dough than any of the others. He told me yo by the Nickerson book, study it and act on it. 

Time will tell how well MRRS Robbins and Kiyosaki investments will do.

As an aside, do not forget that Napolean Hill died with very little wealth. Alas. 

I got to see William Nickerson, in person, and he told the story how his college professor told him that you could get rich in real estate.  Years later after Nickerson did become a millionaire, through real estate, he again met his old college professor, who said, sure you could do it back then when you did it, but you can't do that now. 

@Lynn M.  

And yet the stock market is at an all time high, and real estate not so much.

Surely I jest.

I think one of the several attractions of real estate is the control, decision making of the investor.  And the ability for the small guy to get in the game with an unlimited horizon.

Originally posted by @David Krulac :

On his current cross country tour, "The Burning Down The House Tour", no that's not the right name, that's somebody else's tour; its the "All Weather Tour"; says that real estate should NOT be part of your investment portfolio.

He says that your portfolio should look like this:

Stocks 30%

Medium Term Treasuries 15%

Long Term Treasuries 40%

Gold 7.5%

Commodities 7.5%  

You'll notice NO real estate.

I was reading elsewhere that money market funds, bank CDs, and 30 day T-Bills have all failed to keep pace with inflation over the last 25 years.

And over the last 25 years inflation has averaged 2.2%, gold has averaged 5%, oil has averaged 6.5%, Bonds have averaged 7%, Stocks have averaged 9.6% and real estate has averaged 9.8%.

How many Bigger Pocket member's portfolio looks exactly like Tony Robbins?

 The way market is so competitive right now and there are multiple bids on any decent property, I would also recommend other investors to stay away from real estate and this way there is less competition. 

I invest 0% in gold.

I just finished reading his new book, "master the game" which is his financial advise and he does miss the mark on real estate.

Comparing appreciations and monthly cash flow of real estate to inflation and stocks, real estate is undoubtedly the winner.

A home bought in 1950 in Los Angeles for $10,000 should be worth about $100,000 if you only factor in inflation. Instead it's more likely to be worth $1 million, beating inflation ten fold. That does even factor the monthly income of the property or the ACTUAL USES. Can you make breakfast with your stock?

Quote from this Bloomberg article below:

"As happens so often with accomplished people, they begin to believe their achievements in one field can carry over to another. Michael Jordan was a mediocre baseball player, despite being perhaps the greatest basketball player ever. Nobel Prize-winning physicist William Shockley practically invented Silicon Valley, turning California into the technological hotbed of innovation it is today. He was less successful dabbling in the eugenics of race, proposing financial rewards for the poor and those he deemed genetically disadvantaged -- that’s code for black -- if they volunteered for sterilization.

There is always risk of overreach when people venture outside of their skill set and into other fields. Such is the case with Robbins, who has decided to dabble in financial advice."

http://www.bloombergview.com/articles/2014-11-19/t...

http://www.basonasset.com/yes-i-actually-read-most...

As @Jean Bolger said tony is a great motivational speaker, that doesn't make him an expert in other areas. Keep in mind Tony used to say that AIDS was not a real disease and was the result of poor nutrition. 

In my opinion anyone who buys interest rate sensitive investments like treasuries now is an absolute moron. No one can predict short term results, anyone can predict long term results. Interest rates are going up - Period!!!  Interest rates have been at historic lows for a very long time. That won't continue forever.

Originally posted by @David Krulac :

On his current cross country tour, "The Burning Down The House Tour", no that's not the right name, that's somebody else's tour; its the "All Weather Tour"; says that real estate should NOT be part of your investment portfolio.

He says that your portfolio should look like this:

Stocks 30%

Medium Term Treasuries 15%

Long Term Treasuries 40%

Gold 7.5%

Commodities 7.5%  

You'll notice NO real estate.

I was reading elsewhere that money market funds, bank CDs, and 30 day T-Bills have all failed to keep pace with inflation over the last 25 years.

And over the last 25 years inflation has averaged 2.2%, gold has averaged 5%, oil has averaged 6.5%, Bonds have averaged 7%, Stocks have averaged 9.6% and real estate has averaged 9.8%.

How many Bigger Pocket member's portfolio looks exactly like Tony Robbins?

 I don't following his portfolio. I follow something similar to Betterment's allocation based on my risk profile. 

I don't think your primary residence should be considered an investment because it isn't a productive asset. Owning property for rent that you can compare to other asset classes is more of an investment and less speculative. My guess is that real estate owners under appreciate the risk they are taking on by being under diversified, leveraged 5-20x and the transaction costs that come with unlocking equity. 

At the end of the day everyone has different goals, timelines, liquidity, risk profile, etc.

http://www.thornburginvestments.com/pdfs/TH1401.pdf

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