Book Review: MONEY MASTER THE GAME 7 SIMPLE STEPS TO FINANCIAL FREEDOM, by Tony Robbins
“Money makes the world go around...
A mark, a yen, a buck or a pound…it makes the world go ‘round!” (From the musical CABARET.)
Wouldn’t it be lov-er-ly to be rich (but not necessarily famous?) YES. But how do you travel to the financial mountain top and stake your claim, when the mountain is craggy, steep and you have no gear and no helicopter or the like? Tony Robbins, in his new 616 page book, MONEY Master the Game: 7 Simple Steps to Financial Freedom, wants to help you answer that query.
But first, some editorial housekeeping…
Wouldn’t it be lov-er-ly to be rich (but not necessarily famous?) YES. But how do you travel to the financial mountain top and stake your claim, when the mountain is craggy, steep and you have no gear and no helicopter or the like? Tony Robbins, in his new 616 page book, MONEY Master the Game: 7 Simple Steps to Financial Freedom, wants to help you answer that query.
But first, some editorial housekeeping…
MISSED ON THE TITLE
MONEY MASTER THE GAME 7 Simple Steps
to Financial Freedom should be
entitled YOUR MONEY, Plant the Seeds and Let them Grow, or something
similar, because the book is mainly about investing for the masses who work at
jobs outside the financial industry. It is not a wealth creation book
whereby the reader can learn income producing strategies outside the stock
market.
In an interview with Brendon
Burchard, Tony Robbins characterized his book: “This is a lifestyle book as
well as how do you create wealth and abundance for the long term.” Sounds like
an identity crisis from the get-go—Tony’s book sets an admirable goal that
tries to be all things to all people—which may detract from the main idea.
WRITING STYLE CRITIQUE (I COULDN’T
LET THIS SLIDE)
I learned that good writing utilizes exclamation points very sparingly, so am surprised that both Tony Robbins and Richard Branson excessively use exclamation points in their recent books. Tony defends his writing style saying it’s not a mistake, but a “technique designed to mark out key ideas and to build knowledge into your mind, body, and spirit so that action becomes automatic.” (p.43) Instead of absorbing the points, however, I focused on the irritating writing style.
I learned that good writing utilizes exclamation points very sparingly, so am surprised that both Tony Robbins and Richard Branson excessively use exclamation points in their recent books. Tony defends his writing style saying it’s not a mistake, but a “technique designed to mark out key ideas and to build knowledge into your mind, body, and spirit so that action becomes automatic.” (p.43) Instead of absorbing the points, however, I focused on the irritating writing style.
“Repetition is the mother of skill,”
as Tony often says, and I agree. However, constant repetition works poorly in
book form—it’s exasperating and makes the reader want to skip through the book.
Chapter end summaries work well—no need to sprinkle the book with redundancies.
The book should have been half the size.
THE CAPTIVE AUDIENCE
MONEY MASTER THE GAME: 7 Simple
Steps to Financial Freedom presupposes
that the reader has a fairly regular paycheck or small business income, and
hopefully little or no debt hindering the ability to save and invest. The ideal
reader: someone just beginning their career. The message: start investing and
reinvesting early in order to take advantage of compound interest. Compounding
appears slow and boring in the beginning, but once it gets going, exciting
things happen like exponential growth.
Critics scorn Tony for straying from
his lifestyle coaching work in order to write about investing your money. I
disagree: given Tony’s access to leaders of the financial world, and his
obsession with figuring out what works, Tony is uniquely qualified to write
about how the little guy can become financially savvy and secure. He has opened
up a dialogue about investing today. He reveals some rather new investment
vehicles, like income insurance, that have previously been available only to
the ultra wealthy.
No way can “outsiders” trade with
traders who have access to micro-trading apparatus. No way can “outsiders”
spend the hours it takes to keep tabs on the thousands of investment
opportunities; complicated investment methods like derivatives and short sales;
the tax rules, etc. So where does that leave the “outsiders” aka the rest of
us? Tony focuses on answering that question.WHY DO YOU INVEST?
Most people do not understand why they invest in the first place, according to Tony. They have vague ideas, for example: invest for retirement or invest to build assets. However, those reasons lack focus and oomph. No wonder we don't make investing a priority.
The only reason to invest is INCOME.
You spend income, not assets. Therefore, becoming financially free depends
upon creating a nest egg as quickly as possible and then turning that egg into
an income-producing machine. But how to build that nest egg, you ask?
You need an income, to start with (just like the old saying goes, “it takes
money to make money.”)
THE MEAT OF MONEY MASTER THE
GAME: THE 7 STEPS
1) Become an Investor, not a Consumer: Automate your saving by taking a percentage of your paycheck (ideally 10% or more, but you can start with as little as 3 and ½ percent), and systematically invest it in a low-cost index fund, like Vanguard’s S&P 500 (also known as dollar cost averaging ;)
2) Become an Insider on Investing; Apprise yourself of the rules of the money game; i.e. understand how mutual funds operate, because, 401(k)’s sink your contributions into them, and most of the world invests in mutual funds;
1) Become an Investor, not a Consumer: Automate your saving by taking a percentage of your paycheck (ideally 10% or more, but you can start with as little as 3 and ½ percent), and systematically invest it in a low-cost index fund, like Vanguard’s S&P 500 (also known as dollar cost averaging ;)
2) Become an Insider on Investing; Apprise yourself of the rules of the money game; i.e. understand how mutual funds operate, because, 401(k)’s sink your contributions into them, and most of the world invests in mutual funds;
3) Make the Game Winnable by
Getting a Plan: Get a financial advisor, who is a fiduciary, to help build
and manage your wealth through other means in addition to an index fund. (Tony
promotes Stronghold Financial for just such a purpose;)
4) Evaluate Your Asset
Allocation: Diversify your investment portfolio through an “All Season” asset
allocation strategy. (pg 411) Most of the book refers to investor Ray
Dalio’s strategy for asset allocation. However, Dalio’s successful hedge fund
work involves complicated derivatives and other insider hedge-fund manager
techniques that require sophistication and a constant pulse-reading of “the
market.”
For the book, Tony cajoled Ray into giving investment advice for the masses. The simplified version of Ray’s stratagem, for readers of Money Master the Game, consists of an investment portfolio with: 7.5% Commodities, 7.5% Gold, 30% Stocks, 40% Long Term US Bonds, 15% Intermittent US Bonds. Accumulating and proactively rebalancing such a portfolio may require a fiduciary financial advisor to optimize results. Because, as Tony admits, who has time to learn all this stuff when we have a life, job, kids? We need help!
5) Create a Lifetime Income Plan: Once your investments reach a threshold amount, which can accommodate the lifestyle you want to maintain, plan to extract an income from that nest egg you built. Tony suggests a fixed annuity with a lifetime income rider (which guarantees a minimum withdrawal benefit.) Lifetimeincome.com offers an annual income annuity calculator. (pg 437)
For the book, Tony cajoled Ray into giving investment advice for the masses. The simplified version of Ray’s stratagem, for readers of Money Master the Game, consists of an investment portfolio with: 7.5% Commodities, 7.5% Gold, 30% Stocks, 40% Long Term US Bonds, 15% Intermittent US Bonds. Accumulating and proactively rebalancing such a portfolio may require a fiduciary financial advisor to optimize results. Because, as Tony admits, who has time to learn all this stuff when we have a life, job, kids? We need help!
5) Create a Lifetime Income Plan: Once your investments reach a threshold amount, which can accommodate the lifestyle you want to maintain, plan to extract an income from that nest egg you built. Tony suggests a fixed annuity with a lifetime income rider (which guarantees a minimum withdrawal benefit.) Lifetimeincome.com offers an annual income annuity calculator. (pg 437)
6) Invest like the top .001%: Study
and learn from those who have mastered financial freedom. Also, find ways to
increase your income as much as you can and invest the extra income;
7) Just Do It, Enjoy It and Share
It: Get started immediately with aggressively investing your money. Additionally, spend a portion on yourself and others in need. Spending is fun. Contribution satisfies a basic human need and feels good. Psychologically, you will not continue a plan
if all you notice are numbers adding up on a monthly statement and get no tangible benefits.
9 MYTHS OF INVESTING, AND WHAT THEY
MEAN
Since Tony targets mutual funds throughout most of the book, I have detailed the 9 myths related to investing that he presents in Section 2:
1) Actively managed funds beat the market.
Well, 4% of them do, and it’s not the same funds either, so good luck finding “the one;”
2) Managed funds’ fees are a small price to pay.
Turns out, that the average fees (around 3.17% to own a managed mutual fund, versus 0.14% to own an Index Fund like S&P 500) add up to quite a tidy sum for the mutual fund company—not you. Example: One million dollars, invested at 8% annualized return over 30 years, grows to $7,612,256, with a 1% annual fee. That same one million dollars only grows to $4,321,943, with a larger 3% annual fee. You lose almost HALF your investment monies with only a tiny, 2% fee increase.)
3) Transparent returns in mutual funds.
NOT! The reported returns by mutual funds are not actually earned by investors, according to Jack Bogle, founder of Vanguard. (p. 116) The mutual fund advertises a specific return; however, they advertise time-weighted returns based upon putting all your money in at once, which is not what people really do; because contributions come out of every paycheck throughout the year. Real returns are called “dollar-weighted returns."
4) I’m Your Broker, and I’m here to Help.
Well sort of—Brokers who work on commission help themselves to your money. Brokers are accountable to the Fund, not you. UNLESS your financial advisor is a fee-only based fiduciary, financial advisors sell products for commission, and they sell it to you.
5) Your Retirement is just a 401(k) Away.
But for the excessive fees that eat away your portfolio and add years to reaching your retirement goals.
6) “Just set it and Forget it.”
You must take full responsibility for your financial health.
7) Annuities suck.
Many do, however, the annuity industry is becoming more transparent and accessible to those with fewer funds to invest. The book identifies a few annuity options.
8) “You Gotta Take Huge Risks to Get Big Rewards!”
Always protect your downside in order to mitigate risk/reward ratio. The book gives detailed examples of how some experts evaluate an investment and protect the downside.
9) “The Lies We Tell Ourselves.”
Get your head out of the sand and take action regarding your financial health.
Since Tony targets mutual funds throughout most of the book, I have detailed the 9 myths related to investing that he presents in Section 2:
1) Actively managed funds beat the market.
Well, 4% of them do, and it’s not the same funds either, so good luck finding “the one;”
2) Managed funds’ fees are a small price to pay.
Turns out, that the average fees (around 3.17% to own a managed mutual fund, versus 0.14% to own an Index Fund like S&P 500) add up to quite a tidy sum for the mutual fund company—not you. Example: One million dollars, invested at 8% annualized return over 30 years, grows to $7,612,256, with a 1% annual fee. That same one million dollars only grows to $4,321,943, with a larger 3% annual fee. You lose almost HALF your investment monies with only a tiny, 2% fee increase.)
3) Transparent returns in mutual funds.
NOT! The reported returns by mutual funds are not actually earned by investors, according to Jack Bogle, founder of Vanguard. (p. 116) The mutual fund advertises a specific return; however, they advertise time-weighted returns based upon putting all your money in at once, which is not what people really do; because contributions come out of every paycheck throughout the year. Real returns are called “dollar-weighted returns."
4) I’m Your Broker, and I’m here to Help.
Well sort of—Brokers who work on commission help themselves to your money. Brokers are accountable to the Fund, not you. UNLESS your financial advisor is a fee-only based fiduciary, financial advisors sell products for commission, and they sell it to you.
5) Your Retirement is just a 401(k) Away.
But for the excessive fees that eat away your portfolio and add years to reaching your retirement goals.
6) “Just set it and Forget it.”
You must take full responsibility for your financial health.
7) Annuities suck.
Many do, however, the annuity industry is becoming more transparent and accessible to those with fewer funds to invest. The book identifies a few annuity options.
8) “You Gotta Take Huge Risks to Get Big Rewards!”
Always protect your downside in order to mitigate risk/reward ratio. The book gives detailed examples of how some experts evaluate an investment and protect the downside.
9) “The Lies We Tell Ourselves.”
Get your head out of the sand and take action regarding your financial health.
OTHER TOOLS THAT MAY HELP YOU
PROPERLY INVEST
Tony recommends several tools,
besides obtaining your own financial advisor, in order to achieve better investing
results as quickly as possible. The reason to use such tools: reach retirement
goals up to 10 years sooner than you would without these tools. For example, he
starts with a downloadable app designed for the book, to get investors to
create an investment roadmap.
1) A fee calculator at Personalfund.com analyzes investors’ current plan administration fees (p.111)
2) America's Best 401k checks the fees your current,
actively managed 401k collects. Americas Best 401k offer low cost index funds
to replace an investor’s fee-laden managed fund.
3) Stronghold Financial, a company that Tony
promotes throughout the book, offers a complimentary analysis of investors’
current portfolios.
ENDGAME
Tony spent about 4 years
interviewing several masters of the game; billionaires like Ray Dalio and
Warren Buffet (a chance meeting with Warren, really.) Good read. I like
to learn about how ultra wealthy people operate and perhaps glean some
insights. Nevertheless, the interesting interviews were not necessarily
relevant to the book’s main idea of investment strategies for the little guy.
Let’s face it, for most of us,
investing our hard-earned money is a necessary evil and probably boring. We'd all rather be golfing, even if we hate golfing. Maybe that’s why
Tony included a chapter about the future of technology, which I found
fascinating, fun and hopeful. That chapter gave the greatest final pep talk and
valid reasons to take personal financial wealth seriously. Financial freedom
will make it far easier to apprise ourselves of the amazing things to come,
like 3-D printing biological body parts, for example. Need a new bone, liver or
lung? Technology may have that need covered in our lifetime. And you know that insurance companies will lag far behind, so you'll need some extra money.
It’s in the offing: Star Trek comes to life for us all. We'd better be financially prepared and fully stifle the greatest fear amongst retirees: it's not death; it's outliving one's money.
It’s in the offing: Star Trek comes to life for us all. We'd better be financially prepared and fully stifle the greatest fear amongst retirees: it's not death; it's outliving one's money.
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