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1-Page Summary of Money Master The Game
Overview
Tony Robbins is a life coach, and in his book he outlines seven steps you can take to invest your money wisely.
A lot of people in the United States do not have any kind of financial plan. In order to achieve financial freedom, they need to invest a portion of their income into stocks and bonds. However, many Americans are skeptical about investing because they don’t trust the stock market or think that they don’t make enough money to afford it.
The first step to financial freedom is shifting from being a consumer to an owner. One must take control of their own finances by figuring out how much money they can afford to commit to investments and then automating the process so that it’s difficult for them not to invest regularly. Also, one should increase their investment payments when they get raises at work.
To become financially free, a person must recognize the nine myths of investing. Myth #1 is that mutual funds or stocks are always the best place for investment capital. However, they don’t always perform as promised and sometimes fall in price. The best place to put your money is a diversified S&P 500 index fund instead of just one stock or mutual fund with similar stocks.
Investing is a very important part of life. Many people are not aware that mutual funds charge fees and these fees can reduce the value of their investment over time, or even cause them to lose money.
The third myth of investing is that time weighted funds are not all they seem. It’s assumed that the amount of money invested in a fund stays the same throughout its lifetime, but many investors invest a small amount each month, which lowers their final investment principal.
The fourth myth of investing is that investment advisors are essential to smart investing. However, stock brokers and fund managers often have a conflict of interest because they’re paid to sell products rather than look after the best interests of their clients. Therefore, it’s better to seek out a fiduciary who has no conflicts and can advise you objectively.
Investors should not always invest in the most popular options when investing their 401(k) retirement funds. They should do research to find out which investments are best for them and ensure they are invested in the lowest cost index funds.
One myth about investing is that target-date funds are the best way to invest. However, these TDFs usually fall over time and leave investors with less money than anticipated at maturity of the fund.
The eighth myth of investing is that you have to take huge risks in order to achieve great rewards. This isn’t true because there are many investments with good returns and low risk.
The last myth of investing is based on fear. Many people are afraid to invest because they’re worried about their financial security. People need to change their attitude towards investing in order to be successful.
Once an investor understands the nine myths of investing, they can move on to step three and begin to work toward financial freedom. To do this, investors must identify their needs for certainty/comfort, uncertainty/variety, significance, love and connection, growth and contribution. They should also define which need is most important to them: certainty or variety? After that comes identifying their dreams or aspirations for the future; these become goals that will help them achieve financial freedom. Finally they have to break up those goals into small steps with achievable milestones so they can reach their ultimate goal of achieving financial freedom.
The fourth step is to decide where an investor wants to invest their money. Asset allocation involves choosing between stocks, mutual funds, and index funds in order to diversify the risk of a portfolio. Robbins believes that investors should choose a diverse portfolio and balance their risk by deciding how much they want to take on and when they need the money back.
