Tony Robbins’s book “Money Master the Game” was recommended to me on multiple occasions. In short, the book holds amazing information and insights and has been the most valuable book I’ve read this year. My only criticism is that Tony might be interpreted easily sidetracked because he’s used to life coaching advice (which he excels at). I recommend you buy and read the book, his background stories add to the complete picture. [button link=”#Get_the_PDF” color=”red”]Get the PDF to read it later[/button] Video intro: TL;DR: Great book, read it as well as the summary. My main takeaways:

  • Calculate how much money you need to have an income for life
  • Use low cost index funds and bonds
    • Security bucket (your age in %)
    • Risk bucket
    • Dream bucket
  • Don’t actively manage
  • Diversity, diversity, diversity
  • Invest on a set schedule and rebalance periodically
  • There are other views
  • Money is only part of the equation

Final note: this summary is far less powerful if you haven’t read the book.

Contents

How to read the summary

This summary highlights what I thought were the most important takeaways from the chapters in the book. You will find:

  1. Short paragraphs and examples per chapter
  2. TL;DR sections (Too Long Didn’t Read, meaning summary for lazy or rushed readers)
  3. A pdf at the bottom

I recommend using this summary as a reference after you read the book. You can read it as it is as well. This Money Master the Game summary based on Tony Robbins’s book is written as a reference guide for myself, not everything is in here.

Section 1: Welcome to the jungle

Chapter 1.1: It’s your money! It’s your life! Take  control!

TL;DR: Money isn’t a goal, it’s a means to an end. Most people don’t want money, they want a certain lifestyle or emotional security. You are the master of your financial and emotional success.

  • Most people in the finance world don’t practice what they preach
  • People who succeed aren’t lucky, they do things differently
  • Success leaves clues, model the people who made it
  • There are passive ways to win that beat 96%+ of active stock traders
  • The financial sector seems needlessly complex
  • You need to take control of your money

Chapter 1.2: Create an income for life

TL;DR: Our goal is to create an automatic paycheck machine using investment. You are responsible, act like it.

  • Take responsibility for your retirement
  • Tax efficiency is very important
  • 53% US households are at risk of having insufficient retirement funds
  • Complexity is the enemy of execution, make a plan and make it simple
  • Make a plan, stick to it and readjust course once or twice a year

Chapter 1.3: Make the most important financial decision of your life

TL;DR: Compound interest is more powerful than you can imagine. Start saving and investing as soon as you can. Example of 2 brothers retiring at 65

  • Brother 1
    • Starts at 20 years old
    • Saves $4000 a year for 20 years
    • Leaves the money alone for the last 25 years
    • Total of $80,000 savings
    • 10% growth a year
  • Brother 2
    • Starts at 40 years old
    • Saves $4000 a year for 25 years
    • Lets the money grow until age 65
    • Total savings of $100,000
    • 10% growth a year
  • Results
    • Brother 1: $2,500,000
    • Brother 2: $400,000

Yes, it is that powerful. Why? The interest of next year also grows your interest of this year.

  • You always find ways to spend available money
  • Make saving a personal tax (% of income), unavailable for spending no matter what
  • Use ‘start saving tomorrow’, meaning you assign 50% of income increases to saving
  • You can live off interest with far less money that you realise

Chapter 1.4: It’s time to break through

TL;DR: Humans have common factors that make then feel happy and fulfilled.

  • Whatever you are after, Tony names 6 basic human needs for success and happiness
    • Certainty/comfort
    • Uncertainty/variety
    • Significance
    • Love & connection
    • Growth
    • Contribution
  • Inspect in yourself to what extent you have which needs
  • Gratitude and giving back serve many needs

Section 2: Becoming an insider

Insider suits-min Don’t get in the game unless you know the rules.

Chapter 2.0: Shattering the 9 financial myths

TL;DR: A whole bunch of stuff you believe is wrong, most of it actually.

  • Myth 1: Invest with us! We’ll beat the market!
    • 96% of actively managed mutual funds don’t beat the market (index funds) over any sustained period of time
    • Only very few people (the ‘unicorns’) beat the market consistently, and they take only high value clients
  • Myth 2: Our fees? They are a small price to pay!
    • Average mutual fund cost: 3.17% including hidden fees

Example of fee impact

  • 3 friends
    • All invest $100,000
    • All funds perform at 7%
    • All start at 35 years old and stop at 65
  • Friend 1 (3% fees) result: $324,340
  • Friend 2 (2% fees) result: $432,194
  • Friend 3 (1% fees) result: $574,349
  • Myth 3: Our returns? What you see is what you get.
    • Time weighed “average” return is deceptive
      • Imagine the return going up 50% and down 50% every year. Average 0% return. But you lose money
    • The dollar weighed return is what you need
      • You invest spread out over a year, and thus step in at different points
  • Myth 4: I’m your broker and I’m here to help
    • 96% of actively managed mutual funds don’t beat the market (index funds)
    • A broker means paying extra fees for lower performance
    • 49% of managers own no shares in the fund they manage
    • Brokers get paid affiliate fees for financial products
    • Fiduciaries on the other hand are paid by you, so don’t have ulterior motives
    • 46% of financial planners have no retirement plan
    • The difference between brokers and fiduciaries in a video
  • Myth 5: Your retirement is just a 401(k) away
    • 401(k) is an American construct. Inapplicable for me.
    • Many 401(k)’s are very high in fees, see myth 2
    • Ask your employer to switch to a better 401(k)
  • Myth 6: Target-date funds: “Just set it and forget it”
    • Target date funds automatically become more conservative as you approach retirement
    • TDF’s are based on assumptions about predictability that may very well be wrong
    • TDF’s are basically managed funds, no guarantee at all
  • Myth 7: I hate annuities, and you should too
    • These are basically ‘income insurance’. You pay now to get money back at a fixed rate later.
    • The concept is great, but they are often abused (high fees, bad terms etc)
    • Variable annuities are bad
    • Jack Bogle likes annuities, if they are done right
    • Always check the details, better yet let an expert look at them
  • Myth 8: You gotta take huge risks to get big rewards
    • Big money looks for asymmetric risk/reward
    • Example of Nickles: US nickles are worth more as melted metal than as coins. Kyle Bass bought $1 million in nickles. He had a 25% gain in value the second he bought them. And if the metal price drops, he has 100% of his initial investment.
    • It is possible to have reward with low risk. People with money know this and use it.
  • Myth 9: The lies we tell ourselves
    • Our biggest limits are not external but self imposed
    • Cultivate a breakthrough moment where the impossible feels possible
      • Find a proven strategy that works for you
      • Tell yourself the right story, psychology is important in getting results
        • Example: “I have dyslexia so I can’t study well” vs “I have dyslexia meaning I take more time studying and thus remember it better”
        • Example: two groups of people feel stress. Those who believe it is harmful experience issues biologically, those who see it as a performance booster get no side effects. (Mentor’s  note: yup, proven science)
      • Put yourself in the right state to achieve success
        • Change your body before your mind (easier to measure thus more motivation)

Section 3: What is the price of your dreams?

Notebook

Chapter 3.1: Make the game winnable

TL;DR: Create a concrete picture of how much money you need

  • Pick three financial dream levels that matter to you, a short, medium and long term goal
    • Write down the among of money per year you need to achieve them
      • Monthly x 12 = yearly
  • There are 5 levels of financial dreams
    • Financial security: you can survive without working
      • Mortgage, utilities, food, transportation, insurance
    • Financial vitality: you can survive and indulge a little
      • Half of: clothing cost, dining & entertainment, small indulgences. Add your financial security to this.
    • Financial independence: you don’t need to work to have your current lifestyle
      • Calculate your current yearly costs to live
    • Financial freedom: independence plus 2 or 3 extra luxuries
      • These luxuries you don’t have to work for either. Think a boat, condo in a ski resort etc.
    • Absolute financial freedom: you can do whatever you want, whenever you want, within reason.
  • You are the creator of your life, not the manager
  • Tony’s 3 step process
    • Unleash your hunger and desire, and awaken laser like focus
    • Take massive and effective action
    • Grace (luck, coincidence, god’s hand)
      • Tony with this means a state of gratitude and trust that eliminates fear and insecurities
  • Calculate how much money you need to save
    • Assuming 5% interest you need 20 times your yearly target income
    • Assuming 10% interest you need 10 times your yearly target income
    • Interest x multiplier = 100
      • So if you assume 2.5% interest you need 40 times your target income

Chapter 3.2: What’s your plan?

TL;DR: make a goal and stick to it.

  • Whatever your goal is, you need to make a plan and stick to it
  • It’s not about having the most money, it’s about knowing how much you need
  • Life is not a competition. It doesn’t matter where you start, it matters where you draw the finish line and that you reach it
  • Save more strategies
    • Save more and invest the difference
      • Rate recurring expenses from 0 pleasure to 10 pleasure
      • Invest in yourself also
    • Earn more and invest the difference
      • There are always ways to make money
    • Reduce fees and taxes
    • Get better returns
    • Change your life and lifestyle for the better
      • You can save a lot of money by moving or changing habits, whilst increasing life quality

Section 4: The most important investment decision of your life

Trees growing-min

Chapter 4.1: Asset allocation

TL;DR: Asset allocation is the single most important thing

  • Asset allocation is what keeps you wealthy over time
  • Divide your investments over asset classes
    • Bonds, stocks, real estate etc
  • Diversity across risk, make 3 buckets
    • Security/peace of mind bucket
      • Cash, cash equivalents, bonds, certificates of deposit, home, pension, annuities, life insurance, structured notes,
    • Risk/growth bucket
    • Dream bucket

Chapter 4.2: The risk bucket

TL;DR: Separate risk from security

  • Be willing to lose most or all of this
  • Asset classes
    • Equities, equity etf, high yield bonds, real estate, commodities, currencies, collectibles, structured  notes
  • Diversify. When indoubt, diversity. On second thought, diversity.
  • Diversity across classes, markets and across time
  • Index funds are diverse by nature
  • Want to day trade? Use a small portion of the risk bucket
  • Determine the sizes of the buckets
    • based on age, risk tolerance and liquidity
    • 70% risk bucket is very aggressive
    • Rule of thumb, invest your age in bonds (portion of security bucket)

Chapter 4.3: The dream bucket

TL;DR: Save for treats.

  • For strategic splurges, enjoy your wealth along the way
  • How to fill it
    • Unexpected big scores
    • Risk/growth gets a positive hit
    • Set percentage of income

Chapter 4.4: Timing is everything?

TL;DR: Don’t try to time markets. Use dollar cost averaging.

  • You can never predict a market, only estimate. Don’t bet on entry points
  • If you think you can time the markets, you are wrong
  • Use dollar cost averaging (diversifying across time)
    • Invest on a set schedule on a set plan

Example of dollar cost averaging

  • Index fund 1
    • Invest $1000/year ($5000 total)
    • Year 1: $100/share
    • Year 2: $60/share
    • Year 3: $60/share
    • Year 4: $140/share
    • Year 5: $100/share
  • Index fund 2
    • Invest $1000/year ($5000 total)
    • Year 1: $100/share
    • Year 2: $110/share
    • Year 3: $120/share
    • Year 4: $130/share
    • Year 5: $140/share
  • Intuition: index 2 is better. Reality: dollar cost averaging over a volatile market can be very good
    • Results index 1: $6048
    • Results index 2: $5915
  • If the market dips, your shares get cheaper

 

  • Balance your portfolio 1 or twice a year to keep your security/risk bucket percentages stable
  • Use tax-loss harvesting

Section 5: Upside without the downside

Balance risk reward-min

Chapter 5.1: The all seasons strategy

TL;DR: A historically stable portfolio.

  • Ray Dalio’s recommendation
    • 10% returns anually between 1974 – 2013
    • High safety and low volatility
  • The 1% of the 1% invest with Ray Dalio
  • Stock is 3x more risky than bonds, a 50/50 portfolio in stocks and bonds means you have a vast majority of your risk in the stocks
  • The portfolio is optimized to withstand the 4 seasons
    • The combo’s of inflation, deflation, rising economic growth and falling economic growth

The all seasons portfolio

  • 7.5% in gold
  • 7.5% in commodities
  • 30% in stocks
  • 15% in intermediate US bonds
  • 40% in long term US bonds
  • Portfolio must be readjusted to maintain these ratios

Chapter 5.2: It’s time to thrive

  • Shows how well the all seasons portfolio does
  • If you lose 50% of your money, you need 100% gain to get back up
  • Recommends stronghold financial to look at your broker/401(k) for free

Chapter 5.3: Creating your life income plan

  • The end game of investing is income
  • Average returns is a deceptive statistic
  • Annuities can be great secure income generators

Chapter 5.4: Time to win

TL;DR: Annuities can be good if you take the right ones.

  • Immediate annuities
    • For starting at a late age
    • Pay a bunch of money now and get income
    • The company bets that more people die than live to cash in
  • Deferred annuities
    • Fixed annuity: Independent of the market. You know what you will get
    • Indexed annuity: Get paid a bit more if that market does well, but lose nothing (and gain nothing) if it doesn’t
    • Hybrid/fixed indexed annuity: Get the benefits of both of the above (Tony likes, upside no downside)
    • Variable annuities: avoid.
  • The longer you wait the more you get

Chapter 5.5: Secrets of the ultra wealthy

TL;DR: US tax benefits.

  • All US based tactics
  • Private placement life insurance
  • Living revocable trust

Section 6: Invest like the 0.001%

Dollar bill-min TL;DR: The strategies and views of very wealthy people. They all love giving away money.

Chapter 6.0: Meet the masters

  • Tony talks about the people he interviewed
  • Common obsessions/focus he found
    • Don’t lose money
    • Risk a little, and make a lot
    • Anticipate and diversify
    • You’re never done (learning, earning, growing etc)

Chapter 6.1: Carl Icahn

  • Came from nothing, made his fortune
  • Activist investor
    • Improves companies by replacing management with good people

Chapter 6.2: David Swensen

  • Yale’s chief investment officer
  • Mutual find performance is even worse than it seems because it only includes surviving companies
  • Don’t just chase historically well performing things
  • Three levers you can push as an investor
    • Asset allocation
    • Market timing
    • Security selection
  • Likes index funds, it’s easy diversification
    • Also diversify across funds
  • Equities are at the core for long term portfolios
  • Use different types of securities

Chapter 6.3: John Bogle

  • Creator of the index fund and the Vanguard group
  • Started working at age 9 delivering newspapers
  • There is no such thing as a permanently good investment manager, it’s 95% luck 5% skill
  • Loved low cost index funds, obviously
  • Chances of  a worldwide depression maybe 1 in 10
  • Three  core principles
    • Asset allocation based on your risk tolerance and goals
    • Diversify through low cost index funds
    • Have as much in bonds as  your age (crude  benchmark)

Chapter 6.4: Warren Buffet

  • Tony and Warren talked briefly by chance
  • “I’d love to help, but have said everything there is to say”
  • 10% in government bonds and 90% in a very low cost S&P 500 index fund

Chapter 6.5: Paul Tudor Jones

  • Robin hood foundation
  • 28 consecutive lossless years
  • Risk control is the single most important focus every day
  • Two things to remember
    • Be with what the predominant trend is
    • Five to one ratio of asymmetric risk/reward
  • Bases his decisions on the 200 day moving average

Chapter 6.6: Ray Dalio

  • Founder Bridgewater Associates
  • He’s covered earlier

Copy for convenience: the all seasons portfolio

  • 7.5% in gold
  • 7.5% in commodities
  • 30% in stocks
  • 15% in intermediate US bonds
  • 40% in long term US bonds
  • Portfolio must be readjusted to maintain these ratios

Chapter 6.7: Mary Callahan Erdoes

  • CEO JP Morgan asset management division
  • Since she took over the division it grew more than half a trillion
  • Money business is about results, as a woman it is great
  • There is no one size  fits all
  • Active management works if the trader is good
  • Invest for the long term and only take money out if you really need it

Chapter 6.8: T. Boone Pickens

  • CEO BP Capital Management
  • Shareholder activist (corporate raider)
  • Willing to take big risks for big rewards
  • Have a good work ethic
  • Get a good education
  • Virtually all assets in energy

Chapter 6.9: Kyle Bass

  • Founder Hayman Capital management
  • Was a springboard/block diver (Mentor’s note: approval)
  • Predicted housing crash and made money on it
  • Uses asymmetrical risk and reward
  • Buy a whole load of nickles if you can

Chapter 6.10: Marc faber

  • Publisher of Gloom, Bloom & Doom
  • In the investment world, everything is a lie
  • Emerging world is risky, US too stagnant
  • His portfolio for the climate of 2013 (roughly)
    • 30% bonds and cash
    • 20% stocks
    • 30% real estate
    • 25% gold
    • He realizes this is above 100%, it’s a guesstimate
  • Traditionally holds emerging market bonds
  • Most important: it’s not important what you buy, but what price you buy it at
  • Be careful not to buy things at a high price

Chapter 6.11: Charles Schwab

  • Charles Schwab Foundation
  • Trying to make products for the customer
  • 98% of people should use low cost index funds
  • Asset allocation is the single most important desicion you make
  • Advice to his kids and grandkids
    • Get the right education
    • Get a well paying job
    • Put money in your IRA/401(k)
    • Then start ‘proper’ investing

Chapter 6.12: Sit John Templeton

  • Founder Templeton Mutual Funds
  • There is no disparity between spirituality/ethics and business
  • You don’t want to be your own doctor, you don’t want to be your own investment manager
  • Invests in anything he thinks will turn a profit
  • Only sell an asset if you find an asset that is a 50% better bargain
  • Don’t be a go getter be a go giver

Section 7: Just do it, enjoy it and share it

TL;DR: Money is only one part of the equation.

Chapter 7.1: the future is brighter than you think

  • Technology is awesome
    • It will decrease cost of living
    • It will increase life span
  • Technology develops exponentially
  • Basically a chapter about technological awesomeness

Chapter 7.2: The wealth of passion

  • Everyone wants to be happy
  • Success without fulfillment is the ultimate failure
  • Change your life in 3 decisions
    • What will you focus on
    • What does this mean
    • What am I going to do
  • Use priming, Tony does it every morning

Chapter 7.3: the final secret

  • Money can increase hapiness if used right
    • Invest in experiences
    • Buy time for yourself (outsource)
    • Invest in others
  • It’s been shown that spending money on others increases happiness more than spending it on yourself
    • Especially when you experience the result together
  • Focus on being grateful, forgiving and compassionate
  • The secret to living is giving

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8 Comments

  • Thanks this is great! Annoyingly I lost interest in the book within the first few pages, so it’s great to have your summary to hand 🙂

    • Glad you like it!

      I was afraid many people would feel that way about the book, Tony is great and so is his research, but he has a tendency to write as if speaking to an audience. Works for some, not for others 🙂

  • Hi Mentor,

    I’m enjoying the book, thanks for the recommendation. I’m curious though, the book is targeted to the american public (with all the 401 and stuff), have you done research on good similar strategies to use in Europe?

  • I wonder who recommended you this book!
    All kidding a side, a great summary and I’ll deffinitly (partially due to certain obligations) finish this book in the common month.
    I’ve been using the bullet points for summaries and articles as well and I think they are a great way to keep things clear and organized.

    Looking forward to your next post!

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