“The secret to wealth is simple: Find a way to do more for others than anyone else does. Become more valuable. Do more. Give more. Be more. Serve more.”
Money Master the Game: Short Summary
Money Master the Game by Tony Robbins is the ultimate guide on how to build a secure financial future. Robbins provides a detailed account of what works and what doesn’t. He distills financial planning into 7 fundamental principles. Great book for anyone seeking to know their way around money.
Step 1: Make The Most Important Financial Decision Of Your Life
The most important financial decision you should make is to set at least 10% of your earnings aside.
You cannot afford not to save. When you don’t save, you will always be trading your far more valuable time for money. Decide to be an investor in the economy rather than a consumer.
The earlier you start saving, the better. Save a fixed amount of what you earn and invest it intelligently. In time, the money will compound and make you even more money.
“The core concept of successful investing is simple: Grow your savings to a point at which the interest from your investments will generate enough income to support your lifestyle without having to work. Eventually, you reach a “tipping point” at which your savings will hit a critical mass.”
Should you find it hard to save, make it automatic. You can also commit to save just 3% of your income but grow the savings rate as your income increases over time.
“The best way to save is when you don’t see the money in the first place” — Burton Malkiel
Step 2: Become The Insider: Know The Rules Before You Get In The Game
“Risk comes from not knowing what you are doing” — Warren Buffet
The 9 financial myths that misguide the masses:
- Invest with us, and we will beat the market. 96% of actively managed mutual funds fail to beat the market over any sustained period. An index fund is a better investment
- “Our fees? They’re a small price to pay. The average price of owning a mutual fund is 3.17% a year. Overextended periods, this fee will take a majority of your earnings
- “Our returns? What you get is what you see”. If a mutual fund advertises a return of about 6%, it is close to 3%
- “I’m your broker, and I’m here to help.” Most mutual fund brokers and managers don’t know what they are doing. Otherwise, they would perform better than the market. It is better to consult a fiduciary
- Your retirement is just a 401K away. Although 401K plans benefit from tax deferral, most come with 17 different fees and costs
- Target-Date Funds: “Just set it and forget it.” Asset allocation is difficult even for the most experienced of investors
- “I hate annuities, and you should too.” Discover the pros and cons of your annuity programs as not all annuity programs are created equal
- “You gotta take huge risks to get big rewards!” Successful insiders don’t speculate with their hard-earned savings
- The lies we tell ourselves. The biggest obstacle to your financial success is your limiting perceptions and beliefs
Three steps to creating your breakthrough:
- Strategy. To find the right strategy, go to those who have proven results over the long run
- Change your story. 80% of success in life comes down to psychology, and 20% is mechanics
- Your state. Your emotional and mental states have a great influence on your financial wellbeing
“Money is nothing more than a reflection of your creativity, your capacity to focus, and your ability to add value and receive back.”
Step 3: Make The Game Winnable
The real price of your dreams is less than you are imagining. Life is not about money. It is about emotion, and the real goal is to have the lifestyle you want and not things.
“You can’t reach your financial dreams unless you know precisely how much it will take to get there.”
To get where you want to be, you must know the price of your dream. Most dreamers have never figured out the cost of their dreams, and as such, they cannot plan for them.
How to take something impossible and turn it into reality:
- Unleash your hunger and desire and awaken laser-like focus
- Take massive and effective action
- Grace. You realize that there is more to life than yourself and a higher power that’s in support of what we are doing
One way to increase your savings is to find things you can easily cut down. 40 dollars saved every week can equal $500,000 in savings over a lifetime.
Step 4: Make The Most Important Investment Of Your Life
“Asset allocation is the most important decision of your lifetime”
You can lose all your money if you are not careful about where you put it.
There are three tools for reducing risks:
- Security selection — stock picking
- Market timing — making short term bets on the direction of the market
- Asset allocation — long-term strategy for diversified investing
“Asset allocation is more than diversification. It means dividing up your money among different classes, or types, of investments (such as stocks, bonds, commodities, or real estate) and in specific proportions that you decide in advance, according to your goals or needs, risk tolerance, and stage of life.”
Asset allocation skills can set you apart from 99% of investors. Some of the assets to consider include bonds, treasury bills, gold, stocks, corporate bonds, annuities, and so on. Just don’t put all your eggs in one basket.
Step 5: Create A Lifetime Income Plan
Even when your investments are divided equally between bonds and stocks (50–50), the majority of the risk you take comes from stocks because stocks are more volatile.
An example of a diversified asset portfolio by Ray Dalio, one of the most successful hedge fund managers of all times:
- Stocks 30%
- Gold 7.5%
- Commodities 7.5%
- Intermediate US bonds 15%
- Long term US bonds 40%
“With such a diversified portfolio, it is very hard almost impossible to lose money. The reality is, if we are being honest with ourselves, we all make emotional decisions about our investments. We are all emotional creatures, and even the best traders in the world are always fighting the inner fear. This All Seasons portfolio protects you not only from any potential environment but also from yourself!!!”
Step 6: Invest Like The 0.001%
Compared to everybody else, the ultrawealthy enjoy a lot of financial benefits. They include:
- Unlimited deposit amounts
- No tax growth on your investments
- No tax when accessed
- No estate tax
“By taking taxes out of the equation, the time it takes to reach your critical mass and financial independence will be massively accelerated. No longer do you have to worry about how much of your money will actually be yours to spend after the taxman takes his bite of your apple.”
An example of a financial product that will shield your investment gains from taxes is a PPLI (Private Placement Life Insurance Policy). With a PPLI, you can reduce the number of years you need to get to critical financial mass by half.
Another secret of the ultrawealthy is to establish a recoverable trust. When you have a trust in place, your assets will avoid probate when you pass. A trust can also protect your assets when you are incapacitated.
Billionaire investment rules:
- Don’t lose. Billionaires are obsessed with making sure that they don’t lose money
- Risk a little to make a lot. Billionaires look for home runs not just to make a little
- Anticipate and diversify. Billionaires anticipate failure by diversifying
- You’re never done. The 0.001% are relentless in their pursuit of excellence
Step 7: Just Do It, Enjoy It And Share it
Success without fulfillment is the ultimate failure. When pursuing success, it is important to remember what you are really after.
“So what’s the final secret, the key to a rich life? Enjoy it and share it! But first you must take action. As the saying goes, if what you learn leads to knowledge, you become a fool; but if what you learn leads to action, you can become wealthy.”
The three decisions that determine the quality of our lives:
- What are you going to focus on? Be grateful for what you have. In many ways, most people are more privileged than they care to admit
- What does this mean? The quality of your life is controlled by the meanings we give to things
- What I’m going to do? Prime yourself to react positively in any situation
How to increase your happiness:
- Invest in experiences such as reading, traveling, and learning new skills
- Buy time for yourself. Free yourself to pursue your passions
- Invest in others. Giving money away will make you happier
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Originally published at https://dansilvestre.com.