There are many personal finance books that could lay claim to being the best book on money.
The subject of money can be highly contentious so when Tony Robbins released his personal finance book Money Master the Game, I was dubious as to the legitimacy of Tony’s credentials to embark on such a beast of a subject.
Tony Robbins is one of the world’s best known, and arguably most successful coaches of all time. As featured in the Netflix documentary I’m not your Guru, he is the author of best-selling self-help classics such as Awaken the Giant Within and Unlimited Power. So, when it comes to the area of transformation, Tony knows a thing or two about inspiring change.
Whilst Tony has over 40 years’ experience in the world of human transformation, what I like about Money Master the Game is Tony isn’t arrogant enough to assume he has all the answers. Tony makes the smart decision to gain access to some of the industries most respected financial experts such as Peter Mallouk, Warren Buffett and Ray Dalio to gain and share their knowledge and expertise with the reader.
When it comes to financial matters, collaborators in the book may have contrasting philosophies or beliefs but what Tony effectively does is collate areas of agreement. Contrary to one of my concerns before I read the book, Tony doesn’t promote any form of get rich quick scheme or weird and wacky investment opportunity. Instead, he has put together seven simple (and logical) steps to helping individuals achieve financial freedom.
Let’s look at each of these of these seven simple steps:
Chapter One - Make the most important financial decision of your life
How many of us drift day to day without being engaged with our finances. If you truly wish to move towards financial freedom, you must make the decision to do so — and then consistently adopt the behaviours that will take you there.
One of the areas Tony pinpoints which crosses over very much into some of his other writings, is that individuals that prosper financially are normally those who find a way to help others and provide more value. A key component in this is overcoming a scarcity or an excuse mindset. For example, “It’s easy for John, because he inherited his wealth” or “How is Kyle doing better than me, my product is much better than his.”
It’s undeniable that some people get a leg up in life, but judging yourself against others and making excuses is never going to move you towards financial freedom. Take control of your money, or it’ll take control of you!
Top Tip from Chapter One
Develop an automated plan TODAY for saving and investing. This is because the sooner you begin, the sooner you can start taking advantage of what some call ‘the eighth wonder of the world’ – Compound Interest. The rules of compounding always remain the same. The earlier you start, the better it’ll work for you. For a detailed explanation of the benefits of compounding, our Senior Investment Director Julian Strauss provides a fantastic overview here.
Chapter Two - Become the insider: Know the rules before you get in the game
The hard truth is, as with most things in life, achieving financial freedom takes work. In the financial world the hard work is not necessarily achieved by working up a sweat. It is more by educating yourself, learning about yourself, learning to control your emotions, and executing on your learnings.
Warren Buffett developed a concept early in life of making sure he went to bed each night, smarter than the night before. To do this, he developed a habit of reading, on average 5-6 hours a day, and this helped him develop philosophies on life and money which contributed to his success.
In this chapter of Money Master the Game, Tony outlines several financial myths that prohibit people reaching their financial goals. The range of myths include falsely held beliefs or lack of knowledge on performance, returns and charges.
I believe the most important myth addressed in the chapter is the promise you might hear from certain financial experts such as, “we can select the right funds that will outperform the market.” The harsh reality (as Tony explains) is 96% of actively managed mutual funds fail to beat the market over any sustained period. In addition to this, not only is it folly to believe an adviser that assures you of this, but the higher charges also attached to actively managed funds often eradicate any potential gains even further. This is why, if you’re ever being sold to by a Financial Adviser purely on the performance of their investments, you should think twice.
Top Tip from Chapter Two
Knowledge is power, and what is clear in this chapter is the more knowledge and information you gain, the better chance you have of succeeding in two areas:
- The potential of avoiding certain financial traps that are all around us.
- The importance of developing the right strategy, psychology and emotional tools that will affect your financial wellbeing.
Chapter Three - What is the price of your dreams?
Chapter three is clearly Tony’s wheelhouse. It’s all about goals, and strategy. Whilst this might seem a little fluffy for some people, it is covering two foundational questions that we regularly ask individuals to consider in ourFinancial Education presentations:
- What is the cost of your current lifestyle?
- What would be the cost of your perfect future lifestyle?
Once you understand the answer to both questions, you can then understand what steps you need to make to reach the cost of your perfect future lifestyle.
Tony provides a range of practical considerations individuals should consider to reach their goals such as:
- You are the creator of your life, not the manager
- Calculate how much money you need to save to reach your goals
- Where can I make gains in areas such as savings, growth, charges, reduction in expenses or tax etc.
- Make a plan and stick to it
- Take massive and effective action
Top Tips from Chapter Three
The key to this chapter is in the title. What is the price of your dreams? It’s important to consider, at some level, there is typically some level of sacrifice you will need to make to reach your objectives. The bigger your dreams, the bigger the sacrifices. So, for example, if there are certain sacrifices you can make today in your everyday lifestyle that would bring certainty to your future goals, would you be willing to make them?
This is not always as easy as you may think because there should also be an understanding that, whilst we need to plan, there is never a guarantee that tomorrow will ever come. So the trick is hitting the sweet spot of enjoying today but preparing for the future.
Chapter Four - Make the most important investment decision of your life
In this chapter Tony explains the importance of diversification and the different asset classes that are available to invest in. Asset classes would include Equities, Property, Fixed Interest Securities, and cash deposits. Each asset class naturally have different levels of risks, and pros and cons to consider. The ability to diversify your investments consistently to your personal attitude to risk is of great benefit. Tony suggests doing this by developing the concept of having different risk buckets for different objectives, however, even for myself as a qualified financial adviser who loves segregating my money for different purposes, I personally find this a little complex and the book strays away from the key message.
The key message to understand is ‘diversification and asset allocation’ are your friend. Once you understand what level of risk you can mentally sustain, and have the financial capacity to sustain, you can then invest accordingly.
For most people, one of the most effective ways to diversify your investments is via collective investments. These are pooled investments which provide the opportunity to invest in a range of areas and spread the risk consistently with your attitude to risk. In the UK, most individuals are now automatically enrolled into a workplace pension. These typically provide a range of collective investment funds for individuals to select.
I’m pleased to see in this book that Tony addresses a key concept of investing called pound cost averaging. Pound Cost Averaging is the concept of making regular contributions to your investments to smooth out market volatility. By making regular contributions you naturally purchase fewer units when prices are high and more units when prices are low.
Top Tips from Chapter Four
The lessons of this chapter of Money Master the Game are clear. Developing a better understanding of two areas of investment can dramatically increase your potential of future financial success:
- Diversify your investments
- Pound cost averaging
Chapter Five - Upside the downside
In Money Master the Game, one financial expert Tony seeks contributions from is Ray Dalio of Bridgewater Associates (Founder of one of the world’s most successful hedge funds).
Between the years of 1974-2013, the Bridgewater All weather Fund, with a philosophy of high safety and low volatility provided average annual returns of 10%. The fund set out to achieve this gain through diversification, paying special attention to the asset allocation of the fund, to counter perform each other in differing economic climates.
Historically, there was much commentary on how Ray Dalio achieved these returns in varying economic climates and Ray has also been quite secretive in the underlying investment strategy.
However, when asked by Tony what an all-weather portfolio would look like for the reader, for the first time ever Ray Dalio discloses his suggested asset allocations. In addition, Ray suggests a process called ‘rebalancing’ to ensure the allocations regularly maintain these ratios.
Top Tips from Chapter Five
The asset allocation ratios of your portfolio are important (in line with your attitude to risk). Although it doesn’t cover this in the book, seeking independent financial advice from an expert to help you with this process can be helpful. And a process of regular rebalancing will help to smooth returns, and ensure your portfolio remains consistent with your attitude to risk.
Chapter Six - Invest like the .001%
For anyone who has followed Tony Robbins work will know Tony is a massive advocate of modelling. Modelling works along the concept of ‘success leaves clues’ and therefore, if you want to achieve success in any area, you should research those who have gone before you and been successful in those areas, and where possible, copy their behaviours.
In this chapter Tony seeks contributions from the following financial experts:
Top Tips from Chapter Six
Success leaves clues. For most people, it would be unrealistic to assume that you will go onto achieve the level of wealth of any of the financial experts that Tony has interviewed. However, knowledge is power. The main lesson the reader can learn from this chapter is:
the more you dedicate yourself to learning and understanding the philosophies and skills of individuals that have already achieved great success in investing, the more potential you will have in achieving a level of success for yourself.
This does not mean adopting every single behaviour and philosophy of every expert, but more developing a foundation of knowledge to formulate your own beliefs and practises that work for you.
Chapter Seven - Just do it, enjoy it, and share it!
All the knowledge in the world in any area is fundamentally useless if you do not execute on any of your learnings. However, to achieve most things in life, the purpose may seem somewhat vacuous without a solid reason behind why you should adopt certain behaviours.
The final chapter in Money Master the Game encourages the reader to think on a deeper level behind the purpose of money, and the benefit it can provide to individuals. The adage that money doesn’t bring happiness is not completely true. Money can absolutely contribute to an individual’s happiness provided it is used in the right way. For example, when individuals focus their spending on experiences as opposed to material items, this is scientifically proven to provide long-term happiness. In addition, money can potentially buy individuals more time to do the things they want to do to have those experiences. The chapter also asks the reader to reflect on a more altruistic level of what benefit they can create for others with their money. It’s been shown that spending money on others increases happiness more than spending it on yourself.
Top Tip from Chapter Seven
Whilst not directly referencing the concept, the chapter effectively draws on Simon Sinek’s book Start with Why in getting us to develop a solid ‘why’ behind why we want to be wealthy. Ultimately, without this level of clarity it will be difficult to achieve the level of success you desire. Once you have a solid ‘why’ resolve yourself to do everything in your power to achieve your goals.
The Title Says it All
Overall, I found this book to be very well rounded and comprehensive. It covers many of the concepts a person should understand to navigate their finances. Plus, it utilises the expertise of multiple people who have been successful when it comes to managing and building their wealth.
You won’t find get rich quick schemes, or far fetch techniques and ideas to manage, maintain and/or build wealth. It is a clear explanation of the things you need to understand and the basic rules you should know to master the game of money.
Article by Dave Sykes
Director, Employee Benefits Consultant & Financial Adviser
