MONEY Master the Game is a practical financial crash course on how to invest and retire wealthy. It’s really very good.
- Develop a system of automated withdrawals for your investment
- Defending from downsides is more important than gaining
- Don’t forget: money is only a tool and an enabler. Think why you want and how you’ll use it
Tony Robbins says that most people with a normal job will not manage to earn financial freedom unless they’re deliberate about it. And that’s what you should do: be deliberate and build an automated withdrawal order for your investments and forget about that money.
Know the Rules
Tony Robbins proceeds to bust some myths about the market that many people hold:
- You can beat the market
- Mutual funds hide their fees
There are a litany of hidden fees when investing in mutual funds, and the average total fee adds to 3.17%.
That’s huge when you take into account that you will be missing on a huge chunk of compound interest year after year. That’s another huge reason to use ETF and passive managed index funds.
- Mutual funds embellish their returns (ie.: don’t lose money!)
Tony Robbins says that a core tenet of investing is that it’s more important to avoid losses than making gains.
If you go down 50% in your first years and you go back up 50%, you’re still overall down 25%. But mutual fund will mask that reality by only stating the nominal changes.
- Brokers might not be on your side
Brokers need to increase your money and the company’s money. Those are often mutually exclusive, so he often has a conflict of interests. For those who live in the US, a registered investment advisor is a much better choice.
- Your 401(k) is not a good investment vehicle
The 401(k) is at the mercy of all the top three myths. And it also taxes your withdrawals and doesn’t do anything to shield you from the timing risk (ie.: you need to retire your money during a financial crisis).
- Target date funds aren’t that safe
Target date funds start very risky when you begin your contribution and become progressively more conservative as you get closer to retirement.
The idea is that by being more conservative you will not lose much on your retirement day if there will be a financial crisis.
The idea is good, but it often rests on a bad concepts: that bonds are safer than stocks.
What Are You Really Looking For
Tony Robbins explains that nobody really wants money, and you should better investigate what it is that you actually want. He says what you want is something the money might help you to get and he introduces his principle of the six basic human needs.
Once you know what you’re really after, you can determine what it will cost you financially. And you might easily find out you don’t need nearly as much as you thought -or you can find a way to get to your need at a fraction of the overall costs, for example by leasing or renting-.
Levels of Financial Success
1. Financial Security: half the basic costs
When you reach a point where the returns on your investments and savings will pay for your basic costs (housing, food), then you reach a fundamental level of independence: you can choose a job you really like instead of a job that you might not like but which pays more.
You are also allowed to takes risks to chase your dream: launch a startup or start freelancing for example.
2. Financial Vitality: half discretionary spending
If you can cover half of your discretionary spending (sport, entertainment) you are halfway through never having to work at all again.
3. Financial Independence: all basic costs
Once you can cover half your discretionary spending and all your basic costs, you reached the point where you do not have to work again unless you want to.
4. Financial Freedom: some luxury spending
When you can afford some significant luxury spending (sport-scar, holiday house etc.)
5. Absolute Financial Freedom: whatever you want
There are many steps you can take to achieve the level you would like to achieve. Cutting costs, save more, find a way to save on taxes or.. Move to a cheaper country. Or to a country that will provide you with lots of things you like.
Italy, for example, can give you sea, best food and wines in the world and all the history and culture you want.
Tony Robbins goes into the nuts and bolts of investment and describes many different investment vehicles you could use.
Get the book on Amazon for the accurate descriptions.
Upside Without Downside: The Dalio Secret
This is possibly the best part in the book because Tony Robbins relies heavily on one of the best investors in the word: Ray Dalio (read Dalio’s seminal book Principles).
Here’s the allocation:
- Long term US bonds: 40%
- Stocks: 30%
- Intermediate US bonds: 15%
- Gold: 7.5%
- Commodities: 7.5%
Back testing this portoflio, you would have solidly beat the market. The secret of this allocation is that it heavily shield you against losing years, which as we have seen are the years that really impair your long term growth.
Retiring in Safety
Robbins explains that with the advances in medicine we can expect to live longer, and that also means that once you retire you need to know how to allocate your resources.
Treasuries and CDs provide terrible returns, so he recommends fixed indexed annuities
Money is Only a Tool
In the last part Tony steps back from pure money talk and goes back to the big picture.
He says the three most important decisions in your life are:
- What you focus on
- What does your life mean
- What you will do (action)
Money only enables you to leverage your decisions in those three areas. And money will allow you to better enjoy life’s beauties, like experiences, quality time, and giving.
Use money for growth and contribution and you’ll live a happier and healthier life.
Real Life Applications
Don’t Invest in Mutual Fund
Fees are often too high and eat away at your long term growth
Don’t Use Brokers
They often have a conflict of fiduciary duties (between your interests and and their companies’ interests)
The Past Doesn’t Equal the Future
The idea that all books on investment rely on is that financial assets will always go up… On a long enough time line. As Nassim Taleb explains in Fooled by Randomness that’s not true:
- The past doesn’t equal the future, there’s no guarantee returns will keep staying positive
- On a long enough timeline… We’re all dead
Good ol’ Compound Interest
Money Master the Game rests on the compound interest concept (including the usual crazy-sounding examples).
That concept makes you reach when you’re old… IF all turns out well. Which is a big if as we’ve seen above. Read the great The Millionaire Fastlane for an alternative to that method. Or check Rich Dad Poor Dad and Think and Grow Rich.
Conflict of Interest?
I haven’t investigated myself so I can’d deny or confirm, but it’s a flag I feel like I need raising. The highest rated negative review on Amazon warns that Robbins’ son works for one of his highly recommended companies.
Check out the review and replies here and judge for yourself:
US – Centered
It’s not a con but a plus if you’re a US citizen. But if you’re not a US citizen, the practical side of Money Master the Game is US-centered.
Tony Robbins interviewed the who’s who of the financial industry here, which gives Money Master The Game an authority level that Tony couldn’t have reached on his own.
I listed a lot of cons there, but if you’ve got lots of cash and want to grow your money with long term investment, than Money Master The Game is one of the best book of its genre.
Tony has taken huuuge strides since his earlier years financial advise. With this book he has done some major legwork and interviewed many of the top financial minds.
And you can see it in the book.
What he says makes a lot of sense and some of the insights he shares can be life changing for some. And even for those who don’t plan on living to invest such as myself, you will still gain super helpful insights.
MONEY Master the Game is a fantastic financial crash course based on some of the best investors in the world. Plus Tony Robbins’ wisdom all over it.
Get the book on Amazon!