Financial freedom is a universal goal. Unfortunately, the financial world is difficult to navigate, and many people don’t know how to start taking control of their finances. This is where Tony Robbins’ book Money – Master the Game comes in. The book is an eye-opening resource for readers to educate themselves and learn about Robbins’ 7 Simple Steps to Financial Freedom.
Whether you want to solidify your financial situation, improve your portfolio performance, or are looking for a financial adviser: Robbins provides valuable insights and leads that might change your life. The book contains many interviews with experts from the financial industry, in which they share their secrets to success. Robbins explains the most common financial products, their myths, pros, and cons. He shows how these products are marketed, reveals false claims, points out hidden fees, and tax advantages. Furthermore, you learn who to trust in the financial industry, what to watch out for in investment strategies, and which steps to take to reach your financial freedom.
Take control of your finances
Tony Robbins begins by identifying five financial stages he refers to as dreams:
- Financial security
- Financial vitality
- Financial independence
- Financial freedom
- Absolute financial freedom
With financial security, you can cover all basic living expenses like food, housing, utilities, transportation, and insurance. When reaching financial vitality, your investments and savings provide enough income to cover about half of your lifestyle, including premium clothing, dining, and entertainment. You get to financial independence once you can fully fund your current lifestyle without having to work. Financial freedom allows you to fund not only your current lifestyle but also a few selected luxuries you always wanted. Only very few people reach the highest level of absolute financial freedom: they can fund an unlimited lifestyle and they never have to worry about money again.
We like Robbins' definition of financial stages a lot. This model corresponds well with our method of financial planning, where we identify your financial needs in the upcoming life stages and prioritize your spending by distinguishing various expense levels.
Embarking on the journey toward financial success requires you to learn the ropes, and to take the driver’s seat. Robbins describes what it takes to climb up the ladder of financial stages.
He starts by pointing out the significance of setting up an additional income stream, providing for your means in case you become incapacitated. Continuing Robbins explains the concept of compounding and the role it plays in growing your money. He shows how your nest egg will grow, if you just set aside a fraction of each paycheck, and manage to increase this amount over time.
Financial goals are highly individual, and no two people are alike. Robbins has talked to Sir John Templeton who invested in the depressing times of World War 2. Templeton’s secret to wealth is gratitude: Being grateful for what you have, with no fear and no anger.
Don’t leave money on the table
Robbins shows how to maximize the financial resources available to you. He explains the various account types, including IRA and 401(k) accounts. Further, he points out how valuable your employer’s 401(k) matching is, and how you can save for your retirement in a tax-deferred account. For taxable accounts, Robbins shows how to find tax-efficient investments, and explains the importance of achieving long-term capital gains.
Who can you trust?
If you need help navigating your finances, you need to know who you can trust. In his book, Robbins explains how broker/dealers have an intrinsic conflict of interest between recommending the best product for their client or the most profitable for them. He strongly advises to only seek help from those with a fiduciary duty to act in their client’s best interest. Further, Robbins explains how some firms attempt to blur the lines by using terms without proper legal definitions; most importantly, the term financial advisor. And finally, Robbins discusses the issues associated with dual-registration, under which financial professionals can act as both investment advisers and broker/ dealers.
We sincerely appreciate this section. We often see clients getting confused with the obligations their advisors have, and which level of service they can expect. At Bertram Solutions, we take pride in providing independent and fiduciary advice.
Set your financial goal, then you can come up with a plan to get there. What sounds so trivial is often surprisingly difficult. With carefully chosen examples, Robbins illustrates how smart decisions often allow you to achieve the lifestyle you imagine with less money than you thought you would need. It is essential to set realistic goals to make the game winnable. By making better choices, creating a modest spending plan, or following one of Robbins’ ways to pay off your mortgage quickly, you can shorten the path to get there. Robbins shows how to plan for an uncertain future and how your life stage, your risk tolerance, and your liquidity needs are intertwined with your investment strategy, and risk level.
We could not agree more with Tony Robbins' statements in this chapter as he touches all the right topics. However, Robbins falls short of recommending formalized financial planning. In our opinion, personalized and comprehensive financial planning is the crucial step that all investors should start with. The resulting plan is a living document that evolves with you and adapts as your life progresses. It serves as your guide to making informed spending and investment decisions at any time of your busy life. At Bertram Solutions, we offer financial planning to all our clients: Either as a stand-alone service or as a prerequisite to our wealth management.
On his journey to write this book, Tony Robbins interviewed legendary players of the financial industry and shared their valuable feedback. You learn from:
- John C. Bogle, the founder of the Vanguard Group
- Carl Icahn, who outperformed Warren Buffett in the market in the last 1,5, and 10-year cycles
- David Swensen, how grew the Yale University endowment from $1 Billion to 23.9 Billion in less than two decades
- Mary Callahan Erdoes, CEO of J.P. Morgan Asset Management, who oversees 2.5 trillion in assets
- Charles Schwab, who led a revolution to open up Wall Street to individual investors
- Paul Tudor Jones, who predicted Black Monday in October 1987 and made 60% monthly return, in 2008 produced a 30% profit
- Sir John Templeton, founder of the Templeton Growth Fund
- Ray Dalio, the founder of Bridgewater Associates, one of the world's largest hedge funds with $160 billion in assets
These interviews culminate in the following key takeaways:
- Don't lose
- Risk a little to make a lot
- Anticipate and diversify
- You are never done
An important part of Tony Robbins’ book is the explanation of the various investment products, including mutual funds, index funds, target-date funds, bonds, CDs, and annuities. For all products, he provides a brief overview, explains the pros and cons, and under which financial circumstances the product might make sense. Further, Robbins points out how important it is to consider the fees associated with any investment. He especially warns of the high and sometimes hidden costs associated with some mutual funds, which may cut deeply into your profits. Further, Robbins explains how many funds never beat the market and how they are nonetheless able to reel in investors, thanks to their brilliant marketing.
Of course, there is no discussion of frugal investment without citing Warren Buffet. Buffet advises to simply invest in a low-cost S&P 500 index fund, which is an excellent way to participate in the stock market’s growth while minimizing management fees. Historically and over the past 100 years, the stock market has been the best long term investment available. Further, Robbins points out that the stock market can be quite volatile, which may result in losing money quickly but also offer opportunities.
From his interviews, Robbins learned various investment tools to reach your goals faster: Smart asset allocation, diversification, how to limit losses and increase gains, as well as how to avoid market plunges and create consistent above-average returns.
Remarkable is his interview with Ray Dalio. Dalio points out that relying on hope is not a viable strategy when it comes to your family's wellbeing. Based on his All-Weather Portfolio, Dalio created the All-Seasons Portfolio for Robbins’ book. While Dalio’s fund uses more sophisticated financial instruments and leverage, this younger brother otherwise employs the same core principles.
According to Dalio, only four things move the price of assets:
- rising economic growth
- declining economic growth
It's the surprises that determines which asset class will do well. Since we can’t predict the future, it is crucial to prepare for all eventualities.
We like the All-Seasons Portfolio a lot, thanks to its docile behavior across a wide array of market situations. Compared to simple stock/ bond portfolios, the All-Seasons Portfolio has higher risk-adjusted returns and lower drawdowns. With these properties, the portfolio is an ideal candidate to be levered up until an investor’s risk tolerance is reached. At Bertram Solutions, we are uniquely positioned to create customized portfolios for our clients, and manage and rebalance them daily, based on our computer models.
Money and Happiness
Throughout all chapters, the author encourages the goal of giving back. Besides many other programs, Tony Robbins’s foundation feeds millions of people each year, and he encourages his readers to find their ways to help those in need. Of course, you can only give what you have, but even a little can go a long way for someone who needs help today. Maybe tomorrow you can help more people. Robbins says "the secret to living is giving."
Money can make us happier, but it can’t buy us happiness: If our income doubles, our happiness does not. But it has been scientifically proven that ways how you spend your money can make you happier. Therefore Robbins suggests to think about these three significant changes:
- Invest in experiences, not in necessities: travel to places that interest you or learn a new skill.
- Buy time for yourself: free up time to pursue what matters more, for example, hire a cleaning crew for your house.
- Invest in others: give money away because it makes us happy when we support others.
Unlike many authors of books in this genre, Tony Robbins is a life coach, not a financial professional. Consequently, the book takes a more holistic approach and touches many topics that go much further than investing. Robbins is committed to improving the lives of every investor and wants his readers to follow through. To achieve this goal, Robbins uses frequent reinforcements and describes his topics from multiple vantage points. Further, he intertwines the subjects with anecdotes, helping to illustrate the message and make things more relatable.
While Robbins encourages his readers to take control, the book is not a do-it-yourself instruction. The goal is to provide readers with the right tools to make informed decisions toward your financial freedom. As Tony Robbins said: "Our decisions ultimately control the quality of our lives." As such, Robbins highly recommends seeking the additional help and expertise of a fiduciary, namely to help with assessing the suitability of investments for an individual's financial situation.
This book is an excellent resource for everyone who wants to learn more about personal finance. We see it as the ultimate guide on how taking control of your finances can improve your life in multiple ways. However, with over 600 pages, the book is certainly not a quick read.