Written By: Tony Robbins, Kelly Jabbusch, MBA, AFC®
Tony Robbins is well-known for his ability to inspire and help people reach their dreams. As a motivational speaker, personal finance instructor, life coach and author, he is a recognizable face and has many success stories to share. The introduction to Money Master the Game: 7 Simple Steps to Financial Freedom, authored by Marc Benioff, illustrates this point. This book brings the wisdom of Tony Robbins and 50 of the most brilliant financial minds in the world together to help people create an extraordinary life. Money Master the Game is about more than money, it’s about helping the reader create an extraordinary life!
The Seven Simple Steps to Financial Freedom
In Money Master the Game, Robbins outlines seven actions that must be taken to live a comfortable and secure life financially, personally, and professionally:
- Make the most important financial decision of your life
- Become the insider: Know the rules before you get in the game
- Make the game winnable
- Make the most important investment decision of your life
- Create a lifetime income plan
- Invest like the .001%
- Just do it, enjoy it, and share it!
By committing to these simple steps, financial success and personal peace can be enjoyed.
Make the most important financial decision of your life: Invest in your future. Only about half of America’s private sector workforce is covered by a retirement plan. Those who are may be invested in a 401(k) plan that charges high fees. Make the decision to save and invest in your financial future and take ownership of it. Many investors lose out substantially to high fees and commissions attached to certain investments.
Become the insider: Know the rules before you get in the game. There are many myths surrounding the investment game and these myths are marketed to keep the general public in the dark. High-cost mutual funds are just one problem. It is unrealistic to think that there is a trick or a secret to beating the market. High-cost managed funds rarely beat the market. In fact, from 1984 to 1998, a full 15 years, only eight out of 200 fund managers beat the Vanguard 500 Index. Investment fees associated with actively managed mutual funds are no small price to pay. They can add up to you giving away up 50 to 70 percent of your nest egg. You can take control of your retirement and investments by visiting www.PersonalFund.comfor a cost calculator to help in selecting and managing your investments.
Make the game winnable. Figure out what annual income you need to achieve financial security. The average U.S. household spends their money on housing, transportation, food, insurance, utilities, clothing, healthcare, entertainment, and education. What amount do you need annually to cover your needs? According to a 2014 Princeton University-University of Chicago study, 40 percent of Americans say they could not come up with $2,000
if they needed it. Having an emergency fund is necessary to get you through the unexpected losses that can arise in life. Beyond that, getting into a position where your mortgage is paid off, your utilities, food, transportation and insurance costs are covered, places you in a position to win.
Make the most important investment decision of your life. Make the commitment to diversify and know where to invest to maintain your wealth. There are many choices for investors from annuities and bonds to the stock market and CDs. It is important to know the fees, penalties, limitations, and benefits of each of these investment opportunities. For example, bonds have gotten a bad rap because the federal government has kept interest rates low. However, most experts recognize bonds as the foundation for a portfolio that can work well in all economic climates. Annuities can work as a pension plan if done correctly; however, the fees and penalties associated with many annuities, makes them a bad investment. It is up to you to take control, do your research, and uncover the right investment tools.
Create a lifetime income plan. 65-year-old Ray Dalio created a strategy called the All Seasons strategy, which shows investors how to succeed with the right mix of bonds, equities, commodities, and gold in any economic season. Coming of age in the 1970s as a clerk on the NYSE, Dalio saw bull and bear markets. Tides changed quickly and unexpectedly. David Swensen, Yale’s chief investment officer, says that “unconventional wisdom is the only way to succeed. Follow the herd, and you don’t have a chance.” Consider real estate. In the early 2000s, Americans (including those with little money) were buying whatever they could get their hands on. But they weren’t just buying homes because interest rates were low. Interest rates were lower in 2009, and buyers couldn’t give their homes away. People bought during the boom because prices were rising rapidly. The herd was caught up in the growth and inflating prices of real estate.
There are four things that move the price of assets: inflation, deflation, rising economic growth, and declining economic growth. When higher than expected growth takes place, higher than expected inflation will soon follow. When lower than expected growth takes place, lower than expected inflation will follow. According to Dalio, there are four economic seasons and you need the foresight to invest today for what tomorrow brings by paying attention to the economic indicators that are a part of your everyday life. The All Seasons strategy is:
- 30 percent stocks
- 40 percent long-term bonds
- 15 percent intermediate U.S. bonds
- 7.5 percent commodities
- 7.5% gold
The results of the All Seasons strategy versus the S&P strategy are covered in this book.
Invest like the .001%. Robbins interviewed many billionaires from Carl Icahn to Warren Buffett to John Bogle. Although each had a distinct approach, he found that they all shared at least four common obsessions: (1) don’t lose money, (2) risk a little to make a lot, (3) anticipate and diversify, and (4) you’re never done.
Just do it, enjoy it, and share it. Robbins summarizes this interesting book in a way that inspires the reader like only he can do. He encourages readers to learn about technological trends and to use these trends to take control of their investing future. While our problems come in waves, so do the solutions to those problems. Robbins inspires his readers to get knowledgeable, take control, and give back.
At over 600 pages, Money Master the Game is well worth the read. The knowledge gained is invaluable. I highly recommend it for the millions of “average” Americans that have avoided investing or feel that the odds of financial success are stacked against them. Particularly inspiring to me, was Robbins’ interview of Vanguard founder John Bogle. One of his greatest failures led to his creation of Vanguard and his ability to give the “Average Joe” the opportunity to grow financially through affordable investing that demystified a world upon which many financial advisors profited. Add this one to your reading list!
Kelly Jabbusch, MBA, AFC®, can be reached at jabbuschk@gmail.com.
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