MONEY Master the Game | Tony Robbins

Summary of: MONEY Master the Game: 7 Simple Steps to Financial Freedom
By: Tony Robbins

Introduction

Embark on a transformative journey to master your financial fate with Tony Robbins’ ‘MONEY Master the Game: 7 Simple Steps to Financial Freedom’. This book summary presents valuable insights and lessons from America’s most successful investors as they unfold the key principles to achieving financial independence. Along the way, you will unravel the power of compound interest, the hidden fees that eat away at your investments, and the vital importance of asset allocation. Unveiling the myths that surround conventional wisdom and providing practical retirement savings strategies, this comprehensive guide will empower you to take control of your financial life.

Follow these Seven Principles

The path to wealth is littered with mistakes, but successful investors have learned from these mistakes and have adapted to various economic conditions with discipline and knowledge. The seven steps they suggest revolve around the ultimate goal of saving for retirement. Retirement savings pose a challenge, but with the probability of spending 25 to 30 years in retirement, investing becomes necessary. However, this may be intimidating for some due to its emotional component. By following the seven principles, investing and financial stability can be attained. Additionally, they suggest that sharing with others is essential to not only a greater quality of life but can also bring joy.

The Power of Compound Interest

Discover how the mathematical force of compound interest could help you achieve financial freedom and make your money work for you.

Compound interest is one of the most potent tools in finance, and it can work wonders for your savings goals. The American founding father Benjamin Franklin understood this principle well and bequeathed $1,000 each to the cities of Boston and Philadelphia with a stipulation not to withdraw the money for 100 years. After that period, each city could withdraw $500,000, and by the end of 100 years at an 8% compounding interest rate, the money grew to a whopping $6.5 million.

To achieve financial freedom, becoming an investor is essential. You need to shift from being a consumer in the economy to being an owner. The power of compounding offers a way to make your money work for you, not vice versa, regardless of your earning power. Therefore, it is crucial to start saving or investing early and leave your money to compound.

Saving a percentage of your income every month is the first step towards achieving your financial goals. Once you have a critical mass, the compounded returns can last a lifetime. Therefore, it is vital to use automatic paycheck deductions to save before you can access your income. With the power of compound interest, you can make your money work for you tirelessly, providing a source of passive income.

Investing Myths Debunked

Learn the truth about investing in this book as it debunks common myths misconceptions surrounding investing, particularly on the role of brokers and fees.

Investing is a necessary aspect of ensuring a financially stable future. However, investing comes with its own set of myths and misconceptions that one must know to navigate successfully. In this book, the author debunks these myths and clarifies common misconceptions surrounding investing.

One myth is the belief that brokers will always act in your best interest. This myth is far from the truth because many financial managers fail to beat the performance of index funds over time. Shockingly, only eight out of 200 fund managers beat the Vanguard 500 Index from 1984 to 1995. Therefore, investing in a less costly index fund is better than paying high fees to an active financial manager.

It’s also crucial to consider the impact of fees on your bottom line. Investors mistakenly overlook fees on funds, which can significantly impact their overall returns. Annual fees of 1%, 2%, and 3% on a $1 million portfolio over a 30-year period may result in an $7.6 million, $5.7 million, and $4.3 million, respectively. In essence, investors can assume market risk with little or no return while still paying the fund manager $30,000.

Moreover, pension fund administrators also charge fees on top of mutual fund fees, which can add up to 3.16% of a nontaxable account and 4.17% of a taxable account. As an investor, reducing costs is paramount, including the fees you pay for advice and fund expenses. Experts recommend keeping costs at 1.25% per year or less as fee differences can equal five to 15 years of 401(k) contributions.

Investors should also beware of the differences between time-weighted returns and dollar-weighted returns when investing in mutual funds. According to John Bogle, the founder of Vanguard Funds, actual investor returns tend to underperform advertised fund returns by about 3% annually.

In conclusion, “Investing Myths Debunked” elaborates on the common myths and misconceptions surrounding investing and the role of fees in investing. The book offers invaluable insights on how to avoid investment pitfalls and establish a successful investment strategy that guarantees a financially stable future.

Achieving Financial Independence

To achieve financial independence, it’s crucial to set realistic retirement goals, calculate future expenses, and choose investment products wisely. Annuities are one investment product that can guarantee a lifelong income. Cutting expenses and saving as much as possible is key, including prepaying your mortgage, leasing a less costly car, and eliminating small impulsive purchases. Investing in index funds offers tax benefits and helps reduce investment account fees and expenses. The ultimate goal is to live within your means while enjoying the necessities and luxuries you desire, without letting money control your life.

Investment Diversification

To achieve a successful investment outcome, asset allocation is key. Investors should diversify their portfolio by dividing their investments among different asset classes such as stocks, bonds, commodities, and real estate based on their risk tolerance, time frame, and needs. The well-known phrase “diversification is the only free lunch” emphasizes the importance of diversifying one’s investments.

Investors can split their investments between secure choices and those with higher growth potential, such as stocks and bonds. In contrast, residential real estate is not the best option since market bubbles affect its pricing trends. Insurance, first trust deeds, annuities, and structured notes are some assets that offer financial security. Structured notes provide private contracts to investors who lend money to large banks, with a repayment period of seven years plus interest earned on an index investment.

Market cycles may lead to the loss of investment gains, rendering it essential to adjust portfolios over time. One can invest in seven asset classes across differing markets and maturities while making adjustments to achieve a successful outcome. While many experts recommend investing in low-cost index funds diversifying through stocks to provide broad equity exposure, it is crucial to seek advice from a fiduciary adviser who can create a lifetime income plan that reflects, among other things, the investor’s goals and level of risk tolerance.

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