Ray Dalio on Being Successful and How to Get There

Ray Dalio’s Principles for Success

Success is a funny thing. For some, it’s making a ton of money and lavishing in a huge mansion. For others, it’s improving lives for billions around the globe. Some define it to settle down a secure job, a loving spouse, and a wonderful family. No matter your definition of success, it’s clear that we all want to be successful in our own way. But how?

To many, Ray Dalio would be the definition of success. The founder of the largest hedge fund in the world, worth over $20 billion dollars, on Time magazine’s list of the 100 most influential people in the world, and an avid philanthropist, Ray is certainly no slacker.

After achieving many great success, Ray decided to share his key rules, or principles, to the world on how he got to where he is today. I’ll be sharing the ones I found the most important and had a huge impact on me personally.

Think for Yourself

Before you figure out how to be successful, you have to define your success! Many people want to be “successful”, but they don’t know what it means to them, so they just follow the definition imposed on them by others. Usually it’s to have a high paying job like doctor or lawyer or to have fame and status.

“Unless you want a life directed by others, you need to decide for yourself what to do and you need the courage to do it.” — Ray Dalio

Ray talks about the idea of thinking for yourself. Don’t just blindly follow what everyone else is doing or what society tells you to do. Formulating YOUR OWN definition to success, based on your values and principles, is the first step to being successful.

So, stop for a moment and just ask yourself:

• What does success mean to me?
• What will I feel accomplished doing?
• What should I do so that at the end of my life, before I die, I can say, “Wow, that was an amazing life!”?
• What kind of person do I envision to be?

The answers to these questions are difficult but you must figure out the answers to them if you yearn for a successful life. As Ray says, “The path you take in life is your most important decision.”

I haven’t really fully decided what success means for me yet; I’m still going through the process of discovering myself. And that’s okay! It’s important to take time to figure out who you want to be and what you want to achieve. Whatever your definition of success is, just make sure that it’s your own.

“Have audacious goals … because you want to have the greatest life you could possibly have and the greatest impact you could have!” — Ray Dalio

Ray also reminds us to not belittle ourselves with small goals. Have a big goal that is difficult to achieve and you will rise to the occasion and crush it!

I would recommend taking the free Mindvalley masterclass course “Extraordinary by Design”, which can help to group your goals into Experiences, Growth and Contributions.

Embrace Reality

Ray Dalio often speaks of himself as a hyper-realist. No, that doesn’t mean he’s a pessimist and doesn’t believe in dreams. It means that he knows and accepts the truth.

“Truth — or, more precisely, an accurate understanding of reality — is the essential foundation for any good outcome.” — Ray Dalio

We must learn to embrace reality. Knowing that we’re going to make mistakes and that things won’t turn out the way we want it to be isn’t easy to accept. But deluding ourselves and then having our butts kicked afterwards isn’t the way to go. Learning the harsh realities of life, embracing the pain and optimizing your life against them is hugely important in success. In fact, Ray even has an equation for it.

Dreams + Reality + Determination = A Successful Life

Knowing your dreams and vision of success, embracing reality, and having the grit and motivation to go after it are the keys ingredients to success.

Making Mistakes

From embracing reality, we learn that there’s going to be bumps and cracks along the way. How do we deal with them?

Pain + Reflection = Progress

From making mistakes and deeply reflecting to learn from them, we can make progress.

“Pain, when we’re in the moment of pain, we tend not to reflect, but after that moment of pain, whenever anybody makes a mistake, about anything, it’s not just the market, it’s about life. There’s a message probably there.

And I believe, then if you reflect, in a quality way of what would you do differently in the future that would prevent that mistake, you’ll come out with a principle. Write down that principle and then operate that in the future.” — Ray Dalio

Making mistakes is part of the process, but it’s solving and learning from the problem that will make you bounce back and be better than before.

Ray has a 5 step process for this:

1. Know your goals: Know what you want to achieve and go for it!
2. Identify problems and mistakes: Regardless of your goal you want to achieve, there’s going to be problems along the way. Know when you encounter them and figure out what they are
3. Diagnosis: Figure out the root causes of the problem. Maybe it’s you, maybe it’s someone else, just know what it is.
4. Plan a solution: Knowing the causes, design an effective solution that will get you past that barrier.
5. Execute the solution: Implement your plan, iterate if it fails, and go forth in the journey!

Repeat these 5 steps over and over again, and you’ll make huge progress towards your goal!

Here’s a simple example of how I used the 5 step process.

1. I want to do well in school and the way to do that is to do well on tests.
2. Often on tests, I make small careless mistakes that cause me to drop 5–10%, which is a huge problem.
3. Most of the time, I just rushing and not being able to read the questions well (don’t we all have this problem). This is caused by my overconfidence and need for speed.
4. After getting advice from my family, friends, podcasts and online, I decided to do 2 things: When reading a question, use a visual tracker like a pencil and make sure I read everything and also underline the key words. The other is to stop rushing and
5. I've started executing this solution and has been drastically improving my test scores!

It’s crazy how we all make so many mistakes in life but few actually come up with an action plan to solve it. I’ve actually been making these careless mistakes for years and didn’t think to fix it! If the problem continued, I would keep making these dumb mistakes and it would have a negative effect on me in the long run. Developing a plan to fix the problem is so important in changing your life for the better.

“Evolve or die.” — Ray Dalio

The Abyss

These 5 steps work great for regular problems. However, there’s going to be times in life when you make a horrible mistake or something horrible happens to you, leaving you broke and destroyed.

Ray Dalio was in this situation when he made a terrible bet. He confidently predicted the that market was headed toward a huge decline and acted accordingly. However, he was dead wrong, and and almost lost his entire company in the process.

“I’d lost so much money I couldn’t afford to pay the people who worked with me. One by one, I had to let them go,” he writes. “To make ends meet, I even had to borrow $4,000 from my dad until we could sell our second car.” — Ray Dalio

In these times, it’s important to take time and reflect. From there, you can figure out the best way forward. Ray emphasizes that the worst will pass. No matter how bad the situation is, if you stick to your principles and have your definition of success in mind, you’ll be able to get through it.

From these huge failures, Ray learned about his weaknesses of arrogance and overconfidence and adjusted accordingly. He learned more about himself and lead him to success in the long run. Whenever you have huge failures, just know your greatest failures are your greatest teachers.

“My failure was one of the best things that ever happened to me because it gave me the humility I needed.” — Ray Dalio

In dire situations, you might begin to question your goals and whether or not they’re suitable for you. Ray talks about the importance of balancing risk and reward, how it’s important to you to achieve big goals relative to how important it is to you to avoid the pains required for them. How far are you willing to go to achieve your goals? That’s up to you to decide.

Ray has an analogy here: there’s a dangerous jungle in front of you and the most important thing is to know whether or not you want to cross it.

Two Biggest Barriers:

Everyone faces two great barriers: Ego and blind spot barriers:

Ego

Many are afraid of admitting their weaknesses or wrongdoings. The ego is at play here, stopping you from knowing your fatal flaws. Understanding that your need to know what’s true should be greater than your need to be right will drastically shape how you perceive the world. Stress testing your beliefs and how you think about yourself will help you realize and fix your weaknesses.

I have a huge problem with this barrier. A lot of times I just pretend to know something I don’t, especially in when talking with others to try to impress them. I would get so much more value by just saying I don’t know and actually learn and get value. Being the dumbest person in the room and knowing that I’m gonna get a lot of stuff wrong, is how I can actually learn so much stuff. I can try to adjust my environment by being around smarter and more interesting people who know lots of things that I don’t who I can learn from.

Blind Spot Barrier

Our decisions are decided by the way we see the world. Believing that we can see everything is a great mistake. We all perceive the world differently and we have to figure out what we know and we don’t know. Ray stresses the importance of being with others who see the world differently than you do so you can learn from their perspectives and make more rounded decisions.

Following these principles from Ray, I hope you will learn to find and achieve your success. There’s one last important thing to note: success isn’t just achieving your goals.

Although you must figure out the goals that define your success, ultimately they’re just bait. Reaching for one goal after another purely for the sake of achieving them will leave you exhausted and hungrier.

“It’s the struggle to attain those goals that forces us to evolve. Personal evolution is the reward. “ — Ray Dalio

How you change, learn your principles and your experiences along the way will shape you to become who you are. Being proud of who you've become at the end of your journey is how you truly become successful.

Key Takeaways:

• Think for yourself to define your success
• Embrace reality and deal with it
• Learn from your mistakes for progress
• Learn from others to overcome your barriers
• Personal evolution is the true outcome

Take the principles that you resonate with and put them into action! Go out there and live a life you’re proud of :)