1. 1-Sentence-Summary:
1.1. Money: Master The Game holds 7 simple steps to financial freedom, based on the advice of the world’s best billionaire investors, interviewed by Tony Robbins.
2. Favorite quote from the author:
2.1. "You either master money, or, on some level, money masters you!" - Tony Robbins
3. 3 lessons:
3.1. Never underestimate the exponential power of compounding interest.
3.1.1. Exponential growth is so big, it’s hard to grasp for the human mind.
3.1.2. The best way to astonish yourself is to look at examples of this
3.1.2.1. The folding paper to the moon story
3.1.2.2. How 10 early years of investing are worth more than 35 years of late investing.
3.1.3. When Benjamin Franklin died in 1790, he left $1,000 for both the cities of Boston and Philadelphia, but only after investing it and not touching it for 100 years. Then they could withdraw a portion of it and had to let it sit for another 100 years.
3.1.3.1. After 100 years, Philadelphia withdrew $500,000 to build the Franklin Institute, a museum.
3.1.3.2. The final balance for the bank account in 1990, another 100 years later, was $2 million.
3.1.3.3. Boston did an even better job at investing and has turned $1,000 into a glorious $4.5 million.
3.2. Show yourself you can reach financial freedom by picking one of five goals.
3.2.1. $51,000 is the average annual spending of an American adult.
3.2.2. If you can make $51,000 from investments, you never have to work again. That’s all it takes.
3.2.3. Setting specific goals will help you be realistic about what you can achieve in which period of time.
3.2.4. Here are 3 of the goals Tony suggests:
3.2.4.1. Make enough money from investments to pay for basic living costs: rent, food, utilities, a potential mortgage, and transport.
3.2.4.2. Make enough money from investments to pay for basic living costs plus fun, like travel, going to the movies, buying new clothes regularly, etc.
3.2.4.3. Make enough money from investments to be financially independent and never have to work again, i.e. $51,000 per year.
3.2.5. For number 3 you need $640,000 invested so that you’ll get 8% annual return – which is just a little more than the average return of the stock market in any given year.
3.2.6. You can never make a million dollars in your entire life, but still reach a point where you never have to work again.
3.3. Use Tony’s 3-bucket system to diversify your investments.
3.3.1. Here’s a very simple way to allocate all of your investment money (10% of your income is a good portion and will get you quite far, quite fast, without hurting your spending too much).
3.3.2. Tony suggests having 3 buckets.
3.3.2.1. The security bucket contains safe investments, like bonds, which won’t yield a lot of return, but are very unlikely to make you lose money.
3.3.2.2. The growth bucket is for riskier investments, like stocks, which often beat average returns in the long run, but are highly volatile in the short run, and might take you a while to pan out.
3.3.2.3. The dream bucket gets some of the profits you make from the other two buckets, for example, 10% of your portfolio value at the end of every year.
3.3.3. Making a lot of money is only meaningful when you actually use the money to live the life you want – so without a dream bucket, what good are the other two?