Book Review: Money Master the Game
Money Master the Game is a financial book by the motivational personality Tony Robbins. Although he can come off as self-helpy at times, the overall message and information packed in this book make it an excellent read. The book is full of interviews with powerful financial geniuses like Paul Tudor, David Swensen, and Sir John Templeton. Getting the interviews with these billionaires is something that few people could have orchestrated, and Tony Robbins had the connections to make it happen.
Index Funds vs. Mutual Funds
One of the key points in the book is how much of a rip-off mutual funds are. Mutual funds have higher fees associated with them, and you pay those fees whether they make you money or not. So ultimately index funds out perform mutual funds 96% of the time, once all of the fees are considered. Thats right, 96% of the time you would have greater returns on your investment if you invested in an index fund rather than a mutual fund.
Tony gave the example of a bet made between Warren Buffet and New York asset manager Protege Partners. The New York Company heard of Warren Buffets firm belief in index funds and wagered $1,000,000 that they could pick 5 mutual funds that would outperform the S&P 500 Index Fund over a 10 year period, with the winners earnings going to the charity of their choice. This wager started in 2008 and Warren Buffet was down big early, but has come back and now has a commanding lead. You can learn more about the wager in the article Warren Buffet versus the hedge fund.
What to Invest In?
The other important portion of the book is on Asset Allocation and Diversification. It is important to have your money in a certain combination of assets to ensure that you are adequately protected during all market conditions. Because protecting against your downside is even more important than the upside. Although the types of assets and percentages of those assets varied depending on which billionaire he talked to, there was one in particular that performed better than the others over the years. Although past performance isn’t necessarily an indicator of future success, its all we have to go off of for comparison. The asset allocation plan is called the All Weather Plan by Ray Dalio (Bridgewater). Tony Robbins was able to get Ray to provide a simplified version of this plan which is detailed in the table below:
All Weather Plan
Percentage of your Portfolio
Intermediate Term Bonds (7-10 year Treasuries)
Long Term Bonds (20-25 year Treasuries)
This certain combination was able to provide an average annualized return of 10% from 1984 to 2013. There were only 4 down years that had an averaged loss of 1.9%. The worst of those 4 years was in 2008 when it was down 3.93%, which is great in comparison to the 37% that the S&P 500 dropped. The book has more information on the exact assets used to calculate these returns.
This is by no means a complete summary of the 900 page book, but I do feel that it adequately represents the bottom line of this writing. There are a lot of other interesting nuggets of information on topics such as Fixed Index Annuities, sequence of returns, and whether or not to trust your broker. So I do recommend taking the time to tackle this intimidatingly thick book, and learn how to take control of your investing future.