- Step #1: Make the most important financial decision of your life.
- Step #2: Learn the rules of investing.
- Step #3: Play to Win
- Step #4: Make the most important investment decision of your life.
- Step #5: Create a life annuity plan
- Step #6: Invest as 0.001%: the multimillionaire’s manual
- Step #7: Do, enjoy and share!
To write this book (MONEY MASTER THE GAME: 7 Simple Steps to Financial Freedom) Tony Robbins has interviewed 50 of the best stock market investors, Ray Dalio, Warren Buffett, David Swensen, John C. Bogle… with the aim of putting within reach of the common of mortals, the tools and wisdom with which they invest the richest 0.001% of the population.
“We are already financial traders. We may not see it that way, but if we work for a living we are trading with our time, which we sell for money. And, frankly, it’s the worst exchange we can do. Why? Because we can always make more money, but not more time.”
Although it is an extensive book of more than 700 pages, its reading is easy and enjoyable.
These are, according to Tony Robbins, the 7 steps towards financial freedom:
Step #1: Make the most important financial decision of your life.
You must make a very important decision in your life: become an investor and not just a consumer.
Therefore, you must commit to save and invest a percentage of your income and capitalize interest.
Decide how much you are going to spend each month to build your “freedom fund” and automate this process.
Step #2: Learn the rules of investing.
Before you start investing you should know the rules of the game. Your level of wealth will grow as much as your financial education, so the first investment must be in yourself.
Think of all those people who win the lottery and at the age of 5 are ruined, or all those bullfighters who have left the ring and had to return to pay their debts.
Establish the habit of reading about finances, learn how to administer and manage your money, keep track of expenses, prepare a budget …
If you decide to hire a financial product, always read the fine print and assess the risks, if you do not want to do this job seek a good financial advisor to do it for you. Avoid smoke sellers, who offer you exorbitant profits.
It also dismantles our erroneous beliefs about money.
Step #3: Play to Win
Here, Tony Robbins teaches us to calculate the amount of money we need to achieve financial freedom.
He explains that until we reach “total financial freedom” there are 5 intermediate levels, and we have to decide which one we want to reach, because perhaps not everyone wants to let work.
He tells how throughout his career he has met many people who believed that in order to achieve financial independence they needed an unattainable figure and after a detailed analysis of each one’s needs or dreams, he shows that they did not need as much money as they thought.
Decide what level you want to reach and calculate how much money you would need. These are the different levels.
The first level is financial security. We would reach this level when we obtain a “critical mass” of capital that invested at an interest rate produces a constant monthly income that allows us to cover our basic expenses (mortgage, transportation, supplies, insurance, food).
Financial vitality, when in addition to covering our basic needs we can pay 50% of our leisure expenses (cinema, travel, clothing, …).
We achieve financial independence when our passive income is sufficient to cover our current lifestyle, without having to work unless you choose.
Financial freedom, our income allows us to live the lifestyle we desire. Tony Robbins says that many people think about buying a yacht, when renting it for as long as they are going to use it would be much cheaper.
Finally, we achieve absolute financial freedom, when you have money to cover any expense without having to work.
Step #4: Make the most important investment decision of your life.
Decide where to put the money and in what proportion, to limit losses and increase profits.
“The best way to diversify is to invest in an index, because they don’t charge us so many commissions”.
An example of diversification is the All Season (Ray Dalio) portfolio formed by: 30% in stocks, 15% in medium-term government bonds (7 to 10 years), 40% in long-term government bonds (20 to 25 years), 7.5% in commodities and 7.5% in gold.
Step #5: Create a life annuity plan
Your goal should be to accumulate capital and “collect” assets that produce a constant monthly income to meet your needs.
Step #6: Invest as 0.001%: the multimillionaire’s manual
The best way to achieve something, the quickest way, is to look for someone who has already achieved what we want and follow in their footsteps.
In this chapter you will find interviews with David Swensen, Warren Buffett, Sir John Templeton, Ray Dalio, …
“Rule number one: never lose money.
Rule no. 2: Don’t forget rule no. 1.”
Live an abundant life and fulfill your dreams.
It is a good book that makes you think and reflect, those who resonate within you.
Whether you want to get rich or you want to have a secure retirement, in this book you will find tools to save, you will learn to build a wallet and make the money work for you, dismantle limiting beliefs, in short, learn the game of money.
Knowledge is power and even more financial knowledge.[ratings]