Book Review: Money – Master the Game

Tony Robbins has created a nice little handbook for personal financial planning as it pertains to traditional advice offered by the financial industrial complex. He pairs this with his traditional advice on changing your mindset, state, and life. If you’re thinking solely about investing in public stocks, then his advice covers the bases. Very similar to this cue card that describes all the financial advice you’ll ever need on a single page – which is coincidentally, very similar to my post on personal finance 101… aka ‘get your shit together’:

But he simplifies it and reinforces it over a few hundred pages, providing some great tactical advice on how to think about investing, and how to execute on a plan. As Tony is apt to say, complexity is the enemy of execution, so the intent of the material is to strip out complexity and keep it focused on action.

So what are the keys to personal financial planning?

First, you need to commit to saving money and figure out a plan to make it happen. This starts with basic budgeting, but he expands on it, reminding us that there are a number of ways to increase the amount you have left at the end of the month. Specifically:

  • Reduce your costs of living – this is the standard advice provided from most financial planners (Mr Money Moustache is a good resource for this), but the key angle Tony adds is the psychological component. The best way to reduce cost is to cut out the items from your life that really add limited pleasure… don’t cut out the things you love most. Assess where you’re spending money and determine if you’re blowing dollars on certain things that really aren’t in line with you life philosophy or bringing you that much pleasure
  • Increase your earnings – this is the most important lever for most people. If you’re making $30K a year, there’s no way you’re going to save your way to a comfortable retirement. You need to make more. But how does one make more? How does one acquire more value or wealth? You do it by providing enough value and wealth to other people – it’s really simple when you think about it. In order to get more you need to give more. In order to give more, you need to expand your skills and abilities. Invest in yourself. Start thinking big and figure out a way to start providing massive value to other people.

Second, he suggests considering the lifestyle you actually need to be financially secure or financially free. Often times it’s a lot less than we think it is. Ever consider moving somewhere else in the country? It might not be your preference, but there can be big savings by living in different parts of the country or the world, with potentially great lifestyle benefits as well.

Finally, once you have a sound savings plan in place, and know how much passive income you need to be comfortable, you should develop a simple investment strategy that involves the following tenets:

  • Minimize fees by investing in low fee index funds
  • Diversify your portfolio across a mix of equities (in low fee index funds)
  • Invest consistently in up and down markets – remove ‘timing’ and your emotions from the equation
  • Rebalance your portfolio to protect yourself from psychological errors
  • Ruthlessly minimize taxes by utilizing tax-advantaged savings vehicles, and reducing the amount of trading / capital gains incurred (again, by purchasing low fee index funds!)

He goes into other more exotic options for retirement (annuities, life insurance), but those are getting too fancy for most, and frankly may have other risks that are potentially hidden. Also, he spends a bunch of time talking about portfolio allocation with Ray Dalio. While I’m a fan of Ray Dalio, I wouldn’t advise following his portfolio construction – he literally has an overweight of bonds in the portfolio, which is not only lower long term returns, but is highly sensitive to inflation! If you know me, you know how much I dislike bonds.

The key with investing is to trim the sails from taxes and fees as much as possible, rebalance regularly, and automate the entire process to protect you from yourself. Don’t try and pick individual stocks – you’ll get killed by professionals who are extremely bright and do it 14 hours a day every day of the week. Our psychology results in us making the wrong moves at exactly the wrong time, so the only way we can win at this game is by not playing.

With some simple, modest goals, most investors can make their money work for them and reach Ramen Retirement.


Sounds a lot like Ramen Retirement:

How would you live your life if you could wake up each day knowing there was enough money coming in to cover not only your basic needs but also your goals and dreams? The truth is, a lot of us would keep working, because that’s the way we’re wired. But we’d do it from a place of joy and abundance. Our work would continue, but the rat race would end. We’d work because we want to, not because we have to. That’s financial freedom.

On creating wealth:

The secret to wealth is simple: Find a way to do more for others than anyone else does. Become more valuable. Do more. Give more. Be more. Serve more. And you will have the opportunity to earn more—whether you own the best food truck in Austin, Texas, or you’re the top salesperson at your company or even the founder of Instagram.

“What’s the secret to economic success? The key,” he said, “is to understand how to become more valuable in the marketplace. “To have more, you simply have to become more. “Don’t wish it was easier; wish you were better. “For things to change, you have to change. “For things to get better, you have to get better! “We get paid for bringing value to the marketplace. It takes time . . . but we don’t get paid for time, we get paid for value. America is unique. It’s a ladder to climb. It starts down here, at what? About $2.30 an hour. What was the top income last year? The guy who runs Disney—$52 million! Would a company pay somebody $52 million a year? The answer is: of course! If you help a company make a billion dollars, would they pay you $52 million? Of course! It’s chicken feed! It’s not that much money.

On the futility of trying to beat the pros at investing:

He got right to the point, telling me that individual investors like you can win—but only if you don’t try to beat the pros at their own game. “What they gotta know, Tony, is you can win,” he said. “But you can’t do it by trying to beat the system. You don’t want to try. I have fifteen hundred employees and forty years of experience, and it’s a tough game for me. This is poker with the best poker players on earth.”

Looking for asymmetric risk and reward:

Whether it’s the world’s top hedge fund traders like Ray Dalio and Paul Tudor Jones or entrepreneurs like Salesforce founder Marc Benioff and Richard Branson of Virgin, without exception, these billionaire insiders look for opportunities that provide asymmetric risk/reward. This is a fancy way of saying that the reward is drastically disproportionate to the risk.

On changing your state to change your life – Classic Tony:

I teach many ways to create immediate change in your state, but one of the simplest ways is to change what I call your physiology. You can change the way you think by changing the way you move and breathe. Emotion is created by motion. Massive action is the cure to all fear. Think about it, fear is physical. You feel it in your mouth, in your body, in your stomach. So is courage, and you can move from one to another in a matter of milliseconds if you learn to make radical shifts in the way you move, breathe, speak, and use your physical body. I’ve used these insights for almost four decades to turn around some of the world’s greatest peak-performance athletes, financial traders, and business and political leaders. Last year, Harvard University did a scientific study that proved the validity of this approach.

Investment rules:

1. Don’t Lose. All of these masters, while driven to deliver extraordinary returns, are even more obsessed with making sure they don’t lose money. Even the world’s greatest hedge fund managers, who you’d think would be comfortable taking huge risks, are actually laser focused on protecting their downside. From Ray Dalio to Kyle Bass to Paul Tudor Jones—if you don’t lose, you live to fight another day. As Paul said, “I care deeply about making money. I want to know I’m not losing it . . . The most important thing for me is that defense is ten times more important than offense . . . You have to be very focused on the downside at all times.” And this statement comes from a guy who’s made money for his clients for 28 consecutive years. It’s so simple, but I can’t emphasize it enough. Why? If you lose 50%, it takes 100% to get back to where you started—and that takes something you can never get back: time.

2. Risk a Little to Make a Lot. While most investors are trying to find a way to make a “good” return, each of these hall of famers, without exception, looks for something completely different: home runs! They live to uncover investments where they can risk a little and make a lot. They call it asymmetric risk/reward. You’ll note how Sir John Templeton’s path to great gains with the least risk was not by buying the market but by waiting until—as the 18th-century English nobleman Baron Rothschild put it—there is “blood in the streets,” and everybody is desperate to sell. That’s when you pick up the best bargains. Paul Tudor Jones, on the other hand, follows trends in the market. But, as he says in his interview, he doesn’t make an investment until he can potentially get a return of at least $5 for every $1 he risks. And that, he says, is a $100,000 MBA in a nutshell! In Kyle Bass’s interview, you’ll learn how he figured out how to risk just 3% to make 100% returns. And how he parlayed that victory into more than a 600% return!

3. Anticipate and Diversify. The best of the best anticipate; they find the opportunity for asymmetric risk/reward. They really do their homework until they know in their gut that they are right—unless they’re not! And to protect themselves, they anticipate failure by diversifying. Because in the end, all great investors have to make decisions with limited information. When I interviewed Kyle Bass’s former partner Mark Hart, he told me, “A lot of brilliant people are terrible investors. The reason is that they don’t have the ability to make decisions with limited information. By the time you get all the information, everyone else knows it, and you no longer have the edge.” T. Boone Pickens says it this way: “Most people say, ‘Ready? Aim! Aim! . . .’ But they never fire.”

4. You’re Never Done. Contrary to what most people would expect, this group of achievers is never done! They’re never done learning, they’re never done earning, they’re never done growing, they’re never done giving! No matter how well they’ve done or how well they’ve continued to do, they never lose their hunger—the force that unleashes human genius. Most people would think, “If I had all this money, I would just stop. Why keep working?” Because each believes, somewhere in his or her soul, that “to whom much is given, much is expected.” Their labor is their love. Just like these money masters invest in different ways, they give back in different ways. They share their time, they share their money, they create foundations, they invest in others. Each of them has come to realize that true meaning in life comes from giving. They feel a responsibility to use their gifts to serve others. As Winston Churchill said, “We make a living by what we get. We make a life by what we give.” What unites them is the ultimate truth that life is about more than what you have. It’s really about what you have to give.

Leave a Reply