money master the game

You’re probably familiar with self-help guru Tony Robbins but did you know he wrote a book on personal finance? Well, he did. It’s the personal finance equivalent of War and Peace. Here is my Money Master the Game Review.

I had some preconceived notions about Tony Robbins before I picked up this book. He is apparently aware that people do because early on he proclaims this is not a book about positive thinking and calls himself “the smiling guy with big teeth.”

Money Master the Game: 7 Simple Steps to Financial Freedom claims that it will teach you the seven simple steps you need to take to achieve financial independence. This book is massive. It’s 600 pages.

Annoyingly, it is not merely broken down into chapters but sections and sub-chapters as well. So Chapter 1 includes Chapter 1.2, Chapter 1.3, etc. I am not going to break down the review that way, but rather by an entire chapter at a time.

Introduction

The introduction tells us about some of the people consulted for the book, well-known investors like Ray Dalio, John Bogle, and Carl Icahn. Robbins tells us why he wrote the book and the various emotions around our relationship with money. How we can look for the clues those successful with money left for us and model their behavior.

There is a lot of psychology in the introduction. Some of that is interesting and for some people, valuable. Some of us really don’t understand why we do what we do or don’t do what we know we should do. Understanding that can help some people overcome that.

The introduction goes on and on, and there is a ton of name dropping, both famous investors, and various celebrities. It, as is the rest of the book, jam-packed with cliches and a lot of the psychology is of the pop variety.

Chapter One

Chapter One, Step One urges us to make the most important financial decision of our lives, to become investors. If you want to grow rich and achieve financial independence, you must invest. 

The book acknowledges that many people are afraid to invest because it all seems so confusing to a novice. And if you do start to do some research, that can actually make things worse. There is so much noise around investing. Some people understandably give up and stick their money back under the mattress.

There is a lot of storytelling and more name dropping. He goes on and on about how if you follow his Seven Steps you will enjoy, fill in feel-good buzzwords, the life you’ve always wanted, live life on your own terms, and inner strength. Ugh, give me strength.

Ignore all the noise, except of course the noise Robbins and the people he interviewed for the book are making. And to be fair, the people he interviewed are among the most successful investors in history. If you trust in the book, you have no reason to fear investing.

Robbins explains your paycheck will never be enough and guides you through the process of deciding how much to devote to your “freedom fund,” and urges you to automate the process.

He explains the power of compounding interest and how valuable time is to wealth building. There is not a word about debt in this chapter and for a lot of people that is part of what keeps them from investing. I get it, this is not a Dave Ramsey type of book, so it won’t go into great detail about how debt hurts our wealth building and how to pay it off but to gloss over the subject entirely is a glaring omission.

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Chapter Two

Chapter Two, Step Two is about knowing the rules before you get in the game. According to Robbins, there are nine investing myths that have been sold to us over the years.

Myth One is financial entertainment, commercials, and fancy investing brochures, promise that if we invest with mutual fund X, you will beat the market. But 96% of actively managed mutual funds don’t beat the market over a sustained period.

Myth Two is that the fees you pay for these funds are a small price to pay for the significant returns you are sure to have. But high fees will eat into your savings to the tune of tens or hundreds of thousands of dollars over time.

Myth Three is that when it comes to returns, what you see is what you get meaning that not only is past performance not a guarantee of future results but the past performance numbers themselves can be misleading.

Myth Four is that your broker has your best interests in mind when recommending products to you. They don’t, for that, you need a fiduciary.

Myth Five is that a 401k is all you need to retire. Robbins advocates also having a Roth IRA because of the tax benefits.

Myth Six is about target date funds. Some investors are under the impression that they will be able to retire when the target date of the fund arrives. The date is not meant to be a plan to help you reach your goal but merely an asset allocation that should lower your risk level the closer you get to retirement.

Myth Seven is that we should avoid annuities and that a strategy using stocks and bonds is better for long-term growth and security.

Myth Eight is that you have to take significant risks to get significant gains.

Myth Nine covers the lies we tell ourselves, that money is beyond our control, or those who are successful at it are different than us, they have some knowledge or abilities that we can’t access or don’t have.

There is a lot of great information in this chapter including an exhaustive list of the fees you might find in mutual funds and just how devastating they can be to your investments. But holy cow, does he belabor each point until you’re just begging for each section to get to the point.

Chapter Three

Chapter Three, Step Three is all about the price of your dreams. Despite the cringe-inducing name of this chapter, there is a ton of useful information here and some simple calculations you can do to get some real numbers, so you know how much you need to retire.

If those numbers seem out of reach, Robbins offers a few ways you can speed things up including cutting spending, paying down your mortgage early, reducing fees and taxes, and earning more. Hardly revolutionary.

One of the things he tells us to include in our calculations is our payments from Social Security. Anyone under 40 knows that this is terrible advice. The Boomers are likely going to bankrupt that long before we retire.

The safer option is to leave that number out of your calculations entirely and look at it as bonus money if you do get it. But to count on getting it is insane.

Chapter Four

Chapter Four, Step Four is all about asset allocation which Robbins says is the most important investment decision you will make. Asset allocation just means diving your investment money among different asset classes, or investments in specific proportions.

You have two money buckets, one for risk and growth which you invest in things like stocks, high-yield bonds, real estate and commodities. Your other bucket is your security bucket and is kept partly in cash, bonds, and CDs.

How you divide up the bucket depends on a few things including your time horizon, the further from retirement the more risk you can take and your own risk tolerance. Putting “too much” in the risk bucket will mean some of us can’t sleep at night.

Once you have your money divided, you are not to change that allocation unless you are moving into a different stage of life. You change it as you near retirement for instance, but not according to what the market is doing.

This chapter goes into great detail explaining the different types of investments and which bucket each of them belongs to. There is also a section on trying to time the market and why this is a terrible idea, and instead you should use dollar cost averaging which LMM has done an episode on.

There is also a section on tax loss harvesting which we also did an episode on.

Chapter Five

Chapter Five, Step Five is about creating a lifetime income plan. This chapter is all about legendary investor Ray Dalio’s asset allocation. Like the others, the chapter is interminably long. Here is the Cliff Notes version;

30% in an index fund like the S&P 500 for diversification

15% in intermediate-term (seven to ten year) Treasuries) and 40% in long-term (20-25 year) Treasuries

7.5% in gold

7.5% in commodities

This is called the All Seasons Portfolio and is supposed to protect you no matter what market or economic conditions your investments face.

Now, what do I know compared to Ray Dalio? Less than nothing. But it seems to me this kind of advice is only useful for those who have enormous sums of money to invest. If you’re investing a few thousand dollars a year, I don’t see how this can make you enough money to retire on.

There is another whole section on the marvel of annuities which Tony seems particularly entranced by, and he goes into great detail about the different types. The reason he seems to like them so much is that he believes that when you know, you will have income from annuities, you can plan for fewer years of retirement, a plan for 15 years instead of 20 or 30.

Chapter Six

Chapter Six, Step Six is investing like the .001%. This chapter is a series of interviews with the names Tony has been dropping like it’s hot all through this book; Carl Icahn, John Bogle, and Warren Buffett among others.

There are four common themes:

-Don’t lose

-Risk a little to make a lot

-Anticipate and diversify

-You’re never done

I’m not sure why this kind of cliched advice is considered a Step, but there you go.

Chapter Seven

Chapter Seven, Step Seven is just do it, enjoy it, share it! Exclamation point Robbins’, not mine. I do applaud his restraint in using just the one because I’m sure it was painful. Or maybe he used eight, but the editor took out seven.

If Tony was holding back on the kind of psychology and positive thinking and all that stuff people make fun of him for (he wasn’t), he really let himself off the leash in the final chapter. And again, I’m not sure how this can be construed as a Step.

He does make some good points, that money can buy us happiness when we use it to help others or when we buy experiences rather than things. That it’s important to look after your physical health because all the money in the world doesn’t matter and can’t help you if you are a physical wreck.

But he veers off into strange stories about technology and burn victims and overpopulation. There is lots of the find your passion stuff he is known for, the meaning of life. Honestly, it was all so silly I stopped reading in depth and taking notes and just started thumbing through the rest, having already heroically read nearly 600 pages of this shit.

Money Master the Game Review

So what did I think of the book?

Pros

-Robbins has access to Titans in the investing world, and it was interesting to read their advice, their stories, and their interviews.

-The psychology throughout the book can be useful to help people with bad personal finance habits to understand them and therefore break them.

-He’s absolutely right that the most important thing is to be an investor. You can’t win the game if you never start to play.

-The book does an excellent job of debunking some personal finance myths.

-The book provides simple formulas you can plug your own numbers into to know how much you will need to retire.

-There are a lot of in-depth explanations of things like investing fees, different types of bonds and annuities.

Cons

-I thought that the one moment of being self-effacing about his reputation as a positive thinking woo-woo guy meant that he would keep that to a minimum. Nope! It was laced throughout the book.

-A lot of the psychology is just pop psychology people who watch Dr. Phil and think Oprah is smart will buy into. Sounds like bullshit to the rest of us.

-There is almost nothing about debt in this book.

-Telling people they can factor in Social Security into their retirement numbers is irresponsible.

-The Ray Dalio portfolio allocation advice does not seem to apply to the type of people who would buy this book but is better suited to the .001% Tony swears we can all emulate.

-The way I read this book, there are only five steps he tells us to take. The last two are not things you can actually do. If I gave you a recipe to make a cake and told you it had seven steps, but the last two were not about what temperature to set the oven to or how long to bake the cake but interviews with famous bakers and about how wonderful it would be when you shared this cake, do you think your cake would turn out?

Now maybe by following the first five steps, you will become rich. But then why not just make it five steps?

Should You Read This Book?

Do I recommend Money Master the Game? No. And not necessarily because the bulk of the advice is bad advice or that it wouldn’t be right to follow. But if Robbins had cut out all the psychology, the name dropping, the storytelling, and two of the five steps, the book would be a lot more valuable.

I finished this book because it was my job. I can’t imagine anyone reading word for word all 600 pages because they found it compelling. Do you have any investing books you would recommend? List them in the comments, and possibly we can review a few of them so we can give you a really helpful recommendation.

 

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