Main MONEY: Master the Game - 7 Simple Steps to Financial Freedom
You may be interested in Powered by Rec2Me
Most frequently terms
I was a stockbroker for a decade. This is the most in depth personal finance book I have read. His next book Unshakable is kind of like the cliff notes.
02 September 2020 (00:27)
WHAT THE WORLD’S GREATEST FINANCIAL LEADERS ARE SAYING ABOUT TONY ROBBINS . . . * * * “He has a great gift. He has the gift to inspire.” —Bill Clinton, former president of the United States “Tony Robbins is a human locksmith—he knows how to open your mind to larger possibilities. Using his unique insights into human nature, he’s found a way to simplify the strategies of the world’s greatest investors and create a simple 7-step system that anyone can use on the path to the financial freedom they deserve.” —Paul Tudor Jones II, founder, Tudor Investment Corporation, and legendary trader with 28 consecutive years of positive returns for his investors “Tony Robbins has influenced millions of people’s lives, including my own. In this book he offers you insights and strategies from the world’s greatest investors. Don’t miss the opportunity to experience the life-changing value of this book.” —Kyle Bass, founder of Hayman Capital Management and investor who turned $30 million into $2 billion in the middle of the subprime crisis “In this book, Tony Robbins brings his unique talent for making the complex simple as he distills the concepts of the best investors in the world into practical lessons that will benefit both naïve investors and skilled professionals.” —Ray Dalio, founder and co–chief investment officer, Bridgewater Associates, #1 largest hedge fund in the world “Money: Master the Game will be a huge help to investors . . . Tony Robbins dropped by my office for a 40-minute appointment that lasted for four hours. It was the most provocative, probing interview of my long career, a reaction shared, I’m sure, by the other souls with strong investment values and sharp financial minds who populate this fine book. This book will enlighten you and reinforce your understanding of how to master the money game and, in the long run, earn your financial freedom.” —John C. Bogle, founder, the Vanguard Group and the Vanguard index funds, #1 largest mutual funds in the world “This book is not the typica; l financial book in any way. It is packed with wisdom and vital philosophies to enrich your life. A lot of books out there have more sizzle than steak to offer. Tony’s is different. This book will change your life.” —Dr. David Babbel, professor of finance, Wharton School of the University of Pennsylvania “In this book, Tony masterfully weaves anecdote and expertise to simplify the process of investing for readers—priming their financial education and helping them effectively plan for their future.” —Mary Callahan Erdoes, CEO, J.P. Morgan Asset Management, $2.5 trillion in assets under management “Tony Robbins needs no introduction. He is committed to helping make life better for every investor. Every investor will find this book extremely interesting and illuminating.” —Carl Icahn, Billionaire Activist and Investor “A gold mine of moneymaking information!” —Steve Forbes, publisher of Forbes magazine and CEO of Forbes, Inc. “I have spoken at Tony’s financial events several times in the last few years, for which he pays me a fee. But upon closer reflection, I should be the one who pays him a fee. He has the incredible talent of taking complex knowledge from leading financial experts and converting it into simple steps that the average man can apply to achieve financial security and freedom.” —Marc Faber, winner of Barron’s Roundtable and publisher of the Gloom, Boom & Doom report “You can’t meet Tony Robbins, and listen to his words, without being inspired to act. This book will give you the strategies to create financial freedom for yourself and your family.” —T. Boone Pickens, founder, chairman, and CEO at BP Capital and TBP; predicted oil prices accurately 18 out of 21 times on CNBC “Robbins’s unrelenting commitment to finding the real answers to financial security and independence, and his passion for bringing the insights of the ultrawealthy to the average man, is truly inspiring. This book could truly change your life.” —David Pottruck, former CEO of Charles Schwab and bestselling author of Stacking the Deck "If you’re looking for answers and you’re committed to creating financial freedom for yourself and your family, then Tony Robbins is your man. Get this book, change your life.” —Farnoosh Torabi, award-winning author of When She Makes More: 10 Rules for Breadwinning Women “Sitting in the back of Financial Destiny nearly twenty years ago, I was a student of Tony Robbins’s who had a dream to help teach and empower one million women to be smarter with money. Thanks to Tony, a year later I would be speaking on stage at his events, writing Smart Women Finish Rich, and ultimately creating a program that would reach millions of women worldwide. Today there are more than seven million copies of my Finish Rich books in print, translated into 19 languages. Tony changes lives, and he will change yours. I, like you, will be reading MONEY cover to cover, and sharing it with my friends.” —David Bach, nine-time New York Times–bestselling author; titles include The Automatic Millionaire, Start Late, Finish Rich, Smart Women Finish Rich, and Smart Couples Finish Rich; founder of FinishRich.com “We’ve been selected by Forbes as the most innovative company in the world for four consecutive years. Our revenues are now over $5 billion annually. Without access to Tony and his teachings, Salesforce.com wouldn’t exist today.” —Marc Benioff, founder, chairman, and CEO of Salesforce.com “Tony’s power is superhuman . . . He is a catalyst for getting people to change. I came away with: It’s not about motivation as much as it is allowing people to tap into what’s already there.” —Oprah Winfrey, Emmy Award–winning media magnate “Tony Robbins’s coaching has made a remarkable difference in my life both on and off the court. He’s helped me discover what I’m really made of, and I’ve taken my tennis game—and my life—to a whole new level!” —Serena Williams, 18-time Grand Slam tennis champion and Olympic gold medalist “I was afraid that my success would take something away from my family. Tony was able to turn it around and show me that I’ve helped millions of people. Probably the most intense feelings I’ve ever had.” —Melissa Etheridge, two-time Grammy Award–winning singer and songwriter “No matter who you are, no matter how successful, no matter how happy, Tony has something to offer you.” —Hugh Jackman, Emmy– and Tony Award–winning actor, producer “If you want to change your state, if you want to change your results, this is where you do it; Tony is the man.” —Usher, Grammy Award–winning singer, songwriter, entrepreneur “Working with Tony Robbins, I felt unstoppable. From that moment on, there was zero doubt in my mind about what I wanted and how I was going to achieve it. I was so clear about what I wanted that I made it happen: I became world champion.” —Derek Hough, dancer, choreographer, and five-time winner of ABC’s Dancing with the Stars “Tony Robbins is a genius . . . His ability to strategically guide people through any challenge is unparalleled.” —Steve Wynn, CEO and founder of Wynn Resorts “Before Tony, I had allowed myself to be put in a position of fear. After meeting Tony, I made a decision not to be afraid anymore. It was an absolutely game-changing, life-altering experience. I’m so excited and thankful for Tony Robbins and the incredible gift that he gave me.” —Maria Menounos, actress, journalist, and TV personality “What Tony really gave me, a kid sitting on Venice Beach selling T-shirts, was to take risks, take action, and really become something. I’m telling you as someone who has lived with these strategies for 25 years: I’ll come back for more again, and again, and again.” —Mark Burnett, five-time Emmy Award–winning television producer “What does this man have that everyone wants? He is a 6'7" phenomenon!” —Diane Sawyer, former ABC World News and Good Morning America anchor “Tony Robbins helps you take that first step to making real change in your life. I have a pretty good life, but all of us have aspects of our lives that we want to make greater. It’s life changing. It really is.” —Justin Tuck, defensive end, Oakland Raiders, and two-time Super Bowl champion “Tony Robbins knows the rhythm of success. He is an incredible source of inspiration, and his methods have improved the quality of my life. I only work with the best, and Tony is the best.” —Quincy Jones, Grammy Award–winning musician, producer “Tony Robbins provides an amazing vehicle for looking at your life, mapping out a mission, and determining what’s holding you back and what you need to move forward.” —Donna Karan, legendary fashion designer, founder DKNY Thank you for downloading this Simon & Schuster eBook. * * * Join our mailing list and get updates on new releases, deals, bonus content and other great books from Simon & Schuster. CLICK HERE TO SIGN UP or visit us online to sign up at eBookNews.SimonandSchuster.com CONTENTS * * * Epigraph Foreword by Elliot Weissbluth, founder and CEO of HighTower Introduction by Marc Benioff, founder and CEO of Salesforce.com SECTION 1 WELCOME TO THE JUNGLE: THE JOURNEY BEGINS WITH THIS FIRST STEP Chapter 1.1: It’s Your Money! It’s Your Life! Take Control Chapter 1.2: The 7 Simple Steps to Financial Freedom: Create an Income for Life Chapter 1.3: Tap the Power: Make the Most Important Financial Decision of Your Life Chapter 1.4: Money Mastery: It’s Time to Break Through SECTION 2 BECOME THE INSIDER: KNOW THE RULES BEFORE YOU GET IN THE GAME Chapter 2.0: Break Free: Shattering the 9 Financial Myths Chapter 2.1: Myth 1: The $13T Lie: “Invest with Us. We’ll Beat the Market!” Chapter 2.2: Myth 2: “Our Fees? They’re a Small Price to Pay!” Chapter 2.3: Myth 3: “Our Returns? What You See Is What You Get” Chapter 2.4: Myth 4: “I’m Your Broker, and I’m Here to Help” Chapter 2.5: Myth 5: “Your Retirement Is Just a 401(k) Away” Chapter 2.6: Myth 6: Target-Date Funds: “Just Set It and Forget It” Chapter 2.7: Myth 7: “I Hate Annuities, and You Should Too” Chapter 2.8: Myth 8: “You Gotta Take Huge Risks to Get Big Rewards!” Chapter 2.9: Myth 9: “The Lies We Tell Ourselves” SECTION 3 WHAT’S THE PRICE OF YOUR DREAMS? MAKE THE GAME WINNABLE Chapter 3.1: What’s the Price of Your Dreams?: Make the Game Winnable Chapter 3.2: What’s Your Plan? Chapter 3.3: Speed It Up: 1. Save More and Invest the Difference Chapter 3.4: Speed It Up: 2. Earn More and Invest the Difference Chapter 3.5: Speed It Up: 3. Reduce Fees and Taxes (and Invest the Difference) Chapter 3.6: Speed It Up: 4. Get Better Returns and Speed Your Way to Victory Chapter 3.7: Speed It Up: 5. Change Your Life—and Lifestyle—for the Better SECTION 4 MAKE THE MOST IMPORTANT INVESTMENT DECISION OF YOUR LIFE Chapter 4.1: The Ultimate Bucket List: Asset Allocation Chapter 4.2: Playing to Win: The Risk/Growth Bucket Chapter 4.3: The Dream Bucket Chapter 4.4: Timing Is Everything? SECTION 5 UPSIDE WITHOUT THE DOWNSIDE: CREATE A LIFETIME INCOME PLAN Chapter 5.1: Invincible, Unsinkable, Unconquerable: The All Seasons Strategy Chapter 5.2: It’s Time to Thrive: Storm-Proof Returns and Unrivaled Results Chapter 5.3: Freedom: Creating Your Lifetime Income Plan Chapter 5.4: Time to Win: Your Income Is the Outcome Chapter 5.5: Secrets of the Ultrawealthy (That You Can Use Too!) SECTION 6 INVEST LIKE THE .001%: THE BILLIONAIRE’S PLAYBOOK Chapter 6.0: Meet the Masters Chapter 6.1: Carl Icahn: Master of the Universe Chapter 6.2: David Swensen: A $23.9 Billion Labor of Love Chapter 6.3: John C. Bogle: The Vanguard of Investing Chapter 6.4: Warren Buffett: The Oracle of Omaha Chapter 6.5: Paul Tudor Jones: A Modern-Day Robin Hood Chapter 6.6: Ray Dalio: A Man for All Seasons Chapter 6.7: Mary Callahan Erdoes: The Trillion-Dollar Woman Chapter 6.8: T. Boone Pickens: Made to Be Rich, Made to Give Chapter 6.9: Kyle Bass: The Master of Risk Chapter 6.10: Marc Faber: The Billionaire They Call Dr. Doom Chapter 6.11: Charles Schwab: Talking to Chuck, the People’s Broker Chapter 6.12: Sir John Templeton: The Greatest Investor of the 20th Century? SECTION 7 JUST DO IT, ENJOY IT, AND SHARE IT! Chapter 7.1: The Future Is Brighter Than You Think Chapter 7.2: The Wealth of Passion Chapter 7.3: The Final Secret 7 Simple Steps: Your Checklist for Success Acknowledgments Anthony Robbins Companies About the Author A Note on Sources Index Permissions To those souls who will never settle for less than they can be, do, share, and give The future has many names. For the weak, it’s unattainable. For the fearful, it’s unknown. For the bold, it’s ideal. —VICTOR HUGO To avoid criticism, say nothing, do nothing, be nothing. —ARISTOTLE FOREWORD * * * As a former litigator with years of experience working around Wall Street firms, it’s fair to say that a few liars, crooks, and con artists have crossed my path. Since both the legal and financial fields cultivate their share of professional hustlers, I’ve learned to quickly separate the good actors from the bad. I am also a skeptic by nature. So when Tony Robbins sought me out for this project because of the company I founded in 2007, HighTower, I was curious but wary. Is there really anything new to say about personal finance and investing? And is Tony Robbins the man to say it? I was, of course, aware of Tony’s tremendous reputation as America’s number one life and business strategist. And like many, I knew that he has worked with everyone from US presidents to billionaire entrepreneurs, transforming their personal and professional lives along the way. But what I didn’t know until we met was that Tony Robbins is the real thing. The man lives up to the hype of the brand. His authenticity was evident, and his passion was contagious. Rather than rehash the sins of the financial industry, Tony came to this project with the goal of democratizing financial services and offering tactics and solutions that had previously been appreciated and used by only the wealthiest investors. Tony and I hit it off right away because we share a mission of helping empower people to make better, more informed financial decisions. That’s the heart of my company, and it’s what drives me personally. While the financial crisis of 2008 brought to light the conflicts and injustices inherent in the financial system, few people could come up with real-world, practical solutions that would actually make a difference for individuals and families. Why? Because there’s an inherent conflict in the system. The largest financial institutions are set up to make a profit for themselves, not their clients. Investors may think they are paying fees for high-quality, unbiased advice. Instead, they are all too often paying for the privilege of being offered a small sample of “suitable” investment products and services that are in constant conflict with improving the firm’s bottom line. HighTower is a solution to these problems, and that’s why Tony originally came to interview me for this book. We offer only investment advice, and we have a platform of leading technology, products, and solutions that meet advisors’ and investors’ needs. We do not engage in the many toxic activities that create conflicts of interest within the major banks. We brought together some of the nation’s best financial advisors. Simply put, we built a better model for transparent financial advice. Tony’s mission is to organize and bring to the masses the most honest and practical financial solutions—some of them are even “secrets.” He understands that people need more than knowledge—they need a clear road map to a financially secure future. The guidance provided within these pages is the result of unprecedented access to the leading minds in the financial world. I don’t know of anyone other than Tony who could pull off such a feat. Only Tony, with his wide range of client relationships, his contagious enthusiasm, and his unrelenting passion could have convinced these individuals—among the best in the industry—to share their knowledge and experience. Like me, these people trust Tony to capture their thinking and simplify it for a broad audience. And because Tony’s passion lies in empowering people, he is able to take these conversations from theory to reality, offering tools that nearly anyone can use to improve his or her financial situation. Tony challenged me to look at the solutions we had created for wealthy investors and figure out a way to make them available and applicable to the general public. I’m proud to say that we are deeply engaged in a variety of projects, and we are excited about the positive impact that together we will have on so many people. True to his calling, Tony is using this book to empower individual investors while simultaneously helping those who have slipped through the cracks or been left behind by society. While two-thirds of Americans are concerned they won’t have enough to retire, two million people have lost access to food stamps in the past year. Many of these individuals don’t know where their next meal will come from. Tony has stepped in to help fill the gap. He’s spoken openly about his own experience with homelessness and hunger, and is committed to improving the lives of these often-forgotten populations. Tony is personally committed to feeding 50 million people this year, and is working to double that effort—feeding 100 million people—through matching contributions for next year and in the years ahead. Tony has also partnered with Simon & Schuster to donate copies of his bestselling guide Notes from a Friend: A Quick and Simple Guide to Taking Charge of Your Life to those who are in need and just starting to embark on a new path of empowerment. His goal is to feed minds and bodies. I am honored, humbled, and grateful to be a part of this project and eager to see the change we can enact together. I’m excited for you, the reader. You’re about to meet the force of nature that is Tony Robbins and go on a journey that will truly be life changing. —ELLIOT WEISSBLUTH, founder and CEO, HighTower INTRODUCTION * * * I first met Tony Robbins 25 years ago inside a cassette tape. After watching an infomercial on late-night TV, I took the plunge and bought his 30-day self-improvement program Personal Power. I listened to his tapes every day during my one-hour commute to and from Oracle Corporation, back and forth between my home in San Francisco and our office in Redwood Shores. I was so moved by Tony’s words that one weekend I stayed home and did nothing else but listen again to all 30 days in just two days, and I quickly understood that Tony was truly an amazing person, and his ideas were unlike anything I had ever experienced before. Tony transformed me. At the age of 25, as the youngest vice president at Oracle, I was massively successful—or so I thought. I was making more than $1 million a year and driving a brand-new Ferrari. Yes, I had what I thought was success: a great home and an incredible car and social life. Yet I still knew I was missing something; I just didn’t know what. Tony helped me to bring awareness to where I was, and helped me start defining where I really wanted to go and the deeper meaning of what I wanted my life to be about. It wasn’t long before I went to Tony’s special intensive weekend program called Unleash the Power Within. That’s where I really refined my vision and committed to a new level of massive action. With that, I dove deeper into Tony Robbins’s work and launched full-force on my journey to create and build Salesforce.com. I applied Tony’s insights and strategies and built an amazing tool called V2MOM, which stands for vision, values, methods, obstacles, and measurement. I used it to focus my work, and ultimately my life, on what I really wanted. The V2MOM program took five of Tony’s questions: 1. What do I really want? (Vision.) 2. What is important about it? (Values.) 3. How will I get it? (Methods.) 4. What is preventing me from having it? (Obstacles.) 5. How will I know I am successful? (Measurements.) Tony said to me that the quality of my life was the quality of my questions. I soon began to model everything in my life, my work, and my future simply by asking these basic questions and recording my answers. What happened was amazing. On March 8, 1999, the first day that we started Salesforce.com, we wrote a V2MOM, and today all of our 15,000 employees are required to do the same thing. It creates alignment, awareness, and communication, and it’s all based on what Tony has taught me over the last two decades. Tony says repetition is the mother of skill—that’s where mastery comes from—and so we keep writing and improving our V2MOMs. It’s one of the reasons Forbes magazine just named Salesforce.com the “World’s Most Innovative Company” for the fourth year in a row, and Fortune magazine says we are the “World’s Most Admired” software company, as well as the seventh “Best Place to Work” in 2014. Today we produce $5 billion a year in revenue, and we continue to grow. I can truly say that there would be no Salesforce.com without Tony Robbins and his teachings. This book you are about to read, with its 7 Simple Steps to Financial Freedom, has the potential to do the same thing for you that Tony Robbins’s Personal Power audio program did for me. It is going to bring Tony’s wisdom into your life (along with the wisdom of 50 of the most brilliant financial minds in the world!) and give you the tools you need to make your life even better. As you read Master the Game, I am sure you will translate what Tony is saying into your own life, and create your own methods to achieve success and realize freedom. When Tony told me the title of this book, the first thing I said was, “Tony, you’re not about money! You’re about helping people create an extraordinary quality of life!” I soon discovered this book really isn’t about money, it is about creating the life you want, and part of that is deciding what role you want money to play in it. We all have money in our lives; what matters is that you master money and it doesn’t master you. Then you are free to live life on your own terms. One of my closest mentors, General Colin Powell, former secretary of state and chairman of the Joint Chiefs of Staff, said this about money: “Look for something you love to do and you do well. Go for it. It will give you satisfaction in life. It could mean money, but it may not. It could mean a lot of titles, but it may not. But it will give you satisfaction.” General Powell and Tony Robbins are saying the same thing. The real joy in life comes from finding your true purpose and aligning it with what you do every single day. General Powell also urged me to consider the role of money as I pursued my vision of creating a software company that would change the world. He told me that the business of business was not just to make a profit but also to do good—to do good while doing well. Tony Robbins’s focus on contribution, even 25 years ago, also made a strong impression on me and influenced my thinking. When I started Salesforce.com, I aimed to do three things: (1) create a new computing model for enterprises now called “cloud computing”; (2) create a new business model for enterprise software based on subscriptions; and (3) create a new philanthropic model that tightly integrates the success of a company with its ability to give back. What has resulted over the last 15 years is a company that today has completely transformed the software industry and achieved a market capitalization of more than $35 billion. However, the best decision I ever made was putting 1% of our equity, 1% of our profit, and 1% of our employees’ time into a philanthropic pursuit called Salesforce Foundation. It has resulted in more than $60 million in grants to nonprofits all over the world, more than 20,000 nonprofits using our product for free, and our employees contributing more than 500,000 volunteer hours to their communities. All of this happened once Tony helped me build the tools to gain clarity about what I really wanted to build, give, and become. And nothing has made me happier or brought me more satisfaction and joy in my life. That’s also why I have joined Tony in his quest with the nonprofit Swipeout program to provide meals to more than 100 million people a year; provide clean, disease-free water to more than 3 million families a day; and to work to free both children and adults from slavery. I’ve sent my parents, my closest friends, and my most important executives to Tony’s seminars to study his work, and they have all said the same thing: “Tony Robbins is one of a kind, and we are lucky to have him in our lives.” Now, with Money: Master the Game, Tony will open the same door for you that he opened for me. I am confident that with him as your coach, you too will transform your life and find a path to gain everything you really want! —MARC BENIOFF, founder and CEO of Salesforce.com SECTION 1 WELCOME TO THE JUNGLE: THE JOURNEY BEGINS WITH THIS FIRST STEP CHAPTER 1.1 IT’S YOUR MONEY! IT’S YOUR LIFE! TAKE CONTROL * * * Money is a good servant but a bad master. —SIR FRANCIS BACON Money. Few words have the power to provoke such extreme human emotions. A lot of us refuse to even talk about money! Like religion, sex, or politics, the topic is taboo at the dinner table and often off-limits in the workplace. We might discuss wealth in polite company, but money is explicit. It’s raw. It’s garish. It’s intensely personal and highly charged. It can make people feel guilty when they have it—or ashamed when they don’t. But what does it really mean? For some of us, money is vital and crucial but not paramount. It’s simply a tool, a source of power used in service of others and a life well lived. Others are consumed with such a hunger for money that it destroys them and everyone around them. Some are even willing to give up things that are far more valuable to get it: their health, their time, their family, their self-worth, and, in some cases, even their integrity. At its core, money is about power. We’ve all seen how money can have the power to create or the power to destroy. It can fund a dream or start a war. You can provide money as a gift or wield it as a weapon. It can be used as an expression of your spirit, your creativity, your ideas—or your frustration, your anger, your hate. It can be used to influence governments and individuals. Some marry for it—and then find out its real price. But we all know that on some level it’s an illusion. Money isn’t even gold or paper today, it’s zeros and ones in banking computers. What is it? It’s like a shape-shifter or a canvas, assuming whatever meaning or emotion we project on it. In the end, money isn’t what we’re after . . . is it? What we’re really after are the feelings, the emotions, we think money can create: that feeling of empowerment, of freedom, of security, of helping those we love and those in need, of having a choice, and of feeling alive. Money is certainly one of the ways we can turn the dreams we have into the reality we live. But even if money is just a perception—an abstract concept—it doesn’t feel that way if you don’t have enough of it! And one thing is for sure: you either use it, or it uses you. You either master money, or, on some level, money masters you! How you deal with money reflects how you deal with power. Is it an affliction or a blessing? A game or a burden? When I was choosing the title of this book, a few people were actually outraged at the suggestion that money could be a game. How could I use such a frivolous term for such a serious topic! But, hey, let’s get real. As you’ll see in the pages to come, the best way to change your life is to find people who’ve already achieved what you want and then model their behavior. Want to master your finances? Find a financial master and imitate how he or she deals with money, and you will have found a pathway to power. I can tell you right now, I have interviewed many of the wealthiest people in the world, and most of them do think of money as a game. Why else would anyone work ten or 12 hours a day after they’ve made billions of dollars? And remember, not all games are frivolous. Games are a reflection of life. Some people sit on the sidelines, and some play to win. How do you play? I want to remind you, this is a game that you and your family can’t afford to lose. My promise to you is this: if you will stay with me and follow the 7 Simple Steps in this book—the steps that have been distilled from the world’s most successful financial players—you and your family will win this game. And you can win big! But to win, you have to know the rules and learn the best strategies for success from those who have already mastered the game. The good news is that you can save years of time—and in a few minutes—by simply learning the pitfalls to avoid and the shortcuts to experiencing lasting success. The financial industry often works to make this topic feel incredibly complex, but in reality, once you get past the jargon, it’s relatively simple. This book is your opportunity to stop being the chess piece and become the chess player in the game of money. I think you’re going to be very surprised at how, with an insider’s understanding, you can easily transform your financial life and enjoy the freedom you deserve. So let’s get to it. Just imagine what life would be like if you had mastered this game already. What if money didn’t matter? How would you feel if you didn’t have to worry about going to an office every morning, or paying the bills, or funding your retirement? What would it be like to live your life on your own terms? What would it mean to know you had the opportunity to start your own business, or that you could afford to buy a home for your parents and send your kids to college, or have the freedom to travel the world? How would you live your life if you could wake up each day knowing there was enough money coming in to cover not only your basic needs but also your goals and dreams? The truth is, a lot of us would keep working, because that’s the way we’re wired. But we’d do it from a place of joy and abundance. Our work would continue, but the rat race would end. We’d work because we want to, not because we have to. That’s financial freedom. But is it a pipe dream? Is it really possible for the average person—more importantly, for you—to make this dream a reality? Whether you want to live like the 1% or just have the peace of mind from knowing that you won’t outlive your savings, the truth is you can always find a way to make the money you need. How? The secret to wealth is simple: Find a way to do more for others than anyone else does. Become more valuable. Do more. Give more. Be more. Serve more. And you will have the opportunity to earn more—whether you own the best food truck in Austin, Texas, or you’re the top salesperson at your company or even the founder of Instagram. But this book isn’t just about adding value—it’s really about how to go from where you are today to where you truly want to be, whether that’s financially secure, independent, or free. It’s about increasing the quality of your life today by developing the one fundamental skill that the vast majority of Americans have never developed: the mastery of money. In fact, 77% of Americans—three of every four people—say they have financial worries, but only 40% report having any kind of spending or investment plan. One in three baby boomers have less than $1,000 saved! Polls show that fewer than one in four trust the financial system—with good reason! And stock ownership has been hitting record lows, particularly among young people. But the truth is, you don’t earn your way to freedom. As you’ll see later in this book, even multimillion-dollar earners such as Godfather director Francis Ford Coppola, boxer Mike Tyson, and actress Kim Basinger lost it all because they didn’t apply the fundamentals that you’ll soon be learning. You have to be able to not only hold on to a portion of what you earn for your family, but, more importantly, multiply what you earn—making money while you sleep. You have to make the shift from being a consumer in the economy to becoming an owner—and you do it by becoming an investor. Actually, a lot of us are already investors. Maybe you first got into the game when Grandma bought you a few shares of her favorite stock just for being born, or perhaps your employer auto-enrolled you in the company’s 401(k), or maybe you first became an investor when a friend told you to forget the Kindle and buy Amazon stock instead. But is this enough? If you’re reading this now, my guess is that you know the answer: no way! I don’t have to tell you it’s not your parents’ and grandparents’ investment world. The plan used to be so simple: go to college, get a job, work your butt off, and then maybe get a better job with a bigger corporation. After that, the key was to find a way to add value, move up the ladder, invest in company stock, and retire with a pension. Remember pensions? A promise of a never-ending income for life? They’ve become relics. You and I both know that world is over. We live longer now on less money. New technologies keep coming online, stoking a system that often seems designed to separate us from our money instead of helping us grow it. As I write these words, interest rates on our savings hover near zero, while the markets rise and fall like corks on the ocean. Meanwhile, we’re faced with a financial system of limitless choices and mind-boggling complexity. Today there are more than 10,000 mutual funds, 1,400 different ETFs, and hundreds of global stock exchanges to choose from. It seems like every day we’re pitched more and more complex investment “instruments” with an alphabet soup of acronyms: CDOs, REITs, MBSs, MLPs, CDSs, CETFs . . . WTF? How about HFT? That’s short for high-frequency trading, where 50% to 70% of the tens of millions of trades that churn through the market each day are now generated by high-speed machines. What does that mean for you? It takes only a half second, or about 500 milliseconds, to click your mouse to complete your E*Trade order. In that short time, the big boys with the supercomputers will have bought and sold thousands of shares of the same stock hundreds of times over, making microprofits with each transaction. Michael Lewis, bestselling author of the HFT exposé Flash Boys: A Wall Street Revolt, told 60 Minutes, “The United States stock market, the most iconic market in global capitalism, is rigged . . . by a combination of the stock exchanges, the big Wall Street banks, and high-frequency traders . . . They’re able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price!” How fast are these guys? One HFT firm spent a quarter of a billion dollars to straighten the fiber-optic cables between Chicago and New York, reconstructing the landscape and literally terraforming the earth to shave 1.4 milliseconds off its transmission time! But even that’s not fast enough. Some trades already take place in microseconds—that’s a millionth of a second. Soon HFT technology will allow these trades to happen in nanoseconds—a billionth of a second. Meanwhile, they’re laying cable on the ocean floor, and there’s even talk of solar-powered drones acting as microwave relay stations to connect exchanges in New York and London. If all of this leaves you reeling, I’m with you. What are your chances of competing with flying robots trading at the speed of light? Where do you turn to find a path through this high-tech, high-risk maze of choices? An expert is an ordinary man away from home giving advice. —OSCAR WILDE The problem is, when it comes to money (and investing), everybody has an opinion. Everybody’s got a tip. Everybody has an answer. But I’ll give you a hint: they rarely have one that will really help you. Have you noticed how beliefs around money are like religion and politics? Conversations can get intense and emotional. Especially online, where people without any real knowledge or mastery will promote their own theories and criticize others’ strategies with such vehemence, even though they have no proven track record. It’s like a psychologist on Prozac telling you how you can have a fulfilled life. Or an obese person telling you how to get thin and fit. I tend to separate pundits into those who talk the talk and those who walk the walk. I don’t know about you, but I’m sick and tired of hearing from all these “experts” who tell us what to do, but haven’t produced results in their own lives. If you thought you were going to hear from another investment guru making crazy promises, you came to the wrong place. I’ll leave that to the financial entertainers who scream at you about buying the hottest stock, or implore you to save your money and put it in some mythical mutual fund. You know the one, where they promise you’ll continuously compound your money with 12% annual growth. They dole out advice that too often has no basis in reality, and often they don’t even invest in the products they push. Some of them might sincerely think they’re helping, but people can be sincere and be sincerely wrong. I want you to know I’m not one of those “positive thinkers” who’s going to pump you up with a false view of the world. I believe in intelligence. You have to see things as they really are but not worse than they are—that view of life only gives you the excuse to do nothing. You may know me as the “smiling guy with the big teeth” on TV, but I’m not here to tell you to do a bunch of affirmations—I’m the guy who’s focused on helping you dig deep, solve real problems, and take your life to the next level. For 38 years, I’ve been obsessed with finding strategies and tools that can immediately change the quality of people’s lives. I have proven their effectiveness by producing measurable results where others have failed. So far I’ve reached more than 50 million people from 100 different countries through my books, videos, and audio programs, and another 4 million in live events. What I’ve known from the beginning is that success leaves clues. People who succeed at the highest level are not lucky; they’re doing something differently than everyone else does. I’m interested in those people: those who have a relentless hunger to learn and grow and achieve. Don’t get me wrong. I’m not deluded. I’m aware there are very few people in the world who are fit and healthy and who sustain it. Most people don’t have decades of sustained love and passion in their intimate relationships, nor do they experience ongoing gratitude and joy. There are very few people who maximize their business opportunities. And there are even fewer who start with little or nothing and become financially free. But a few do! A few do have great relationships, great joy, great wealth, and endless gratitude. I have studied the few who do versus the many who talk. If you want to look for obstacles, what’s wrong is always available. But so is what’s right! I am a hunter of human excellence. I seek out those individuals who break the norms and demonstrate to all of us what’s really possible. I learn what those few extraordinary individuals do that’s different from everybody else, and then emulate them. I find out what works, and then I clarify it, simplify it, and systematize it in a way to help people move forward. Ever since the dark days of 2008, when the global financial system nearly melted down, I’ve been obsessed with finding a way to help everyday people take control of their money and fight back against a system that’s often been rigged against them. The fix has been in for years, and it hasn’t gotten a whole lot better with all those so-called reforms on Capitol Hill. In some areas, it’s gotten worse. To find answers, I interviewed 50 of the most brilliant, influential players in the world of money. In this book, you won’t get talking heads, and you won’t get my opinions, either. You’ll hear it straight from the masters of the game: self-made billionaires, Nobel laureates, and financial titans. Here’s just a sampling of a few of the masters of money that you will be learning from in the pages ahead: • John C. Bogle, the 85-year-old sage with 64 years of stock market history and the founder of the Vanguard Group, the number one mutual fund company in the world; • Ray Dalio, founder of the largest hedge fund on the planet, with $160 billion in assets; • David Swensen, one of the greatest institutional investors of all time, who grew Yale University’s endowment from $1 billion to more than $23.9 billion in less than two decades; • Kyle Bass, a man who turned $30 million in investments into $2 billion in two years during the subprime crisis; • Carl Icahn, who has outperformed Warren Buffett, the market, and virtually everyone else in the last one-, five-, and ten-year cycles; • Mary Callahan Erdoes, whom many consider to be the most powerful woman in finance. She oversees more than $2.5 trillion as CEO of J.P. Morgan Asset Management; and • Charles Schwab, who led a revolution to open up Wall Street to individual investors, and whose iconic company now has $2.38 trillion under management. I’ll put you in the room with these and many other superstars who get consistent results, decade after decade, in up markets and down, booms and busts. Together we will uncover the core secrets to their investment success and see how to apply them even to the smallest amount of money. And here is the key: I wrote this book based on timeless wisdom of the most successful investors in the world. After all, none of us knows which way the economy will be headed by the time you’re reading this book. Will there be inflation or deflation? A bull market or a bear? The idea is to know how to survive and thrive in any market condition. These real experts will explain how. Plus, they’ll be opening their portfolios to show you the mix of investments that they rely on to weather every storm. And they’ll answer this question: If you couldn’t pass on any of your financial wealth to your children, but only a set of principles, what would they be? That could be the greatest inheritance of all, and you don’t have to be one of their kids to get it! The secret of getting ahead is getting started. —MARK TWAIN Get ready, because together we’re about to go on a journey through 7 Simple Steps to financial security, independence and freedom! Whether you’re a millennial just starting out, a baby boomer facing retirement, or a sophisticated investor looking to keep your edge, this book will offer you a practical blueprint for setting and achieving your financial goals and help you break free from whatever limiting behaviors might be holding you back from true abundance. We’ll explore the psychology of wealth, something I’ve studied and taught for nearly four decades. We’ll tackle the money mistakes people make, zeroing in on what keeps them from following through on their best-laid plans. And to make sure you get the results you desire, I’ve gone to the best behavioral economists on earth to find solutions that really work—small, simple adjustments that automatically trigger you to do what others need discipline to maintain; strategies that can make the difference between retiring comfortably or dying broke. Let’s face it: so many smart and accomplished people have put aside this area of money because it seems so complicated and overwhelming. One of the first people I gave this manuscript to to review is a brilliant friend named Angela who has accomplished mastery in many areas of her life—but never in the area of money. She told me that people thought she was amazing because she’d sailed 20,000 miles of ocean in some of the roughest seas on small sailboats. But she knew she neglected her finances, and it embarrassed her. “It seemed so confusing, and I couldn’t be competent. I already felt defeated, so I gave up, even though it’s not in my nature.” But she found that by following the 7 Simple Steps in this book, she could finally get control of her finances, and it was easy and painless! “Gosh, I could save for my future just by cutting a few things that don’t give me joy,” she told me. Once she started thinking about saving, she was able to set up an automatic investment account, and by chapter 2.8, she had already transformed her life. A few days later, she came in to see me and said, “I got my first-ever brand-new car.” I asked her, “How did you do it?” She said, “I began to realize that I was spending more money on my old car for repairs and gas than it cost me to finance a brand-new car!” You should have seen the look on her face when she pulled up in a shiny new pearlescent white Jeep Wrangler. So I want you to know that this book is not just about how to have a comfortable retirement, but also about how to have the quality of life you desire and deserve today. You can live life on your own terms while you simultaneously lock in your future quality of life as well! The feeling of empowerment and inner strength and certainty that you experience when you master this area of your life will spill into everything else: your career, your health, your emotions, and your relationships! When you lack confidence about money, it unconsciously affects your confidence in other areas too. But when you take charge of your finances, it empowers you and excites you to take on other challenges! What holds us back from getting started on the road to financial freedom? For a lot of us, like my friend Angela, it’s the feeling that we’re in over our heads. We’ve been taught to think, “This is too complex” or “This is not my field.” Frankly, the system is designed to be confusing, so that you’ll give up control to the “professionals” who reap enormous fees by keeping you in the dark. You’re going to learn in the chapters ahead how to prevent that from happening, and, most importantly, I’m going to show you that investing your way to freedom isn’t confusing at all. One reason people succeed is that they have knowledge other people don’t. You pay your lawyer or your doctor for the knowledge and skills you don’t have. They also have their own special language that can at times keep them insulated from the rest of us. For example, in the medical world, you might hear that 225,000 people have died “iatrogenic deaths” in the past year. According to the Journal of the American Medical Association (JAMA), it’s the third largest cause of death in the United States. Iatrogenic. How’s that for a hundred-dollar word? It sounds important, but what does it even mean? Is it a rare tropical disease? A genetic mutation? No, iatrogenic actually refers to an inadvertent death caused by a doctor, or a hospital, or an incorrect or unnecessary medical procedure. Why don’t they just come out and say so? Because it doesn’t serve a medical institution’s interests to put it in plain language a layperson can understand. The financial world has its own jargon too, with special words for things that are really additional fees disguised in language that would make it impossible for you to realize it is taking much more of your money than you would ever imagine. I hope you’ll let me be your translator as well as your guide on this journey. Together we’ll break the code and cut through the complexity that keeps most of us feeling like outsiders in the world of finance. Today there is so much information that even the most sophisticated investors can feel overloaded. Especially when we realize what’s being pushed on us often has nothing to do with our needs. Say you’re having some mild chest pains, and you Google the word heart. What do you see? It’s not something about the heart attack you might want to deal with right now. Instead, you get Heart, the music group that hasn’t had a hit in 20 years. How does that help you? My plan is to serve you by becoming your personal financial search engine—a smart search engine, one that will filter through all the superfluous, even harmful financial information out there to deliver simple, clear solutions. Before you know it, you’ll be an insider too. You’ll learn why chasing returns never works, why nobody beats the market long-term,1 and why the vast majority of financial experts don’t have a legal responsibility to serve your best interests. Crazy, right? You’ll learn why the returns advertised by mutual funds are not the returns you actually earn. You’ll find solutions that could add literally millions of dollars to your lifetime of investing returns—statistical studies show that you can save between $150,000 and $450,000 just by reading and applying the principles of section 2 of this book! You’ll be putting money back in your own pocket, not the “fee factories.” You’ll also learn about a proven way of growing your money with 100% principal protection, and tax free to boot (IRS-approved). This vehicle is finally available to individual investors like you. And here’s what truly sets this book apart: I don’t just tell you about investment strategies that the ultrawealthy have and that you can’t afford or access; I’ve found ways to make them affordable and accessible for you! Why should the privileged few be the only ones to tap into extraordinary opportunities? Isn’t it time that we level the playing field? Remember, it’s your money, and it’s time for you to take control. A moment’s insight is sometimes worth a life’s experience. —OLIVER WENDELL HOLMES, SR. Before we go on, let me tell you what moved me to write this book. If you’ve watched any of the coverage of my work over the years, or if you’ve read any of my previous books, you probably know my track record for creating massive and measurable change—helping people lose 30 to 300 pounds, turning around relationships that seem to be at their end, helping business owners grow their companies 30% to 130% in a year. I also help people overcome enormous tragedies—from couples who’ve lost a child, to soldiers coming back from Afghanistan with post-traumatic stress disorder. My passion is helping people create real breakthroughs in their relationships, their emotions, their health, their careers, and their finances. For nearly four decades, I’ve had the privilege of coaching people from every walk of life, including some of the most powerful men and women on the planet. I’ve worked with presidents of the United States as well as presidents of small businesses. I’ve coached and helped transform the performance of sports stars, from the early days with hockey great Wayne Gretzky to today’s superstar Serena Williams. I’ve had the privilege to work with award-winning actors with the coolness of Leonardo DiCaprio and the warmth of Hugh Jackman. My work has touched the lives and performances of top entertainers from Aerosmith to Green Day, Usher to Pitbull to LL Cool J. And billionaire business leaders as well, such as the casino magnate Steve Wynn and the internet wizard Marc Benioff. In fact, Marc quit his job at Oracle and began building Salesforce.com after attending one of my Unleash the Power Within seminars in 1999. Today it’s a $5 billion enterprise and has been named the “World’s Most Innovative Company” by Forbes magazine for the last four consecutive years. So obviously my clients don’t come to me for motivation. They have plenty of that already. What they get from me are strategies that help them hit the next level and keep them at the top of their game. In the financial arena, since 1993 I’ve had the honor to coach Paul Tudor Jones, one of the top ten financial traders in history. Paul predicted the October 1987 Black Monday crash—still the largest single-day US stock market decline (by percentage) ever. While markets plummeted around the world and everyone else was losing his shirt, Paul as much as doubled his investors’ money in 1987. He did it again in 2008, bringing his investors nearly a 30% positive return while the market plummeted 50%! My job working with Paul is to capture the principles that guide all his decisions. Then I put them into a system that he uses daily and, most importantly, at critical times. I’m not a positive-thinking coach. Quite the opposite: I’m a prepare-for-anything coach. I’ve been in touch with Paul, tracking his trading every day through a roller coaster of market conditions. From the tech bubble of the late 1990s to 9/11. From the growth in real estate and the collapse of the subprime market to the financial meltdown of 2008. I’ve been there during the subsequent European debt crisis as well as the largest one-day percentage crash in gold prices in three decades in 2013. In spite of the diversity of these financial challenges, in 28 full consecutive years, Paul has never had a single losing year. I’ve been working with Paul for the last 21 of those years. He is truly unmatched in his ability to find the way to victory. I’ve had the privilege of being shoulder-to-shoulder with him while he made money consistently, no matter how volatile the market. Through him, I’ve learned more about the real world of investing and how decisions are made in tough times than I could get from a hundred MBA courses. I’m also incredibly blessed to not only work with Paul during this time but also consider him one of my dearest friends. What I love and respect about Paul is that he not only creates financial results for himself but also is one of the most extraordinary philanthropists in the world. Over the years, I’ve watched him grow the Robin Hood Foundation from the simple idea of harnessing the power of free markets to alleviate poverty in New York into what Fortune magazine has called “one of the most innovative and influential philanthropic organizations of our time.” So far Robin Hood has distributed more than $1.45 billion in grants and initiatives, changing millions of lives in the process. I’ve also learned my own lessons along the way, some through the pain of my own trials and errors—which this book is designed to help you avoid as much as possible. I’ve earned my own scars on Wall Street. I took a company public when I was 39 years old and watched my personal net worth soar to over $400 million in a few weeks—and then plunge back to earth with the dot-com crash of 2000! But that stock market “correction” was nothing compared with what we’ve all been through in recent years. The meltdown of 2008–09 was the worst economic crisis since the Great Depression. Do you remember how it felt when it looked like our financial world was coming to an end? The Dow Jones Industrial Average plunged 50%, dragging down your 401(k) with it. The bottom fell out in real estate, and the price of your home may have plummeted by 40% or more. Millions of people lost the gains from a lifetime of hard work, and millions more lost their jobs. During those terrible months, I received more phone calls from a greater variety of people needing help than ever before. I heard from barbers and billionaires. People would tell me they were losing their homes, their savings were gone, their children couldn’t go to college. It just killed me because I know what that feels like. I’ve worked hard and been blessed with financial success, but it wasn’t always that way. I grew up with four different fathers in California’s dusty San Gabriel Valley. I can vividly remember, as a kid, not picking up the phone or answering the door because I knew who was there—it was the bill collector, and we had no money to pay him. As a teenager, I was embarrassed to have to wear school clothes we bought for 25 cents at the thrift shop. And kids can be pretty brutal when you are not “hip.” Today the thrift-store shopping would be a sign of coolness—go figure! And when I finally got my first car, a beat-up 1960 Volkswagen bug, the car had no reverse, so I parked on a hill, and there was never enough money for gas. Thankfully, I didn’t buy the theory that this is just how life is. I found a way to overcome my circumstances. Because of my own experiences, I can’t stand to see anybody suffer. It makes me crazy. And 2008 brought more needless economic suffering than I had seen in my lifetime. In the immediate aftermath of the stock market crash, everybody agreed that something had to be done to fix the system. I kept waiting for those promised changes to happen, but years later it was still business as usual. And the more I learned about the roots of the financial crisis, the angrier I got. My personal tipping point came after I watched an Academy Award–winning documentary called Inside Job, narrated by Matt Damon, about the Wall Street gunslingers who took crazy risks with our money and nearly toppled the economy. And their penalty? We the taxpayers bailed them out, and somehow the same cast of characters was put in charge of the recovery. By the end of the film, I was seething with frustration, but I converted my anger into a question: “What can I do?” This book was the answer. There is no friend as loyal as a book. —ERNEST HEMINGWAY It wasn’t an easy decision. I haven’t written a major book in almost 20 years. Last year, on average, I was on a plane once out of every four days traveling to more than 15 countries. I run a dozen companies and a nonprofit. I have four children, an amazing wife, and a mission I love and live. To say my life is full would be an understatement. Both Unlimited Power and Awaken the Giant Within were international bestsellers, and that was enormously gratifying, but I haven’t felt compelled to write again until now. Why? I love live events! I love the total-immersion experience, the immediacy and flexibility of communicating with 5,000 to 10,000 people at a time, going deep and keeping their focused attention for 50 hours in a weekend. And that in a day and age when most people won’t sit for a three-hour movie that someone spent $300 million to make. I can remember vividly Oprah telling me that she couldn’t stay for more than two hours—and 12 hours later she was standing on a chair and shouting to the camera, “This is one of the greatest experiences of my life!” Usher told me he loved my work, but certainly he wouldn’t last through an entire weekend. Just like Oprah, he ended up having the time of his life. Fifty hours later he said to me, “This is like going to one of the greatest concerts of my life! I was writing notes like crazy, and you made me laugh my ass off!” My live-event experience is filled with so much emotion, music, excitement, and profound insights that people are moved to take massive action. They don’t just think, they don’t just feel, they change, they transform. And my body language and my voice are essential to my style of teaching. So, I’ve got to confess, when I sit down to write words on a page, I feel like there’s a gag over my mouth and one hand tied behind my back! Heck, I found that I could reach more than ten million people through one TED Talk alone. So what made me change my mind? The financial crisis caused tremendous pain, but it also made us reevaluate what’s most important in our lives—things that have nothing to do with money. It was a time to get back to basics, to the values that have sustained us through troubled times before. For me, it made me remember the days when I was sleeping in my car homeless and searching for a way to change my life. How did I do it? Books! They helped to establish me. I’ve always been a voracious reader: as a young man, I decided I was going to read a book a day. I figured leaders are readers. I took a speed-reading course. I didn’t quite read a book a day, but over seven years, I did read more than 700 books to find the answers to help myself and others. Books on psychology, time management, history, philosophy, physiology. I wanted to know about anything that could immediately change the quality of my life and anyone else’s. But the books I read as a child made the deepest impression. They were my ticket out of a world of pain: a world with no compelling future. They transported me to a realm of limitless possibilities. I can remember Ralph Waldo Emerson’s essay on self-reliance, and the lines “There is a time in every man’s education when he arrives at the conviction that envy is ignorance; that imitation is suicide; that he must take himself for better, for worse, as his portion.” Another was a book by the philosopher James Allen, As a Man Thinketh, echoing the biblical proverb “As a man thinketh, so his heart will be.” It came to me at a time when my mind was a battlefield filled with fear. He taught me that everything we create in our lives starts with thought. I devoured biographies of great leaders, great thinkers, great doers, like Abraham Lincoln, Andrew Carnegie, John F. Kennedy, and Viktor Frankl. I realized that the great men and women of the world had experienced pain and suffering much greater than my own. They weren’t just lucky, or even fortunate; somehow there was something in them, an invisible force that would not let them settle for less than they could do, or be, or give. I realized that biography is not destiny; that my past was not equal to my future. Another favorite was an American classic from 1937, Napoleon Hill’s Think and Grow Rich. Hill spent two decades in the early 20th century interviewing 500 of the world’s most accomplished individuals, from Andrew Carnegie, to Henry Ford, to Theodore Roosevelt, to Thomas Edison, finding out what made them tick. He discovered that they all shared a relentless focus on their goals, and a combination of burning desire, faith, and persistence to achieve them. Hill’s message that ordinary people could overcome any obstacle to success gave hope to a generation of readers struggling through the Great Depression. Think and Grow Rich became one of the bestselling books of all time. Napoleon Hill’s quest has been an inspiration to me. Like his classic, this book is modeled on seeking out the best of the best in the world, from Warren Buffett to Sir Richard Branson—and including the man that experts in the field have called the Edison of our day: Ray Kurzweil, who invented the first digital music synthesizers, the first software to translate text into speech; he’s the man behind Siri on your iPhone. He developed a device that allows the blind to walk the streets and read road signs and order from any menu. Today Ray is head of engineering development for Google. But I wanted to write a book that went beyond the psychology and science of achievement to come up with a real plan, with real tools that you could use to build a better future for yourself and your family. It would be a handbook, a blueprint, an owner’s manual for the new economy. As I began to reassociate to the power of a book, I thought, “I need to put these answers in a form that’s available to anyone.” And with today’s technology, this book has a few great advantages to help push you along the way. It has electronic segments where you can go online to see some of the men and women I interviewed and hear their words. We have an app that’s designed to trigger you to walk through the 7 Simple Steps so you don’t just learn the ideas but follow through and get the financial freedom you truly deserve. By the way, when I began this adventure, people told me I was crazy. Many so-called experts—and even friends!—warned me I was nuts to try to bring the complex world of finance to a wide audience. Even my publisher begged me to write about anything else. But I knew I could pull it off if I found the best voices to guide the way. Most of the people I’ve interviewed here do not give interviews, or if they do them, they’re extremely rare. They might speak in Davos, Switzerland, at the World Economic Forum, or for the Council on Foreign Relations, but bringing their knowledge to the general population, in their voices, has never been done before. Sharing their critical insights in a way that anyone could act on became the mission of this book. I’ve been honored to have great relationships with some of the most influential people in the world: friends in high places who were willing to make a few calls on my behalf. Before long I found doors opening to me, and I was getting access to the masters of the game. Welcome to the jungle . . . —“WELCOME TO THE JUNGLE,” Guns N’ Roses So where do I start? I decided to start with a person who most people have never even heard of, even though he’s been called the Steve Jobs of investing. But ask any of the world’s financial leaders, whether they’re the chairwoman of the Federal Reserve, the head of an investment bank, or the president of the United States, and they all know about Ray Dalio. They read his weekly briefing. Why? Because governments call to ask him what to do, and he invests their money. Same with pension funds and insurance companies. He’s the founder of Bridgewater Associates, the world’s largest hedge fund, with $160 billion in assets under management (AUM) at a time when a large hedge fund might manage $15 billion. It used to take a net worth of $5 billion and an initial $100 million investment just to get in the door. But don’t bother trying; he won’t take your money—or anybody else’s—at this point. Ray Dalio came from an unlikely background, born in Queens, New York, to a jazz musician father and a homemaker mother. He started as a caddy who picked up his first stock tips at the local golf course. Now he’s worth about $14 billion and is the 31st richest man in the United States. How did he do it? I had to find out! Here’s a man whose Pure Alpha fund, according to Barron’s, has lost money only three times in 20 years, and in 2010 he produced 40% returns for his key clients. Over the life of the fund (since launching in 1991), he’s produced a 21% compounded annual return (before fees). If there’s anyone I wanted to ask, “Can the average investor still make money in this crazy, volatile market?” it was Ray. So when he told me, “There’s no question you can still win,” I was all ears! How about you? It’s not that easy to get access to Ray Dalio. But as it turns out, Ray already knew who I was, and he was a fan of my work. One afternoon I sat down with him in his surprisingly modest house on a wooded island off the Connecticut coast. He got right to the point, telling me that individual investors like you can win—but only if you don’t try to beat the pros at their own game. “What they gotta know, Tony, is you can win,” he said. “But you can’t do it by trying to beat the system. You don’t want to try. I have fifteen hundred employees and forty years of experience, and it’s a tough game for me. This is poker with the best poker players on earth.” Ray is 65 years old, speaks with a soft New York accent, and uses his hands like a conductor when he talks. He reminded me that poker, like playing the markets, is a zero-sum game. For every winner, there has to be a loser. “As soon as you’re in that game, you’re not just playing poker against the guys across the table. It’s a world game, and only a small percentage of people make real money in it. They make a lot. They may take money away from those who are not as good at the game,” he said. “So I would say to your investors, the average guy: you don’t want to be in that game.” I asked Ray, “If you’re telling people they can’t compete in this game, should they be thinking twice about letting someone else play for them? What about the brokers and mutual fund managers who say they can get you better returns?” “You think you’re going to a doctor, but they’re not doctors,” he told me. We’re trained to throw our total faith into doctors and do whatever they tell us without thinking, hoping they have all the answers. But Ray Dalio says that typical money managers are not going to help you win because they don’t have the skills or resources to play in the big game, either. “If they did, you wouldn’t have access to them. “The Olympics is easy compared with what we do,” Ray continued. “This is more competitive. You can go to your broker-dealer, and you think you have to say, ‘Is that a smart guy?’ He might be smart. He might care about you. But you’ve got to ask, ‘How many gold medals has he won?’ You have to be very, very careful, because there are so many people who’d give you advice, but they have to be good enough to be able to take it away from the best in the game.” So what’s the answer? “Instead of trying to compete, you’ve gotta learn there is a passive way to win. There’s a way to not put all your eggs in one basket. It’s a system to protect yourself against all downsides, because the best investors know they’re going to be wrong, no matter how smart they are.” Wait a second! Ray Dalio, who gets a compounded return of 21%, can still be wrong? “That’s right, Tony, I’m gonna be wrong,” he said. “We’re all gonna be wrong. So we gotta set up a system that protects us from that.” So, at the end of nearly three hours together, it was time for the big question: “Ray, what is that system?” And Ray said to me, “Tony, the last time I took money, you had to have a five-billion-dollar net worth to get access to my knowledge and the minimum investment was one hundred million. It’s really complex, and it changes a lot.” I said, “C’mon, Ray. You just told me that nobody new can get access to you anyway. I know how much you care about people. If you couldn’t pass on your money to your children, and you could pass on only a set of principles or a portfolio—a system that will allow them to make money in good times and bad like you have—tell me what that would look like for the average investor?” We went back and forth a bit, and in the end, guess what? He walked me through the sample ideal portfolio, the exact investment mix that would help you maximize returns with the least amount of downside volatility in any market. What’s a portfolio? If you’re not familiar with the term, it’s just a collection of diverse investments that you put together to try to maximize your financial returns. Ray revealed a simple system of what to invest in and in what percentages and amounts. And when we looked back in history, we found that by using his strategy, you would have made money 85% of the time over the last 30 years (1984 through 2013)! That’s only four losing years in the last 30 years (1984 through 2013)—with a maximum loss of 3.93% in a year (and an average negative year of just 1.9%). And one of those four down years was just 0.03%, which most would chalk up to a breakeven. In 2008 you would have been down just 3.93% when the rest of the market lost 51% (from peak to trough)—all by just doing what Ray has shared with us. The plan he shared here has averaged a return of just under 10% per year (net of fees), and it’s an investment plan that you can easily set up for yourself! And it’s only one of the systems from the world’s greatest investors that you’ll learn when you get to section 6, “Invest Like the .001%: The Billionaire’s Playbook.” Now, I know you want to jump ahead right now and look up the portfolio, but I want to remind you, there are 7 Simple Steps you have to follow to make this work. If you haven’t figured out where you’re going to get the money to invest, you haven’t figured out what your goals are, and you don’t know what the rules of the game are, then access to the best portfolio in the world will be worthless. So stay with me, and let’s stay in sequence. There’s a method to my madness! How valuable is that information from Ray Dalio? If others have to have $5 billion to get access, and it cost you only the price of this book, then it’s not a bad return on investment! As exciting as it was to learn his investment system, what I found most interesting about Ray is how he looks at the world. He sees it as a jungle, and his life as a constant, exhilarating battle. “The way I look at life, Tony, we all have something we want, something that represents a greater quality of life. But to get there, you have to go through a jungle filled with challenge. If you pass through it, you get to the life you desire. It’s like I’m on one side of the jungle,” he told me. “And you could have a terrific job, a terrific life if you can cross that jungle. But there are all of these dangerous things and they can all kill you. So, do you stay on one side and have a safe life, or do you go into the jungle? How do you approach that problem?” Ray goes into the jungle with very smart and trusted friends by his side, always asking, “What don’t I know?” “This is the key thing,” he said. “What has been very successful for me through my whole life is to not be arrogant about knowing, but to embrace the fact that I have weaknesses; that I don’t know a lot about this, that, and the other thing. The more you learn, the more you realize you don’t know.” Is that ever the truth! And I was a living example. I went into this book thinking I knew what I was doing. After all, I’d had decades of experience. But during my four-year quest to meet the best investors on earth, I’ve been humbled over and over again by how much I didn’t know. And I found that unlike the talking heads who claim to have all the answers, the best are essentially humble. Like Ray Dalio, they’ll tell you what they think and then admit they could be wrong. Riches are not an end of life, but an instrument of life. —HENRY WARD BEECHER As my journey continued, I found my mission was evolving. At each stop along the way, I was discovering tools, opportunities, and investment products available to ultrawealthy people that the average person never hears about. And ironically, some of the best ones have very little risk, or they have limited risk with what they call asymmetric risk/reward—which means the investors get a big upside potential for very little downside exposure. And that’s what the “smart money” lives for. It was exciting for me to find out about these opportunities and take advantage of some of them, because at this stage of my life, I’m old enough, fortunate enough, and well off enough financially to have those choices. But my sons and my daughter don’t, and some of my dearest friends don’t, and, most important, likely neither do you (unless you’ve got tens of millions stashed away and you’re just reading this to see where Ray Dalio puts his money). So I changed from being just a passive information gatherer in the world of investing to becoming a passionate advocate for my friends and readers. I wasn’t just going to tell you about something that wealthy people get to do; I wanted to open up these opportunities for everyone. So I looked for companies that have focused exclusively on the ultrawealthy and then worked to convince them to create new opportunities for investors at any economic level or any age level. I’ve worked to highlight their services, and in some cases, I’ve gone all in and partnered with them to help create new products that will be available to you for the first time. But what I’m most proud of is that I’ve persuaded many of them to open up their services for people who are not wealthy—for free! In the pages that follow, you’ll learn about a revolutionary strategic venture between Stronghold Wealth Management and HighTower, the fifth largest investment advisory firm in the United States, which provides transparent, conflict-free advice to the ultrawealthy. It will now provide some of the same extraordinary planning services at no charge to you, regardless of how much you have to invest. You will learn how to access a complimentary online platform that will allow you to test-drive your broker and see if you’re truly overpaying for underperformance. I’m hoping this could be the beginning of a sea change in the world of personal finance, a real leveling of the playing field for the first time. Why in the world do they do this? First, it’s the right thing to do. People need to know what they are truly paying for. Second, they know that people with lots of money didn’t always start out with lots of money. It’s the secret to wealth, remember? Do more for others than anybody else does. And if HighTower does this for you at this stage of your life, they’re betting you won’t forget them in the future. You’ll become a raving fan and a loyal client forever. You get the help you need today for no money and HighTower gets a future client. That’s financial synergy. An opportunity to create the elusive win-win that rarely shows up in the world of Wall Street. Kindness in words creates confidence. Kindness in thinking creates profoundness. Kindness in giving creates love. —LAO-TZU One of the great gifts of “mastering the game” is not only being able to win but to have enough to make a difference for others. No matter how difficult our situation may be, there are always people who are suffering more. When someone creates wealth, it’s his or her privilege, and, I believe, his or her responsibility, to give back to those who are just beginning the journey or those who have experienced tragedies that have knocked them off the path. As I will share with you later, my family was the recipient of a simple act of kindness when we literally had no food, and that changed my entire perspective on people and life. It helped shape who I am today. So for decades I have worked to give back by feeding more than 2 million people a year through my Anthony Robbins Foundation, and for the last few years, my wife and I have personally matched all their contributions. Today I’m proud to say that a kid who started with no food personally helps 4 million people a year to feel cared for and fed. In total, over 38 years, I’ve had the honor to feed 42 million people. I want to use this book as a vehicle to help you develop enough wealth—both physical and emotional—so that you can be a force for good through your economic contributions as well as your time. I will tell you, though, if you won’t give a dime out of a dollar, you won’t give $1 million out of $10 million. The time to give is now! When I had nothing, I began this process. The reward is that if you give, even at the times when you think you have very little, you’ll teach your brain that there is more than enough. You can leave scarcity behind and move toward a world of abundance. So I’d like to get you started on this path. As you read this book, know that you are not only helping yourself create a new financial future, but you are helping those 17 million American families who face hunger every day.2 How? I decided to do more in one year than I have in my entire lifetime. In the name of my readers, at the time of this publication, I am donating 50 million meals to the men, women, and children in this country who suffer from homelessness. You’d be surprised who these people are. Yes, some have been scarred by memories of serving in war and some are mentally or physically challenged. But millions are people just like you and me who had a normal life and then the loss of a job, a health problem, or a family loss pushed them over the edge to where they could not meet their financial obligations. Most Americans are only a few lost paychecks away from insolvency. So together let’s reach out to help. As I was writing this book, Congress slashed $8.7 billion from the food stamp budget. I witnessed firsthand the devastating impact this had on the volunteers and nonprofit organizations that work in the fight against hunger. That’s why I put up 50 million meals, and I’m using my influence to get matching funds so that we can provide 100 million meals to feed the hungry. You’re welcome to join in and help, but know this: because you bought the book, the one you are holding in your hand or reading on your iPad, you’re personally feeding 50 people. My hope is that by the end of this book, you’ll be inspired to make a small direct donation on your own as well. I have information in the last chapter on how you can use your “spare change to help change the world.” There are so many simple and enjoyable ways in which you can give and create a legacy you can feel truly proud of. — Whew, this has been quite a full chapter! I know it’s a lot, but hopefully it doesn’t feel long! Do I have you hooked on what’s really possible for your life now? Can you imagine what it will feel like to take yourself from where you are today to where you really want to be? What would it be like to have your experience of money no longer be a source of stress but rather a feeling of excitement and pride? I promise you the feelings you will have as you conquer this area of your life will create a new momentum not only with financial success but also in other areas of life that matter even more! Are you ready? One final note, if you’ve read this far, I want to compliment you because, unfortunately, you’re in the top 10% of people who buy a nonfiction book. That’s right: statistics show that fewer than 10% of people who buy a book ever read past the first chapter. How insane is that? I wrote this book to be simple but also to give you the opportunity to go deep—to master the game, to arm you with the skills to master your financial world once and for all. It’s not meant to be a “little red book of investing.” So I want to invite you now, and challenge you, to commit to take the full journey with me through these pages. I promise you the rewards you will reap will last for decades to come. So turn the page and let me first give you a quick overview of what it will take to have an income for life—a paycheck that gives you the life you have (or the lifestyle you desire) without ever having to work again. Once you achieve this, you will work only if and because you want to. Let’s grab an outline of the road ahead and discover the 7 Simple Steps to Financial Freedom. * * * 1. Except for a few “unicorns,” a tiny and exclusive group of “financial wizards” that the general population does not have access to, but I’ll introduce you to in the chapters ahead. 2. Feedingamerica.com CHAPTER 1.2 THE 7 SIMPLE STEPS TO FINANCIAL FREEDOM: CREATE AN INCOME FOR LIFE * * * A journey of a thousand miles begins with a single step. —LAO-TZU Tell me something: Have you ever had that experience, you know . . . the completely humiliating experience of playing a video game against a child? Who always wins? The child, of course! But how does she do it? Is she smarter, quicker, stronger? Here’s how it works. You’re visiting your niece or nephew, and she or he will say, “Come play it with me, Uncle Tony!” You immediately protest, “No, no, I don’t know this game. You go ahead and play.” And they say, “C’mon, it’s easy! Just let me just show you.” Then they shoot a few bad guys when they pop up on the screen. You still resist, so they start pleading. “C’mon! C’mon! Please, please, please!” You love this kid, so you give in. Then she says the simple words that tell you you’re being set up: “You go first.” So you decide you’re gonna make it happen! You’re going to show this kid a thing or two. And then what? Bam! Bam! Bam! In 3.4 seconds, you’re dead. Shot in the side of the head. Smoked. Then the kid takes the gun, and suddenly it’s bam-bam-bam-bam-bam! The bad guys are dropping from the sky and whizzing around every corner in hyperspeed. The kid is anticipating every move and picking them off—and about 45 minutes later, you get your second turn. Now you’re ticked off, and even more committed. This time you last a full five seconds. And she goes another 45 minutes. You know the drill. So why do these kids always win? Is it because they have better reflexes? Is it because they’re faster? No! It’s because they’ve played the game before. They already have one of the greatest secrets to wealth and success in life: they can anticipate the road ahead. Remember this: anticipation is the ultimate power. Losers react; leaders anticipate. And in the following pages, you’ll learn to anticipate from the best of the best: the Ray Dalios and the Paul Tudor Joneses and the army of 50 other extraordinary financial leaders who know the road ahead. They’re here to help you anticipate the problems and challenges on the path to financial freedom so you don’t get hurt along the way. Like Ray Dalio says, it’s a jungle out there, full of things that can kill you financially, and you need trusted guides to help you get through it. With their help, we’re going to lay out a plan that will help you anticipate the challenges, avoid unnecessary stress, and arrive at your ideal financial destination. I want to give a quick overview of where we’re going and how this book is set up, so you can make the best use of it. But before we do that, let’s be clear about our true purpose. This book is committed to one primary outcome: to set you up so you have an income for life without ever having to work again. Real financial freedom! And the good news is, it can be achieved by anyone. Even if you’re starting out in debt, deep in the hole—no exaggeration—with a little bit of time, consistent focus, and the right strategies applied, you can get to financial security or even independence in a few years. Before we walk through the steps, let’s first take a look at why being financially secure used to seem so simple. What’s changed? And what do we need to do? Let’s start with a little history lesson. You can be young without money, but you can’t be old without it. —TENNESSEE WILLIAMS Everything about your financial life seems so much harder these days, doesn’t it? I’m sure you’ve wondered why it is so difficult to save money and retire comfortably. We’ve come to treat retirement as a given in our society; a sacrosanct stage of life. But let’s not forget that retirement is a relatively new concept. The idea has really served only a generation or two—for most of us, our parents and grandparents. Before their time, folks generally worked until they couldn’t. Until they died. Do you remember your history? When was Social Security invented? It was created under Franklin Delano Roosevelt during the Great Depression, when there was no social safety net for old and sick people. And “old” was a different concept back then. The average life expectancy in the United States was 62 years. That’s all! And Social Security retirement benefits were supposed to kick in at age 65, so not everybody was expected to collect, or at least not for very long. In fact, Roosevelt himself didn’t live long enough to cash in on his benefits (not that he would have needed them). He died at the age of 63. The Social Security Act eased the suffering of millions of Americans during a time of crisis, but it was never intended to become a replacement for retirement savings—just a supplement to cover the most basic needs. And the system wasn’t designed for the world we live in today. Here’s the new reality: There’s a 50% chance that, among married couples, at least one spouse will live to the age of 92 and a 25% chance that one will live to 97. Wow! We are closing in on a life expectancy of age 100 pretty damn quick. And with longer lives, we expect longer—much longer—years for our retirement. Fifty years ago, the average retirement was 12 years. Someone retiring today at age 65 is expected to live to 85 or longer. That’s 20-plus years of retirement. And that’s the average. Many will live longer and have 30 years of retirement! It is not realistic to finance a 30-year retirement with 30 years of work. You can’t expect to put 10% of your income aside and then finance a retirement that’s just as long. —JOHN SHOVEN, Stanford University professor of economics How long do you expect to live? All the breakthroughs we’re seeing in medical technology might add years to your life—decades, even. From stem cell technology, to 3-D printing of organs, to cellular regeneration, technologies are exploding onto the scene. You’ll hear about them in chapter 7.1, “The Future Is Brighter Than You Think.” It’s a blessing, but are you ready? Many of us are not. A recent survey conducted by Mass Mutual asked baby boomers to name their number one fear. What do you think it was? Death? Terrorism? Pestilence? No, the number one fear of baby boomers was outliving their savings. (Death, by the way, checked in a distant second.) The baby boomers have a right to be scared, and so do millennials. According to an Ernst and Young study, 75% of Americans can expect to see their assets disappear before they die. And the Social Security safety net—if it survives into the next generation—won’t provide a reasonable standard of living on its own. The current average benefit is $1,294 per month. How far do you think that will stretch if you live in New York, Los Angeles, Chicago, or Miami? Or how long will the equivalent system work in your country if you live in London, Sydney, Rome, Tokyo, Hong Kong, or New Delhi? No matter where you live, if you don’t have another source of income, you could end up the best-dressed greeter at Wal-Mart. It’s obvious that we’ll need to stretch our retirement income longer than ever before—smack in the middle of a flat economy at a time when many are struggling to recover lost ground. How have we responded to this growing emergency? A lot of us find the problem so painful and overwhelming that we just block it out and hope it goes away. According to EBRI, the Employee Benefit Research Institute, 48% of all working Americans haven’t even calculated how much money they’ll need to retire. Yep, 48%! That’s an astounding number: almost half of us have yet to take one of the first steps toward planning for our financial futures—and our time of reckoning is coming. So what’s the solution? It starts with taking Step 1: make the most important financial decision of your life. By the time you finish this book, you’ll not only have an automated plan for saving and investing, but also you’ll know how to create income without having to work. Wait a second! That’s too good to be true, you’re thinking. And anything that sounds too good to be true probably is, right? Yet I’m sure you know there are some exceptions to the rule. What would you say if I told you that today there are financial instruments that will let you make money when the markets go up and not lose a penny when they go down? Twenty years ago, it would have been impossible for ordinary investors to imagine such a thing. But investors using these tools in 2008 didn’t lose a dime or even a night’s sleep. I have this kind of security and freedom for my family. It’s an amazing feeling to know you’ll never run out of income. And I want to make sure you have it for yourself and your family as well. In this book, I will show you how to create a guaranteed lifetime income stream. A paycheck for life without ever having to work again. Wouldn’t it be great to open up your mail at the end of the month, and instead of finding a statement with an account balance you’re hoping hasn’t gone down, you find a check in its place? Imagine this happening every month. That’s income for life, and there’s a way to get it. In section 2, we’ll show you how to build your investments into a sizeable nest egg—what I call a critical mass—that will enable you to make money even while you sleep! With a few simple strategies, you’ll be able to create a guaranteed income stream, allowing you to build, manage, and enjoy your own personal “pension” on your own terms. It’s probably hard for you to imagine that there’s a structure available today that can deliver for you: • 100% principal protection, meaning that you can’t lose your investment. • The returns in your account are directly linked to the upside of the stock market (for example, the S&P 500). So if the stock market goes up, you get to participate in the gains. But if the market goes down, you don’t lose! • You also have the ability to convert your account balance to a guaranteed income that you’ll never outlive. You can stop imagining—it’s here! It’s one of the opportunities that’s now available for investors like you. (And you will find out about it in chapter 5.3.) To be clear, I’m not suggesting here that, even with income for life, you’ll want to stop working when you reach the traditional retirement age. Chances are you won’t. Studies show that the more money you earn, the more likely you are to keep working. It used to be that the goal was to get rich and retire by the age of 40. Now the goal is to get rich and work until you’re 90. Nearly half of all individuals who earn $750,000 per year or more say they will never retire, or if they do, the earliest they would consider it is age 70. How about the Rolling Stones and Mick Jagger at age 71—still rockin’ the world? Or think of business moguls like Steve Wynn at 72. Warren Buffett at 84. Rupert Murdoch at 83. Sumner Redstone at 91. At those ages they were all still running their businesses and crushing it. (Probably still are.) Maybe you will be, too. But what happens if we can’t work, or don’t want to work anymore? Social Security alone is not going to be much of a cushion for our retirement. With 10,000 baby boomers turning 65 every day and the ratio of old to young getting more and more lopsided, it may not even be around, at least as we know it. In 1950 there were 16.5 workers paying into the Social Security system to support one person getting benefits. Now it’s 2.9 workers per recipient. Does this ratio sound sustainable to you? In an article titled “It’s a 401(k) World,” Thomas Friedman, the New York Times columnist and bestselling author, wrote, “If you are self-motivated, wow, this world is tailored for you. The boundaries are all gone. But if you’re not self-motivated, this world will be a challenge because the walls, ceilings and floors that protected people are also disappearing. . . . There will be fewer limits, but also fewer guarantees. Your specific contribution will define your specific benefits much more. Just showing up will not cut it.” As for those sweet employee pensions our parents and grandparents counted on in retirement, they too are going the way of blacksmiths and telephone operators. Only about half of America’s private sector workforce is covered by any kind of retirement plan at all, and most of those are now do-it-yourself, take-all-the-risk models. If you’re a municipal, state, or federal employee, you might still enjoy a government-backed pension, but with every passing day, there are more folks, like those from Detroit to San Bernardino, wondering if that money will be there when it’s their time to collect. So what’s your retirement plan? Do you have a pension? A 401(k)? An IRA? Today about 60 million Americans participate in 401(k) plans, totaling over $3.5 trillion. But they can be a bad, even disastrous deal for you if you’re in one of the high-fee plans that dominate the market. That’s why, if you are in a 401(k) plan, you’ve got to read chapter 2.5, “Myth 5: ‘Your Retirement Is Just a 401(k) Away.’ ” What you’ll learn and the simple changes you can make could transform your life—giving you peace of mind and the certainty you need today—and mean the difference between retiring early and not being able to retire at all. DEATH AND TAXES: THE ONLY CONSTANTS Not to be outdone by volatile markets (moving faster than the speed of light, literally), exorbitant (and hidden) fees, and an outdated pension system, let’s not forget about our good old friend the tax man. Oh, the tax man. He’ll take up to 50% (or more!), thank you very much—on everything you earn. If you thought hidden fees were the only drag on accumulating wealth, you’ve missed the biggest culprit of all. We all know the drag of taxes, to some degree, but few realize just how big a bite taxes take from our ability to achieve financial freedom. Sophisticated investors have always known this: it’s not what you earn, it’s what you keep that matters. The greatest investors in the world understand the importance of tax efficiency. Just how destructive can taxes be when compounded over time? Let’s try a metaphor: say you’ve got one dollar, and somehow you’re able to double it every year for 20 years. We all know this game. It’s called compounding, right? After year one, you’ve doubled your dollar to $2. Year two: $4. Year three: $8. Year four: $16. Year five: $32. If you had to guess, what do you think your dollar has grown to by year 20? Don’t cheat and peek ahead. Take a moment and guess. Through the magic of compounding, in just two decades your dollar turns into (drumroll, please): $1,048,576! That’s the incredible power of compounding! As investors, we want to tap into this power. But, of course, the game is not that simple. In the real world, Caesar wants to be paid first. The tax man is looking for his piece. So what’s the impact of taxes on the same scenario? Once again, take a guess. If you’re fortunate enough to pay only 33% in taxes per year, what do you think your dollar has now grown to after taxes in 20 years? Again, take a moment and really guess. Well, if the tax-free number was $1,048,576 . . . hmmm. With 33% tax, would that be about $750,000? Or even $500,000? Think again, Kemosabe. Now let’s look at the next column and see the incredible dollar-draining power when we take out money for our taxes each year before compounding—doubling our account. Assuming an annual tax rate of 33%, at the end of those same 20 years, the actual net amount you’ll end up with is just over $28,000! That’s right, $28,000! A difference of over $1 million—and that doesn’t even account for state taxes! In some states, such as California, New York, and New Jersey, you can expect the total to be significantly smaller still. Sure, this dollar-doubling, dollar-draining scenario is based on returns you’ll never see in the real world—but it illustrates what can happen when we neglect to consider the impact of taxes in our financial planning. Given the way things are going in Washington, do you think taxes are going to be higher or lower in the coming years? (You don’t even have to answer that one!) In section 5, I’m going to give you the “in” that until now was available only to sophisticated investors or ultra-high-net-worth individuals. I’m going to show you what the smartest investors already do—how to take taxes out of the equation, using what the New York Times calls “the insider’s secret for the affluent.” It’s an IRS-approved method to grow your money tax free, and you don’t have to be rich or famous to take advantage of it. It could literally help you achieve your financial independence 25% to 50% faster, depending upon your tax bracket. No person is free who is not master of himself. —EPICTETUS But plan or no plan, the future is coming on fast. According to the Center for Retirement Research, 53% of American households are “at risk” for not having enough money in retirement to maintain their living standards. That’s more than half! And remember, more than a third of workers have less than $1,000 saved up for retirement (not including pensions and the price of their home), while 60% have less than $25,000. How can this be? We can’t blame it all on the economy. The savings crisis started long before the recent crash. In 2005 the personal savings rate was 1.5% in the United States. In 2013 it was 2.2% (after topping 5.5% at the height of the meltdown). What’s wrong with this picture? We don’t live in isolation. We know we need to save more and invest. So why don’t we do it? What’s holding us back? Let’s start by admitting that human beings don’t always act rationally. Some of us spend money on lottery tickets even if we know the odds of winning the Powerball jackpot are 1 in 175 million, and that we are 251 times more likely to be hit by lightning. In fact, here’s a statistic that will blow your mind: the average American household spends $1,000 a year on lotteries. Now, my first reaction when I heard this from my friend Shlomo Benartzi, the celebrated professor of behavioral finance at UCLA, was, “That’s not possible!” In fact, I was recently at a seminar and asked the audience how many had bought a lottery ticket. In a room of 5,000 people, fewer than 50 raised their hands. If only 50 people out of 5,000 are doing it and the average is $1,000, then there are plenty of people buying way more. By the way, the record is held by Singapore, where the average household spends $4,000 a year. Do you have any idea what $1,000, $2,000, $3,000, $4,000 set aside and compounded over time could be worth to you? In the next chapter, you’re going to discover how little money it takes to have a half million to one million dollars or more in retirement that requires almost no time to manage. So let’s turn to behavioral economics and see if we can’t find some little tricks that could make the difference between poverty and wealth. Behavioral economists try to figure out why we make the financial mistakes we do and how to correct them without even our conscious awareness. Pretty cool, huh? Dan Ariely, renowned professor of behavioral economics at Duke University, studies how our brains fool us regularly. Human beings evolved to depend on our sight, and a huge part of our brain is dedicated to vision. But how often do our eyes deceive us? Have a look at the two tables below. If I asked you which table is longer, the narrow one on the left or the fat one on the right, most people would naturally pick the one on the left. And if you were one of them, you’d be wrong. The lengths of both tables are exactly the same (go on, measure them if you don’t believe me). Okay, let’s try it again. Which table is longer this time? Wouldn’t you bet anything that the one on the left is still longer? You know the answer, and yet your brain continues to deceive you. The one on the left still looks longer.