Top 10 Rules for Success From World's Richest Investors

The world's richest investors didn't build lasting wealth by chasing quick profits. Warren Buffett says successful investing starts with understanding what you're putting your money into.

Figure out what the business is worth. If you can't figure out what the business is worth, you've got no business buying the stock.

Ray Dalio protects his wealth by spreading risk instead of depending on one investment.

The best thing to do is to have a diversified portfolio.

Tony Robbins shows how even small investments can grow into life-changing wealth The most important thing is get started with whatever you have, because if you do that, you get to tap into the power of compounding. Howard Marks studies credit cycles so he can recognize when opportunity is rising and when risk is getting too high.

Most people are not, not aware of the importance of the credit market cycle.

And Kevin O'Leary explains why the best time to start investing in your future is right now.

At the end of the day, you've really got to think about your future because I think no one else is going to do it for you.

If you want to make smarter decisions, build lasting wealth, and take control of your financial future, this video is for you. Need motivation?

Watch the top 10 with Believe Nation.

If you've been here before, drop a hashtag #Believe in the comments below so I can feature you here in a future video. And if you're new, welcome to Believe Nation, the only channel that helps you believe in yourself daily, one video at a time. Okay, let's kick it off with number 1, understand investing with Warren Buffett.

Help me understand the operative idea about Ben Graham and value investing.

Well, Ben just says look at a stock not as some thing that wiggles around or is quoted in the paper every day or is up there on a ticker. He says, look at it as a piece of a business. Figure out what the business is worth. If you can't figure out what the business is worth, you've got no business buying the stock. And I'd never thought of it that way. And so I started looking at businesses instead of stock charts and volume and all that kind of thing. And it was amazing what kind of an edge that gave me. And then secondly, he said, the stock market is there to serve you, not to instruct you. So You don't look at stock prices as telling you whether you're right or wrong. You're, you're there to take advantage of stock prices when they get out of line with reality. And then thirdly, he said, always have a margin of safety. Don't try and drive a 9,800-pound truck across a bridge that says limit 10,000 pounds. Leave yourself some room for error because you don't know everything. So you always leave that margin of safety.

Rule number 2 is diversify with Ray Dalio.

Then you can invest in, let's call this stocks. Okay, that we'll call that the stock market. This is cash, and then you think on the stocks, and then the stocks can go up or down, and then they have this dynamic that we're talking about that creates these big cycles and the busts. And those cycles, when they go down, go down 60-70%. Okay, that's that's what a bear market looks like.

Woo!

What a What a dive. Okay, this is gold. That's gold. And these are bonds and this is your house and that's Bitcoin. Okay, so these are the choices. They each change for certain reasons. I'll digress into that in a minute. But what happens is they go like this. When gold goes up, tends to be that the bonds will go down. in value or your house. And these change in a certain way. And so the best thing to do is to have a diversified portfolio of that. When you have that rather than any one, you won't reduce your return, but you will reduce your risk.

And diversified means having a little bit of each.

Right.

A certain amount. And you have to know how to balance them because of their volatility. This one, stocks, is more volatile than this one. And my own recommendations are you start first of all with what you need. Should I buy a place or should I use that money and I could travel more and so on? One of the advantages of the house, the apartment and whatever is it's your environment. Your environment is important. It produces forced savings. Sometimes that forced savings is good. It typically is taxed better. It's a better vehicle for tax over a period of time. But I'm not arguing for this alone, but I'm saying when I'm looking at this, then I think this one, gold, is very interesting because when all of these tend to do badly, this tends to do well. Okay, so it's a very effective diversifying because this was money. not until 1971. And it's still the second largest reserve currency. Central banks hold reserve currencies. So it has qualities that are different from this. And this has qualities like when the value of money goes down because of inflation, this—

Bonds.

Okay.

And bonds are basically lending the government money.

That's right. If you lend the money at a certain interest rate, And then inflation and interest rates rise, you're kind of locked into that interest rate. And so it has its own problems. The more important thing I would say is, you know, you save up and you say, how many years can I live if money doesn't come in? Okay. And then you take that and you say, how could I be secure? So I don't want to put it into one thing that can go down 70%. So how do I diversify that?

That's my Rule number 3 is tap into the power of compounding with Tony Robbins.

The illusion is when I have more money, then I'll invest, then it'll be worthwhile. The most important thing is get started with whatever you have, because if you do that, you get to tap into the power of compounding we all know about, but very few people use. I'll give you an example. A guy named Theodore Johnson, you probably never heard of him, worked for UPS, never made more than $14,000 in an entire year of his life. And yet when he retired, he had $70 million and he didn't inherit a dime. So how do you do that? A friend of his said, you've got to stop being a consumer and you've got to become an owner. You've got to become an investor. And he said, I have no money to invest. I make $14,000 a year. And his friend said, no one has money to invest, but if the government came by and put a 20% tax above what you're paying now, you would scream, you'd yell, and you'd pay it. You would adjust. I'm going to make you a wealthy man. He took the 20% off the top, never let him see it, put it straight in the investment account. It was worth $70 million compounding by the time he was in retirement. So, people don't really get how powerful that is. You don't earn your way to a fortune, you invest your way, you compound it. Most people are trading time for money. And as an entrepreneur, that's the worst trade you can ever make. What I try to do is say, listen, whether you're an operator or owner, let's set up this business on the side, a financial business with no employees, that will be an extraordinary economic nest egg that brings you income for life so you're free to do your business on your terms. But you've got to get started.

Rule number 4 is understand credit Marx cycle with Howard Marks.

Most people are not aware of the importance of the credit market cycle, but it is really, really influential. And it starts really with the fact that most people don't think about enough, which is that nobody pays their debts. Governments never pay off their debts. You ever— you think that the UK government will ever in the future have a day when it pays— when it owes less money than it owes today? I know the U.S. government will not. Most companies never reduce their debt. And most individuals don't reduce their debt. You know, they just put it on the credit card and then they pay the minimum payment to get through, but they owe more money every month. Nobody pays their debts. They rely on the ability to roll their debts over. So you, you, you, you know, the U.S. government issues some 5-year notes. The 5 years pass. They assume that when they mature, they'll be able to go back to the credit window and say, I'd like to borrow that money for another 5 years. And the credit person behind the credit window will say, that's fine. And that's the way it usually goes. But what happens if a company has some bonds, the bonds are outstanding, the bonds mature, they go to the credit window, they say we'd like to raise— borrow that money, roll it over for 10 years, and the credit window is closed that day? What if it's a day of panic? What if it's a day when people are so terrified of risk that they will not renew the debts? Then that debtor is bankrupt.

Mm-hmm.

So the availability of Credit, the openness of the credit window determines life or death for borrowers. And its openness is dependent on the mindset of providers of capital with regard to risk on that day. And it's extremely important.

Also, if you want to take real action after this video, I made a free worksheet just for you. It covers the top lessons from this video. Helps you build a simple action plan. It's 100% free. Just click the link in the description below to go grab it and I'll see you there. Rule number 5 is invest into the future with Robert Kiyosaki.

Well, that's why I say if you're 30 years old and you're not rich, you better do a self-examination because it's in your head that's stopping you. See what you're doing? I'll just, I'll give an exactly what you're doing. You can see the future. and you invested into the future. That's how people get rich. You have to see the future and you invest into the future. Most people, you know, don't, all the future is what they're gonna have for lunch. You know what I mean?

Yeah.

That's as far as they can see. So your skillset is you can see the future in technology, but most important thing is you're already taking action. That's your biggest skillset.

Rule number 6 is invest with confidence with Stan Druckenmiller.

If the reason I bought a stock is no longer the case, I don't care what I paid for it. And if I bought it at 60 and it's 50 because the market's discovered the problem before me, I have, I have no emotion whatsoever. Soros was the same way. I didn't really learn it from him, but it was certainly reinforced. Like, after a while, Nikolai, you also develop enough confidence that you're not afraid to clean the slate and start over 'cause you have the confidence that you'll be successful again and you're not gonna sit there in a lazy position that you're not that sure about anymore. Just clean house. And if you've been doing it for decades and it's worked, you kind of have the confidence. To take a loss and not worry about it too much. Once I'm out, I'm out.

Rule number 7 is invest wisely with Bill Ackman.

How do you be a successful investor? Now, I'm assuming that you're not going to go into the business of investing. I'm assuming that you're going to be a doctor or a lawyer, you're going to pursue your passion, but you're going to have some money that you're going to save over time. And I'm going to give you my advice on the topic. It's not necessarily definitive advice, but it's what the advice I would give my sister My grandmother on what she should do if she were in the same position. I'd avoid investing in startup businesses where the prospects are not very well known. Because again, you don't need to make 100% a year to have a fortune. You just need to invest at an attractive return, 10%, 15% over a long period of time, your money grows very significantly. So how do you avoid the riskiest investments?

I would—

my advice would be to invest in public securities. Listed companies, companies that trade on the stock market.

Why?

Because those businesses tend to be more established. They have to meet certain hurdles before they go public. The stocks are liquid, so you can change your mind if you want to sell. If you invest in a private lemonade stand, it's hard to find someone to take you out of that investment unless that business becomes fabulously profitable. So that's piece of advice number 1: invest in public companies. Number 2, you want to invest in businesses that you can understand. What I mean by that is there are lots of businesses that you come in, that you deal with in the course of your day and your personal life, whether it's a retail store that you know because you like shopping there, or it's a product, your iPad, or that you know, you think is a great product. But you have to understand how the company makes money. The business is just too complicated. You don't understand how they make money. Even if they've had a great track record, I would avoid it. A lot of people thought Enron was an incredible business because it appeared to have a good track record, but very few people understood how they made money. It was good to avoid it. Another very important criteria is you want to invest at a reasonable price. It could be a fabulous business that's done very well over a long period of time, but if you pay too much for it, you're not going to earn a very good return. The last bit is that you want to invest in a business that you could theoretically own forever. If the stock market were to close for 10 years, you wouldn't be unhappy. What do I mean by that? Now again, if you're going to compound your money, if at a 10% or 15% return over a 43-year period of time, you really want a business that you can own forever. You don't want to constantly have to be shifting from one business to the next. And what are businesses that you can own forever? Well, there are very few that sort of meet that standard. Maybe a good example is Coca-Cola, right? What's good about Coca-Cola is it's a relatively easy business to understand. You understand how Coke makes money, right? They sell a formula or syrup To bottlers and to retail establishments, and they make a profit every time they serve a Coca-Cola. People are going to drink a lot of Coca-Cola for a very long period of time. The world's population is growing. They sell in almost every country in the world. And each year, people drink a little bit more Coca-Cola. So it's a pretty easy business to understand. And it's also a business that I think is unlikely to be competed away as a result of technology or some other new product.

Right.

People have grown used to the taste. You know, they— parents give it to their children, and you can expect that it'll be around a long period of time.

Rule number 8 is start investing with Grant Cardone.

The guy invests $5,000. He's got $5,000 in the bank. Another guy's got $50 grand in the bank, and another guy's got $500,000. Okay, all 3 of these people invested money with me. This is Cliff, this is Dave, and this is Jennifer. Okay. Cliff sent me 5 grand. Dude, it was his last 5 grand. It was as hard for him to do this as this guy to do that. Do you understand? Okay. This guy earns, I don't know, he's gonna earn $300 a year. This guy's gonna earn $3,000 a year. This guy's gonna earn $30,000 a year. But they all had to start with this. They all start with $5,000. Everybody starts with $5,000, including Jennifer right here. She's got a 5, just another zero. All of them had to make a decision. Should I keep the money? This is where the opportunity comes in. You gotta think in terms of opportunity costs, okay? Is my money better in the bank or is my money better in an asset that add— that, that, that can grow over time, okay? Do I buy a watch?

No.

Okay, do I buy something stupid?

It is beautiful, man.

It is beautiful, but it's stupid. Let's keep it real. Stupid is as stupid does, and that, ladies and gentlemen, is stupid paddock. Okay, however, the reason— the way I bought the paddock was because the real estate that I buy— not this real estate, okay, I already distributed to these people— the real estate I invested in Sent me a little check-check.

Number 9 is Investing What You Love with Sam Altman.

How many investments do you have, like, large, you know, like, altogether, active? I'm trying to get a sense for—

I mean, counting all the YC ones, like, a few thousand. Personal ones, I would guess 400.

Wow, really?

Something. Well, I've been doing this for a long time.

Yeah, no, absolutely. I mean, and every once in a while I see, like, a really gigantic deal. What What makes a Sam Altman deal?

I try to just do things that I'm interested in at this point. One of the things I have realized is all of the companies I think I have added a lot of value to are the ones that I sort of think about in my free time on a hike or whatever, and then text the founder and say, hey, I have this idea for you. And I have learned kind of what those are, and the ones that are not, I think every founder deserves an investor who is going to think about them while they're hiking. And so I've tried to hold myself to the stuff that I really love, which tends to be the hard tech, years of R&D, capital intensive, or risky research. But if it works, it really works.

And rule number 10, the last one before a very special bonus clip, is don't believe numbers with Jamie Dimon.

If I open a branch, I have to expense it. It's not earning money for 3 years. At the end of 3 years, it's making $1 million or $2 million a year. Is that an expense or a profit or an investment? If it was software, I'd capitalize it. I wouldn't start depreciating. So I tell people, even when you look at numbers, don't believe the number. Think about it a little bit. There are good expenses and bad expenses. There are good revenues and bad revenues. In our business, you take on a lot of bad business, you will pay for it. They're bad revenues. And so Quality, how you do things. Then you want to have complete openness with management teams, detailed follow-up lists. People have a little grit, you know, a little bit of courage to speak up. You know, some people don't treat everyone with respect. Earn your respect every day. Like, you know, I look at my company, I want everyone to say the company treats me well and gives me opportunity. And I, I like working there and I trust them. We make a lot of mistakes. So you also trust we make mistakes, that we'll fix them.

At the end of the day, you've really got to think about your future because I think no one else is going to do it for you. Everybody loves to procrastinate. I don't want to work out today. I don't want to go for a walk. I don't want to start investing. There's always a reason not to do something, and it's your enemy. When it comes to investing, you really want to get over that quickly because you need the time value of money to be on your side. So don't procrastinate. Start investing. Find a way to get disciplined. Put some aside every week and let it grow for you. You're not doing it for somebody else. You're doing it for you so that when you end up in your 60s, you have something set aside. When people say, when should I start investing? My answer is always the same.

Now.

Now is the time.

Why?

Because it takes time, usually many, many years for investments to grow and to build your wealth. So you've got to have a long-term strategy. Investing can feel really overwhelming, especially when it's your first time. If you've never done this before, it can be scary. Ideally, you would have started yesterday, but there's no point in dwelling on the past. Let's get started today. The most important step in the process is to make a commitment to yourself and your own future. More than 100 million Americans Don't have any investment accounts. That's crazy. That's 1/3 of the population doing nothing for retirement, doing nothing to grow their wealth. Huge problem. You don't want to be one of them. If you start now, you can give your investments more time and really start to grow your money. Think about this. If you invest $100 a week, every week, not just saving but investing, Assuming markets generate growth similar to the past 30, 40 years, which has been roughly around 8%, and you invested in a diversified portfolio and reinvested your dividends, you could have $1.5 million in the bank in 40 years with just $100 a week. Is that too hard to do? The longer you wait, the less you will have in retirement. So it's best you get started right now.

And congratulations, you're one video closer to who you're meant to be. For 10 more amazing rules from the world's richest investors, check the video right there next to me. I think you'll love it. Continue to believe, and I'll see you there. Some of the world's richest investors built their fortunes by seeing opportunities differently than anyone else. Warren Buffett says the first rule is simple: stay inside your circle of competence and invest in what you actually