Latest posts by R.J. Weiss, CFP®
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Tony Robbins Money Master The Game Summary
# 1 – Your Savings Rate Is The Most Important Decision Of Your Financial Life
“As you can see, the “machine” can’t start working until you make the most important financial decision of your life. The decision? What portion of your paycheck you get to keep. How much will you pay yourself—off the top, before you spend a single dollar on your day-to-day living expenses? How much of your paycheck can you (or, more importantly, will you) leave untouched, no matter what else is going on in your life? I really want you to think about this number, because the rest of your life will be determined by your decision to keep a percentage of your income today in order to always have money for yourself in your future.”
# 2 – Money Plays An Important Role In Your Life
“Whether we let money control us, or whether we take control of it.”
# 3 – Look For Small Risks For Big Rewards
The goal for an investor is to take the smallest risk possible and earn the highest possible reward.
Tony talks a lot about how the best investors in the world take the above concept, also known as asymmetric risk/reward, and use it to their advantage.
Tony had this to say about Paul Tudor Jones, a billionaire hedge fund manager:
“One of Paul Tudor Jones’s greatest successes is that he knows he can be wrong and still be successful, because he uses asymmetric risk/reward to guide his investment decisions. He’s always looking for what he calls a 5:1 investment—where if he risks $1, he believes he can make $5.”
As I’m a very passive investor, not trying to beat the market, I find this lesson more applicable to business strategy. For example, I like the story Tim Ferriss shares about how he decided to start his podcast. Instead of committing long-term to run a podcast, Ferriss decided to record six episodes. By committing to six episodes, the worse case scenario or “risk” was having a few conversations with friends and learning a new skill (interviewing/podcasting).
In a book I’m reading now Expert Secrets, it tells the story of an entrepreneur who wanted to learn how to dunk a basketball. So, he recorded some YouTube videos of his progress.
It turns out his YouTube videos were a big hit. Many people wanted to learn how to increase their vertical.
A few years later, these YouTube videos turned into a million dollar business.
The “risk” to identify a market was very small–the time it took to record and publish a handful of videos. However, the rewards have proven to be quite large.
When I look back over my own life, a lot of good things happened when I took “small” risks.
For example, I look at the decision to start this blog. The monetary risk was quite small. While I invested my time before the site was profitable–the entire time I was learning, growing, and adding valuable skills.
Looking at the decision from this point of view–the risk was a few dollars a month and around 10 hours a week.
Not bad, right?
Thinking about starting a blog? You’ll be happy to know you can get your blog up and running in as little as 10-15 minutes, even if you have no technical experience. As a reader of The Ways To Wealth, you can setup your blog with Bluehost for under $4.00 a month, instead of the regular price of $7.99. You also get a FREE domain name, a $15 value. Plus, to reduce your risk even further, there’s a 30-day money back guarantee, if you decide blogging isn’t right for you.
I remember the thoughts going through my head 5+ years ago when I was deciding whether to buy The Unconventional Guide to Luxury Travel on a Budget. Therefore, learning how to travel hack. The risk was about $40 and a one or two new credit cards in my name. It turns out this guide has saved me well over five-figures over the years. Plus, my fear of hurting my credit score was a false belief.
# 4 – Take Advantage of Compounding
“What’s the biggest misstep most of us make right from the start? Malkiel didn’t even hesitate when I asked him. He said the majority of investors fail to take full advantage of the incredible power of compounding—the multiplying power of growth times growth.”
# 5 – Money Can’t Make You Happy By Itself
“Money can’t change who we are. All it does is magnify our true natures.”
# 6 – Index Your Way To Riches
“Don’t be sold that someone is going to beat the market. Instead, align yourself with the market!”
- Related Reading: A Beginners Guide To Investing Like A Pro
# 7 – Create A Better Story
“You can use your story, or your story can use you.”
“Here’s her new story, and it could be yours: “If I just happen to use this simple system of compounding, I can make a lot of money, I can go wherever I want, I can live however I truly want, I can be financially free. There are no limits except the ones I impose on myself.”
# 8 – Create Value, Then Become Rich
“Money is nothing more than a reflection of your creativity, your capacity to focus, and your ability to add value and receive back. If you can find a way to create value—that is, add value for a massive number of people—you will have an opportunity to have a massive amount of economic abundance in your life.”
The key to making money, and therefore living a life of less stress, is to cause someone to joyfully give you money in exchange for something they perceive to be of greater value than what you give them.
# 9 – Have A Purpose
“I’ve found that if you try to figure out a percentage to save without really knowing what you’re saving for, it’s not going to happen”
# 10 – The Importance Of Fees
“The average plan administrator charges 1.3% to 1.5% annually (according to the nonpartisan Government Accountability Office). That’s $1,300 for every $100,000 just to participate in the 401(k). So when you add this 1.3% for the plan administration to the total mutual fund costs of 3.17%”
Bonus – BE GRATEFUL
“The wealthiest person on earth is one who appreciates.”