I recently finished reading Tony Robbins’ latest book, MONEY Master the Game: 7 Simple Steps to Financial Freedom. I first heard about the book while driving back to Portland from an anniversary weekend spent in Bend. My wife and I were listening to the Financial Freedom Podcast, where Grant Sabatier interviews Tony Robbins.
Like most people, I’ve heard of Tony Robbins. However, I haven’t read any of his previous books. He’s most known for his motivational speaking, and his passion comes through in the podcast. After listening, I was inspired to read the book. Plus, all profits are donated to Feeding America.
What’s MONEY Master the Game About?
The majority of Americans don’t even think about their retirement: How much money they need to be financially independent, how much money they should be investing, or what to even invest in. When I talk to family, friends, and coworkers, they know they should be saving for retirement, but they just don’t. At best, they end up doing the bare minimum, and default their 401k investments.
Tony Robbins starts Money Master the Game by explaining the basics of investing. He discusses the pitfalls of using a financial advisor by pointing out how financial advisors’ game the system. Some example of this are charging higher fees, and recommending funds that get them commissions – basically acting in their best interest not yours.
He goes on to talk about developing a plan to reach financial independence and includes interactive tables that you can fill out based on your own lifestyle. After taking the time to sit down and actually look at how much money you need to reach financial independence, you could see that the light at the end of the tunnel is closer than you might think.
Tony’s book covers different asset allocations recommended by some of the nation’s greatest investors, including David Swenson, Ray Dalio, and Jack Bogle. I found this section of the book particularly interesting because they differed from my own asset allocation strategy. I ended up analyzing these portfolio strategies myself to see how they compared to my own personal investment returns.
Issues with MONEY Master the Game
Tony Robbins obviously has a lot of confidence and thinks highly of himself. He is doing a lot of good in the world, and he makes sure to let you know about. While listening to the podcast, he often mentioned all the great causes he supports and all the amazing things he is doing. Tony continues this trend in MONEY Master the Game, repeatedly. Don’t get me wrong, what Tony is doing is great, but you can still do great things and not repeat yourself at nauseum about it.
Towards the end of the book, Tony includes a series of interviews with investing experts like Warren Buffet, Jack Bogle, and Charles Schwab. Often the advice these experts give contradicts what Tony had previously recommended earlier in the book. As an example, Tony recommends investing in low index mutual funds, but some of the experts recommend investing in actively managed funds. I felt like this section was unnecessary and could cause confusion.
Tony also recommends investing in Roth 401k and IRA accounts. The reasoning behind this is because he feels like our country is currently in so much debt, the only way to get out of this debt is by raising taxes in the future. He argues, if you pay taxes now and use a Roth 401k or IRA, you won’t have to worry about taxes going up in the future.
To me, this is mostly speculation, and I recommend investing in traditional 401k and IRA accounts. For most people, your income level will drop after you become financially independent. Why? The two biggest reasons are:
- You won’t be saving money to be financially independent
- Your house will be paid off (or will be soon)
What MONEY Master the Game Gets Right
Tony Robbins does a great job at explaining how financial advisor fees and mutual fund fees can add years or even decades to your working career. Tony gives an example showing how three friends invest the same amount of money and each see the same return (8%). However, one friend is paying 1% in fees, the second friend is paying 2% in fees, and the third friend is paying 3% in fees. After thirty years have passed the friend paying 1% in fees has almost double the amount of money of the friend who is paying 3% in fees.
Tony shows that 401k plans and mutual funds purposefully make their fee structure complicated by using terminology most people don’t understand. Tony points out that index mutual funds (first developed by Vanguard founder Jack Bogle) purposefully keep their fees low and have outperformed 92% of actively managed funds.
The sections on asset allocation were particularly enlightening to me. Tony presents multiple asset allocations recommended by some of the greatest investors in the country. The two that stood out most to me were the asset allocations recommended by Jack Bogle and Ray Dalio.
Jack Bogle recommends investing in low cost index funds. Jack says you should have the following asset allocation:
- S&P 500 Index Fund – 65%
- Intermediate US Bonds – 35%
Over the last 15 years this allocation has seen greater than 8% returns and has been less volatile than investing in stocks alone.
Throughout the book Tony builds up suspense around Ray Dalio’s “All Weather Portfolio.” A portfolio that maximizes returns while minimizing risk. Here’s a breakdown of what this portfolio looks like:
Ray Dalio’s All Weather Portfolio
- Stocks – 30%
- Intermediate US Bonds – 15%
- Long-term US Bonds – 40%
- Gold – 7.5%
- Commodities – 7.5%
In MONEY Master the Game Tony Robbins back tests Ray Dalio’s All Weather Portfolio over the past 30 years. He shows from 1984 to 2013 this portfolio has seen annual returns of 9.72%. Over this time period the All Weather Portfolio has only lost money 4 times, with an average loss of 1.9%. The worst down year was in 2008 with a loss of 3.93% (The S&P 500 was down 37% that year).
I back tested the All Weather Portfolio and found similar results. However, the last 30 years have seen one of the greatest bond bull runs (high returns) of our time. When interest rates go down bond returns go up. I have a hard time seeing interest rates getting much lower than they are today.
Another note about the All Weather Portfolio: 401k plans are limited with their investment choices. In most cases it will be impossible to replicate the All Weather Portfolio in your 401k plan. If you wanted to implement this portfolio in your own investments, it would need to be done in your IRA or individual investment account. Check out my post on 401k asset allocations to help find a 401k investment strategy that works for you.
MONEY Master the Game Rating
Overall, I thought MONEY Master the Game was very informative and definitely worth the read. After listening to the Financial Freedom podcast, I had high expectations, and Tony Robbins delivered.
When I finished this book, I spent a good amount of time looking at my own asset allocation and back testing the asset allocations presented. I also rolled over my 401k plans into Vanguard IRA accounts, and further moved my investments from Fidelity to Vanguard to further lower my expenses.
Tony Robbins’ intentions in MONEY Master the Game are for the reader to take action in their investments and financial independence plan. After reading, the advice hit home with me. I give this book an 8/10.