I recently finished 21 hours of a neat audiobook, Tony Robbins’ latest work.
This was a great reminder and summary of most of the books I’ve read about money and prosperity.
In fact, if I could only give my younger self a single book, it would be this one. The dry financial information is nicely sandwiched between abundance, gratitude, and positive thinking.
This book could give you a “paradigm shift” toward accumulating wealth if you get through it with an open mind.
Here is a summary of the key points: “the 7 simple steps to financial freedom”:
Step 1. “Make the most important financial decisions of your life.”
“Live beneath your means. Make more, invest the difference. Pay yourself first.” The whole idea here is to get the most powerful tool any of us have working ASAP.
Here is how.
Automate saving: get 10%, 20%, even 50% – as much as you possibly can – AUTOMATICALLY withheld from your income and save it in a place you can’t easily access.
Compounded interest is VERY powerful, so you must make use of it.
Another automatic strategy that is useful is dollar cost averaging, to be combined with step #4.
Finally, become tax efficient – while “reading” this book, I spoke with my friend and investment partner Mel. He told me a recommendation he heard that people should spend 15% of their time tax planning. You have to pay taxes, but you don’t have to leave a tip.
Taxes are likely to increase in the future. Especially because your income is likely to increase in the future, not decrease. Instruments like a registered retirement savings plan will likely be a disservice to you.
Step 2. “Get educated.”
You need to know the rules of the game to win.
When a man with experience meets a man with money, the man with the experience gets the money, and the man with the money gets experience.
Tony speaks about his mentor Jim Rohn and a goldmine of advice:
Learn to work harder on yourself than you do on your job. Earn more by becoming more valuable. Become more valuable by adding more value to other people’s lives.
This book covers the financial world in detail, and much is applicable to Canada if you substitute the following words:
USA 401K = Canada RRSP
USA Roth IRA = Canada TFSA
At the very least, after reading this section you will get a working knowledge of the
financial industry casino, and be better able to spot gambles with the highest odds, if you choose to continue participating in “the game”.
Step 3. Set goals.
Fail to plan and you plan to fail.
Spend time figuring what you want and what it will cost(it will likely be much less than you think you need).
Ideas to stretch your dollars further:
– move to cheaper places
– purchase investments that produce an income stream and then rent rather than spend capital on large purchases(vacation home, fancy vehicles, etc).
– Tony speak at length about the benefits of renting a private jet over owning one… very applicable to me 😉
4. Asset allocation.
This step is “the most important investment principal”, but 90% of North Americans have no idea what this is. Investments fit into buckets: dream bucket, risk/growth bucket, security bucket.
The “all weather portfolio” has the following percentage of assets allocation:
30% stock ie. s&p 500 or other index
15% intermediate term gov bonds ie. 7-10yr treasuries
40% long term gov bonds ie. 20-25yr treasuries (all these bonds counter the risk of the stock indexes)
If you use this asset mix you must rebalance at least annually.
5. Upside without downside.
This step is about some products and strategies Tony endorses. Here are some examples:
Fees will kill you, portfolio managers fees will decimate your long-term investments. Most Mutual funds are bad because of high fees, plus managers consistently beating the market is statically impossible. “Financial advisors” are frequently commission based brokers.
Brokers are butchers.
Fiduciaries are great, like a dietician. They are fee based financial advisors. The advice they give may also be tax-deductible.
Some Annuities are good. Fixed annuities are great, but variable annuities are a terrible variation of this 2000-year-old product.
6. Invest like a billionaire.
No one beats the market, except some unicorns [people who don’t statistically exist: the likes of Warren Buffett].
This step is about interviews with 12 “unicorns” and how they invest.
Interesting, but perhaps less useful to middle class people like me than the rest of the book. It is interesting who a motivational speaker(for all you Tony fans, I know he is much more than that) can rub shoulders with.
7. Do it, enjoy it, share it.
The future is better than you think. Technology is increasing all our productivity, increased productivity is what grows the economy, and creates a better quality of life for everyone.
Aside: How the economy works is fascinating, here is a short video that explains it well.
Motivational quotes are scattered throughout the book, but here is one that stuck with me:
“We make a living by what we get. We make a life by what we give.” – Winston Churchill
Tony points out that true wealth is not about money: citing studies that show when people make $75,000/yr, earning more doesn’t add any happiness to life.
To increase happiness(LIFE WEALTH), money is best spent on these three things.
1. Invest in experiences: travel, courses(unleash the power within -hint hint), etc…
2. Buy time for yourself: hire out mundane tasks and use time saved to work/focus on your passions.
3. Invest in others: give your money/time/talents away.
Another principal: gratitude is a must for a wealthy and prosperous life.
Tony closes by pitching his charities and gives lots of inspiring stories in this section. It’s hard not to have hope for the future after this part of the book.
If you can look past the obvious pitching of certain financial companies/products that Tony Robbins is affiliated with, this book will infuse you with a deeper understanding of the financial world, and how to create wealth in general.
To be fair, Tony’s pitches for his courses and affiliate financial products are subtle, and this is by no means a book solely designed to sell these things. There is great value here!
Especially since I got my copy free by trying out Audible on my iPhone(you can too).
I highly recommend this book for financial beginners and as a great refresher for veterans.
You may be prompted to reevaluate your investment strategies – I know I did!
And after looking at all the investment options for my family, income producing real estate is still my #1 pick!
To find out why, you can download my 35 page PDF report here 🙂.
Until next time,