Book Review and Summary of Money Master the game : 7 steps to Financial freedom
– by Tony Robbins
How do people win Financially? Why is it that some people with same Education, Background, similar Knowledge and life end up vastly different?
Wherein one ends up broke and debt ridden & other becomes a millionaire, financially free and enjoy retirement without having to work another day?
The people who win Financially have learned to play the game and Mastered it. They anticipate based on their understanding, & then Plan and Execute for Winning it.
For a common individual, what should we do?
Start with becoming an Investor – not merely a Consumer.
Commit a percentage of your Earnings to Savings & Invest them, automating the process.
That means you learn how to play like an insider and not investing blindly.
So before we start, lets get over some Myths relating to Investments:
- You have to take huge risks or have loads of Capital to be able to Invest.
That’s not true because there are various techniques available to keep your money safe and yet participate in market gains.
- Fund managers can easily beat the market giving higher than avg. market returns.
over time, 96% of Fund managers perform give lesser returns compared to Stock market, thus low cost Index Funds can be a good attractive Investment for majority of Investors who want to maximise their Investment value in long term.
- In fact, there is even a difference in the returns advertised and actual overall returns
for eg. Returns for yr1 were -50% and yr2 +50. This might be shown as 0% return adding them up. However, if you have continued your investment, your 100$ turned to 50 which turned to 75. So, in the process, you lost 25$ whereas it shows net balance same.
- Small differences in Fees and Taxes don’t matter much.
The reality is in fact, a difference of 1-2% in fees and tax benefits combined & applied correctly can lead to majority % difference in portfolio value with compounding.
So where do we start with?
Let’s starts with understanding basic concepts of financial Security, Independence & Freedom?
So what’s Financial Security?
Having Income to pay for Rent, food, Basic necessities such as Electricity, Insurance etc
If you are able to pay for that, you are Financially secured.
Financial Independence means being able to pay for all your current lifestyle expenditure
So, if you can make Interest income or generate passive income without working to match your current Lifestyle, you are Financially Independent.
Financial Freedom takes it a level upper with adding 2-3 luxuries you dream of having along with maintaining Financial independence. For eg having your Dream sports car or 2nd Home, taking that luxurious trip or so on.
It’s very important to calculate and note down the amount as well as time required to achieve this, as most people over estimate the amount they will require for themselves – demotivating themselves. Understanding the actual real figures generally shows them a much smaller figure and keeps it achievable for them, thus allowing the game to be winnable.
What are the small things that can be done for speeding up the Plan to achieve Financial freedom?
- Expenses – Write off Mortgage Debt towards principal payment 1st, Interest later. This simple technique can help save vast Interest expenditure overtime.
- Income – making better Investment decisions can help you to earn many times in the long term.
- Taxes and other Investment
Having understood our Needs & how to speed up achieving them, let’s get to Investing.
So what are the Investment options?
Secured Investment options like Bonds, CDs, Pension, Home, Cash etc
& Growth options like Equities, Real Estate, Equity linked Bonds, Currency & Commodity markets etc
How to allocate amongst different Assets is a question that is so Important that it can make the difference in majority of your wealth creation
That’s why you DIVERSiFY amongst Secured and Growth based Investment options, across Assets and at various times, as no one really times the market perfectly and using Averaging can give you significant results.
In order to make Money at all times irrespective of Rising/ Falling market and Inflation or Deflation. You diversify your Portfolio well.
What does the Ideal Portfolio comprise of, in layman terms?
Based on several years of practice, experience and time testing it during Recession & Depression,
This ideal portfolio comprises of :
Stocks – 1/3rd to achieve Growth
Long term Govt Bonds – 1/3rd for Risk Free Investments
and further divide the 3rd portion in Short term Govt Bonds, Gold and Commodity market – the latter 2 help counter Inflation.
Tony has Interviewed several top Investors- from Carl Icahn, Ray Dalio to including advice from the absolute best Warren Buffet and Sit John Templeton and given his best in sharing all of their Insights to the common men, the most basic yet important of them being:
- Not to Loose money
- Risk a little, to make a Lot
- Anticipate, Plan and Act
- Diversify the Portfolio
Finally, Tony Robbins also emphasises for other important things in life to have most fulfilling life:
Sharing – Giving to others without selfishness gives immense Satisfaction and Happiness.
Having Gratitude – Focusing on what we have, rather than what we don’t, what we can control rather than what we can’t.
Seeing things in a Positive way and Acting accordingly to have a happy Life.