Power Players

How billionaire Ray Dalio used 'mantra' meditation to come back from financial ruin

Ray Dalio, founder, chairman and co-chief investment officer of Bridgewater Associates
Source: Ray Dalio

At the age of 12, billionaire Ray Dalio bought his first stock for less than $5 a share with money he made while caddying in Queens, New York.

"I got lucky, because the company was about to go broke, but some other company acquired it and it tripled, and I thought the game was easy, and so that's what I got hooked on," Dalio says during an episode of the Business Insider podcast, "This is Success" Friday.

His $300 investment into Northeast Airlines turned into $900, which made him a profit of $600 before he headed into the 7th grade in 1962.

Now more than 57 years later, Dalio has a net worth of $16.9 billion. Not to mention, he is one of the most influential figures in the world of finance as founder world's largest hedge fund — Bridgewater Associates, which has $160 billion in assets under management.

However, it wasn't a straight shot to success for Dalio.

In 1982, seven years after launching Bridgewater out of his two-bedroom New York City apartment, he made a bad bet that wiped him out financially — and spiritually.

"I was so broke, I had borrow $4,000 from my dad to help pay for family bills," Dalio says.

Dalio, then 33, was certain that the stock market and economy were about to go down (as a result of Mexico defaulting on its debt). Instead the U.S. economy and markets soared. Weeks later, the Fed made rate cuts, propelling the markets even more, causing Dalio to lose everything.

"As a result of being wrong, I lost money for me, I lost money for my clients, I had to let everybody in my company go," he says.

And while he describes that time as "very painful," he says the experience was the "best thing" that ever happened to him because it forced him change his mindset.

Using 'mantra' meditation

"I had learned Transcendental Meditation," Dalio tells Business Insider. So Dalio used meditation to reflect on his mistakes and to clear his mind to make better decisions in the future.

"When the pain passes, don't just go forward, reflect, because that's where your progress is," Dalio tells Business Insider.

In his book, "Principles," Dalio writes that he learned Transcendental Meditation after the Beatles studied the practice in 1968 in India. He says the practice allows him to think more clearly and creatively when making decisions.

Transcendental Meditation doesn't focus on breathing or chanting; instead it encourages a restful state of mind beyond thinking by closing the eyes and repeating a mantra in silence to reduce stress and anxiety. It is typically practiced for 20 minutes, two times a day, according to Bob Roth, author of "Strength in Stillness: The Power of Transcendental Meditation," who Dalio cites as the best teacher and expert he knows on the subject.

According to a 2009 study from the National Institutes of Health, Transcendental Meditation helped to alleviate stress in college students, while also reducing blood pressure, anxiety, depression and anger in students. It has also been shown to reduce everything from symptoms of trauma to anxiety, depression and sleep disturbance in prisoners.

Dalio says most people don't realize that there are "two yous in you."

There's the "emotional you" that comes from the subconscious, which under some circumstances can produce stress and emotions that can completely take you over, and then there's the "thoughtful part of you."

"Both have advantages, because the subliminal is bringing forward these intuitions and those types of things and then the intellectual, and if you can be calm and resolve those things together, not only does it give you the calmness, it gives you better thinking," he says.

He says his TM practice helped him balance his aggressiveness and shift his mindset from thinking that he's always right to instead asking himself, "How do I know I'm right?"

"I saw clearly that the best way to answer this question is by finding other independent thinkers who are on the same mission as me and who see things differently from me," Dalio writes in his book about the incident. He says by engaging others through thoughtful disagreements, he was able to better understand their reasoning and have them "stress-test" his ideas, which ultimately lead Bridgewater to make better decisions and rebuild its name.

Dalio has credited his meditation practice with being the single most important reason for his success today and the greatest gift that he could give anyone.

Like this story? Like CNBC Make It on Facebook.

Don't miss: Hedge fund billionaire Ray Dalio: Meditation is 'the single most important reason' for my success

The Navy SEAL 'spiritual ritual' for overcoming laziness
The Navy SEAL 'spiritual ritual' for overcoming laziness