Money – Master the Game

7 Simple Steps to Financial Freedom

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Tony Robbins

Notes

You have to make the shift from being a consumer in the economy to becoming an owner

…the most important financial decision of your life is – what portion of your paycheck you get to keep. How much will you pay yourself (your future-self) off the top, before you spend a single dollar of your day-to-day living expenses?…Save 50 cents out of every dollar so that you can build up your assets

…to receive conflict-free advice, we must align ourselves with a fiduciary

fiduciary – a legal standard adopted be a relatively small but growing segment of independent financial professionals who have abandoned their big-box law firms, relinquished their broker status, and made the decision to become a registered investment advisor.

The added cost of a fiduciary may only be justifiable if they are adding value such as:

  • Tax-efficient management
  • Retirement income planning
  • Greater access to alternative investments

“The secret to economic success is to understand how to become more valuable in the marketplace. To have more, you simply have to become more. Don’t wish it was easier; wish you were better. For things to change, you have to change. For things to get better, you have to get better. We get paid for bringing value to the marketplace. It takes time but we don’t get paid for time…we get paid for value.”

Jim Rohn

Tax efficiency is one of the simplest ways to continuously increase real returns on your portfolio.

“What goes up must come down. In your lifetime, it’s almost certain that whatever you’re going to put your money in, there will come a day when you will lose 50-70%”

Ray Dalio

Don’t lose money – the most important piece of advice every investor echoed…They understand that when you lose, you have to make significantly more to get back to where you started, just to get back to break-even.

Private Placement Life Insurance (PPLI) the secret of the affluent

  • Unlimited deposits
  • No tax on the growth of the investments
  • No tax when accessed (if structured correctly)
  • Any money left over for your heirs cannot be taxed

Skeptical that this simply is an elaborate way to sell life-insurance. Prefer my scheme in Trust, where there are no transfers to heirs.

4 common obsessions for investors interviewed in this book:

  1. Don’t lose
  2. Risk a little; Make a lot
  3. Anticipate and diversify
  4. You’re never done

Don’t trade…Sell an asset only when you think you have found a different asset that is a 50% better bargain.

Portfolios

David Swensen – portfolio:

  • 20% – Stocks – Wilshire 5000 Total Mkt TR USD
  • 20% – REITs – FTSE NAREIT All REITs TR
  • 20% – Foreign Developed Markets – MSCI ACWI Ex USA GR USD
  • 15% – T-Bonds – Barclays US Long Credit TR USD
  • 15% – TIPS – Barclays US Treasury US TIPS TR USD
  • 10% – Emerging Markets – MSCI EM PR USD

Ray Dalio – All-Weather portfolio:

  • 30% – Stocks – S&P 500 – VTI
  • 15% – Short-Term Bonds – 7-10 Yr T-Bills – IEF
  • 40% – Long-Term Bonds – 20-25 Yr T-Bonds – TLT
  • 7.5% – Gold – GLD
  • 7.5% – Commodities – DBC

John Bogle – portfolio:

  • 60% – Stocks – Index funds
  • 15% – Bonds – Vanguard Total Bond Index Fund
  • 15% – Municipal Bond Funds
    • (2/3) Vanguard’s Intermediate-Term Tax Exempt Fund
    • (1/3) Vanguard Limited-Term Tax Exempt Fund

Warren Buffet – portfolio:

  • 10% – Short-Term Government Bonds
  • 90% – S&P 500 Index Fund

References

How the Economic Machine Works
Gospel of Wealth – Andrew Carnegie
Unconventional Success – David Swensen S