Main Unshakeable: Your Financial Freedom Playbook

Unshakeable: Your Financial Freedom Playbook









Year: 2017
Publisher: Simon & Schuster
Language: english
Pages: 256
ISBN 10: 1501164589
ISBN 13: 9781501164583
File: EPUB, 1.66 MB
Download (epub, 1.66 MB)

You may be interested in


Most frequently terms

Thank you very much.....
21 March 2019 (20:41) 
this is deadmasterfourtynine, thank you for this download.
18 June 2019 (15:57) 
thanks a lot for insightful books and articles./

03 February 2020 (14:33) 
Thank you very much
07 February 2020 (03:47) 
How Wall Street Fools You into Overpaying for Underperformance

The name of the game? Moving the money from the client’s pocket to your pocket.


I often ask people “What are you investing for?” I get a variety of answers: from “high returns,” to “financial security,” to “retirement,” to “a beach house in Hawaii.” But before long, nearly everyone’s answers begin to rhyme. What most people really want, regardless of how much money they have today, is freedom. Freedom to do more of what they want, whenever they want, with whomever they want. It’s a beautiful dream, and an achievable one. But how can you sail off into the sunset if your boat has a hole in it? What if it’s slowly but surely taking on so much water that it’ll sink long before it reaches its destination?

I hate to tell you this, but most people are in exactly this position. They don’t realize that they’re doomed to disappointment because of the gradual—but ultimately devastating—impact of excessive fees on their financial well-being. What kills me is that they have no idea this is even happening to them. They have no idea that they are victims of a financial industry that is surreptitiously but systematically overcharging them.

Don’t just take my word for it. The nonprofit organization AARP published a report in which it found that 71% of Americans believe that they pay no fees at all to have a 401(k) plan. That’s right: 7 out of 10 people are entirely unaware that they’re even being charged a fee! This is the equivalent of believing that fast food contains no calories. Meanwhile, 92% admit that they have no idea how much they’re actually paying.I In other words, they’re blindly trusting the financial industry to look out for their best interests! Yup, that’s the very same industry that brought about the global financial crisis! You might as well just hand over your wallet and the password to your debit card.

You know the old saying “Ignorance is bliss”? Well, let me tell yo; u: when it comes to your finances, ignorance is not bliss. Ignorance is pain and poverty. Ignorance is disaster for you and your family—and bliss for the financial firms that are exploiting your inattention!

This chapter will shine a bright light on the subject of fees, so you know exactly what’s going on. The good news: once you know precisely what’s happening, you can put a permanent, life-changing stop to it. Why does this matter so much? Because excessive fees can destroy two-thirds of your nest egg! Jack Bogle spelled it out to me quite simply:

“Let’s assume the stock market gives a 7% return over 50 years,” he began. At that rate, because of the power of compounding, “each dollar goes up to 30 dollars.” But the average fund charges you about 2% per year in costs, which drops your average annual return to 5%. At that rate, “you get 10 dollars. So 10 dollars versus 30 dollars. You put up 100% of the capital, you took 100% of the risk, and you got 33% of the return!”

Did you get that? You forfeited two-thirds of your nest egg to line the pockets of money managers who took no risk, put up none of the capital, and often delivered mediocre performance! Now who do you think will end up with the beach house in Hawaii?

Once you’ve read this chapter, you’ll know how to take back control! By minimizing fees, you’ll save years—or, more likely, decades—of retirement income. This one move will dramatically accelerate your journey to financial freedom. But that’s not all. You’ll also learn how to slash the taxes you pay on your investments. That’s crucial because excessive taxes, like fees, are a destructive force that can overwhelm all the positive steps you’ve taken.

How do you think you’ll feel when you’ve not only identified these two enemies but also defeated them? You’ll feel truly unshakeable!


If you’re looking to achieve financial security, the obvious route is to invest in mutual funds. Maybe your brother-in-law was lucky enough to buy shares in Amazon, Google, and Apple before they skyrocketed. But for the rest of us, picking individual stocks is a losing game. There are just too many things we don’t know, too many variables, too much that can go wrong. Mutual funds offer a simple and logical alternative. For a start, they provide you with the benefit of broad diversification, which helps to reduce your overall risk.

But how do you pick the right funds? There are certainly enough to choose from. As we mentioned earlier, there are about 9,500 mutual funds in America—more than double the number of publicly traded US companies! So it’s safe to say the mutual fund market is a tad saturated. Why do so many companies want to be in this business? Yup, you got it: because it’s fabulously lucrative!

The trouble is, it tends to be much more lucrative for Wall Street than for actual customers like you and me. Don’t get me wrong. I’m not suggesting that the industry is consciously out to screw us. I’m not suggesting that this is a business full of crooks or charlatans! On the contrary, the majority of financial professionals are intelligent, hardworking, and thoughtful. But Wall Street has evolved into an ecosystem that exists first and foremost to make money for itself. It’s not an evil industry made up of evil individuals. It’s made up of corporations whose purpose is to maximize profits for their shareholders. That’s their job.

Even the best-intentioned employees are working within the confines of this system. They’re under intense pressure to grow profits, and they’re rewarded for doing so. If you—the client—happen to do well, too, that’s great! But don’t kid yourself. You’re not the priority!

When I met David Swensen, the chief investment officer for Yale University, he helped me to understand just how badly the mutual fund industry serves the majority of its clients. Swensen is the rock star of institutional investing, famous for having turned a $1 billion portfolio into $25.4 billion! But he’s also one of the most caring and sincere people I’ve ever met. He could easily have left Yale and become a billionaire by starting his own hedge fund, but he’s guided by a deep sense of duty and service to his alma mater. So I wasn’t surprised to hear his dismay at the way many fund companies mistreat their clients.

As he put it: “Overwhelmingly, mutual funds extract enormous sums from investors in exchange for providing a shocking disservice.”

What service is it that funds are supposed to provide? Well, when you buy an actively managed fund, you’re essentially paying for the manager to generate market-beating returns. Otherwise wouldn’t you be better off just sticking your money in a low-cost index fund, which attempts to replicate the returns of the market?

As you can imagine, the people who run actively managed funds are no fools. They aced their math tests in high school, studied economics and accounting, and earned MBAs from the world’s best graduate schools. Many of them even wear suits and ties! And they’re dedicated to researching and selecting the very best stocks for their funds to own.

So what could possibly go wrong? Pretty much everything . . .

The Human Factor

Fund managers try to add value by predicting which companies will perform best in the weeks, months, or years to come. They can avoid or “underweight” particular sectors (or countries) that they believe have unattractive prospects. They can build up cash if they can’t find stocks worth buying—or they can invest more aggressively when they’re feeling bullish. But it turns out that the professionals aren’t really any better at predicting the future than the rest of us. The truth is, humans are generally pretty lousy at making predictions! Perhaps that’s why you never see a newspaper headline that says “Psychic Wins the Lottery!”

When active fund managers trade in and out of stocks, there are plenty of opportunities to make mistakes. For example, they don’t just have to decide which stocks to buy or sell, but when to buy or sell them. And every decision obliges them to make another decision. The more decisions they face, the more chances they have to mess up.

To make matters worse, all this trading gets expensive. Every time a fund trades in or out of a stock, a brokerage firm charges a commission to execute the transaction. It’s a bit like gambling at a casino: the house gets paid no matter what. So the house always wins in the end! In this case, the house is a brokerage firm (like the Swiss financial company UBS or Merrill Lynch, the wealth management division of Bank of America) that charges a toll every time the fund manager makes a move. Over time those tolls add up. As it happens, I’m working on this chapter while staying at a hotel in Las Vegas run by my buddy Steve Wynn, who became a billionaire by creating some of the world’s most popular casinos. As Steve will tell you, it’s much better to be the one who collects the tolls than the one who pays them!

Like poker, investing is a zero-sum game: there are only so many chips on the table. When two people trade a stock, one must win and one must lose. If the stock goes up after you buy it, you win. But you’ve got to win by a big enough margin to cover those transaction costs.

Wait, it gets worse! If your stock goes up, you’ll also have to pay taxes on your profits when you sell the stock. For investors in an actively managed fund, this combination of hefty transaction costs and taxes is a silent killer, quietly eating away at the fund’s returns! To add value after taxes and fees, the fund manager has to win by a really big margin. And, as you’ll soon see, that ain’t easy.

Do your eyes glaze over when we start talking about taxes? I know, I know! This isn’t the sexiest topic. But it should be! Because the largest expense in your life is taxes, and paying more than you need to pay is insane—especially when it’s absolutely avoidable! If you’re not careful, taxes can have a catastrophic impact on your returns. Here’s an extreme yet surprisingly common example:

Let’s say you invest in a fund in December. Then, the next day, the manager sells a stock that’s shot up over the past 10 months. Since you’re now an owner of the fund, you’ll be getting a tax bill for those gains, even though you didn’t benefit one bit from the stock’s meteoric rise!II Nobody said the tax code was fair.

Another common problem has to do with how long actively managed funds hold their investments. Most are trading constantly. They sell many of their investments in less than a year. That means you no longer benefit from the lower capital gains tax rate. So regardless of how long you hold the fund, you’ll be taxed at your higher ordinary income tax rate.

Why should you care? Because your profits could be slashed by 30% or more, unless you’re holding the fund inside a tax-deferred account such as an IRA (individual retirement account) or a 401(k) plan. Not surprisingly, fund companies don’t like to dwell on these tax issues, preferring to tout their pretax returns!

Imagine that over time you’re losing two-thirds of your potential nest egg to fees—and you’re giving up another 30% in unnecessary taxes. How much will really be left for your family’s future?

So what’s the antidote?

Index funds take a “passive” approach that eliminates almost all trading activity. Instead of trading in and out of the market, they simply buy and hold every stock in an index such as the S&P 500. This includes companies like Apple, Alphabet, Microsoft, ExxonMobil, and Johnson & Johnson—currently the five biggest stocks in the S&P 500. Index funds are almost entirely on autopilot: they make very few trades, so their transaction costs and tax bills are incredibly low. They also save a fortune on other expenses. For one thing, they don’t have to pay enormous salaries to all those active fund managers and their teams of analysts with Ivy League degrees!

When you own an index fund, you’re also protected against all the downright dumb, mildly misguided, or merely unlucky decisions that active fund managers are liable to make. For example, an active manager is likely to keep a portion of the fund’s assets in cash, ready to invest if an enticing opportunity arises—or ready to meet redemption requests if lots of investors decide to sell their shares in the fund. Keeping some cash on hand isn’t a bad idea, and it’s handy when the market falls. But cash doesn’t earn a return, so it will underperform stocks over time, assuming that the market continues its general upward trajectory. Ultimately the resulting “cash drag” tends to have a negative impact on the returns of actively managed funds.

What about index funds? Instead of sitting on cash, they remain almost fully invested at all times.


Why is it so difficult to time the market successfully, moving in and out of stocks at just the right moment so that you can benefit from the market’s upturns and avoid the pain of its downturns? Many people mistakenly assume that you just need to be right a little more than 50% of the time for this approach to pay off. But an exhaustive study by Nobel laureate economist William Sharpe showed that a market-timing investor must be right 69% to 91% of the time—an impossibly high hurdle.

In another landmark study, researchers Richard Bauer and Julie Dahlquist examined more than a million market-timing sequences from 1926 to 1999. Their conclusion: just holding the market (via an index fund) outperformed more than 80% of market-timing strategies.

If you’re feeling pissed off right now, I’m with you. You’re probably asking yourself: “What the hell am I really getting when I invest in an actively managed fund?” Well, most likely you’re buying this toxic brew of human error, high fees, and nasty tax bills! No wonder David Swensen is so skeptical about your chances of achieving financial freedom through active funds. He warns: “When you look at the results on an after-fee, after-tax basis, over reasonably long periods of time, there’s almost no chance that you end up beating the index fund.”

You Get What You Pay For—Except When You Don’t


—SENATOR PETER FITZGERALD OF ILLINOIS, cosponsor of the Mutual Fund Reform Act of 2004 (killed by the Senate Banking Committee)

When I was a teenager, I’d sometimes take a girl out to Denny’s on a date. I had so little money that I’d order an iced tea and pretend I’d already eaten. The truth was, I couldn’t afford for both of us to eat! The experience of growing up poor left me with a keen awareness of what things should cost versus what they actually cost. If you go out for a fantastic meal in a great restaurant, you expect it to be expensive. That’s fine. But would you pay $20 for a $2 taco? No way! Let me tell you, that’s what most people are doing when they invest in actively managed mutual funds.

Have you ever tried to figure out the actual fees you pay for the funds you own? If so, you probably zeroed in on the “expense ratio,” which covers the fund company’s “investment advisory fee,” its administrative costs for stuff such as postage and record keeping, plus critical office expenses like free sodas and cappuccinos. A typical fund that invests in stocks might have an expense ratio of 1% to 1.5%. What you probably didn’t realize is that this is just the start of its fee bonanza!

A few years ago, Forbes published a fascinating article entitled “The Real Cost of Owning a Mutual Fund,” which revealed just how expensive funds can truly be. As the writer pointed out, you’re not only on the hook for the expense ratio, which the magazine estimated conservatively at just less than 1% (0.9%) a year. You’re also liable to pay through the nose for “transaction costs” (all those commissions your fund pays whenever it buys or sells stocks), which Forbes estimated at 1.44% a year. Then there’s the “cash drag,” which it estimated at 0.83% a year. And then there’s the “tax cost,” estimated at 1% a year if the fund is in a taxable account.

The grand total? If the fund is held in a nontaxable account like a 401(k), you’re looking at total costs of 3.17% a year! If it’s in a taxable account, the total costs amount to a staggering 4.17% a year! By comparison, that $20 taco is starting to look like a real bargain!

You’ve got to look very carefully at the small print. I don’t like things that require small print, by the way.


I hope you’re paying really close attention right now, because the knowledge about all these hidden fees will save you a fortune! But what if you’re reading this and thinking “Yeah, but we’re only talking about 3% or 4% a year. What’s a few percentage points between friends?”


Nontaxable Account

Taxable Account

Expense ratio: 0.90%

Expense ratio: 0.90%

Transaction costs: 1.44%

Transaction costs: 1.44%

Cash drag: 0.83%

Cash drag: 0.83%


Tax cost: 1.00%

Total costs: 3.17%



Total costs: 4.17%

“The Real Cost of Owning a Mutual Fund,” Forbes, April 4, 2011

It’s true that the numbers look small at first glance. But when you calculate the impact of excessive costs multiplied over many years, it takes your breath away.

Here’s another way to put this in perspective: an actively managed fund that charges you 3% a year is 60 times more expensive than an index fund that charges you 0.05%! Imagine going to Starbucks with a friend. She orders a venti caffé latte and pays $4.15. But you decide that you’re happy to pay 60 times more. Your price: $249! I’m guessing you’d think twice before doing that.

In case you think I’m being too extreme, let’s consider the example of two neighbors, Joe and David. Both are 35 years old, and each has saved $100,000, which they each decide to invest. Over the next 30 years, the universe smiles on them, and each achieves a gross return of 8% a year. Joe does it by investing in a portfolio of index funds that costs him 0.5% a year in fees. David does it by owning actively managed funds that cost him 2% a year. (I’m being generous here by assuming that the active funds match the performance of the index funds.)

Check out the chart that follows, and you’ll see the results. By the age of 65, Joe has seen his nest egg grow from $100,000 to approximately $865,000. As for David, his $100,000 has grown to only $548,000. They both achieved the same rate of return, but they paid different fees. The outcome? Joe has 58% more money—an additional $317,000 for retirement.

As the chart also shows, these two neighbors then start to withdraw $60,000 a year to support themselves in retirement. David runs out of money by the age of 79. But Joe has an entirely different life experience. He’s able to withdraw $80,000 a year—33% more—and his money lasts until he’s 88! Hopefully, Joe lets David live in his basement. For free.

[image: Images]

Now do you see why you need to pay such close attention to the fees you’re being charged? This one crucial factor might make all the difference between poverty and comfort, misery and joy.

Overpaying for Underperformance: The Five-Star Trap

Here’s a question you probably never thought to ask: How do you find an active fund manager who will not only charge you those outrageous fees but also provide you with mediocre returns in exchange? Don’t worry. The financial services industry has you covered. If there’s one thing in plentiful supply, it’s active managers who’ll overcharge you for underperformance!

That’s the incredible thing. It’s not just that actively managed funds are overcharging their customers. It’s that their long-term performance is appalling. It’s like a double insult. Imagine that you just bought that caffé latte for $249, took a sip, and discovered that the milk had gone bad.

One of the most shocking studies I’ve seen on this topic of mutual fund performance was by an industry expert named Robert Arnott, the founder of Research Affiliates. He studied all 203 actively managed mutual funds with at least $100 million in assets, tracking their returns for the 15 years from 1984 through 1998. And you know what he found? Only 8 of these 203 funds actually beat the S&P 500 index. That’s less than 4%! To put it another way, 96% of these actively managed funds failed to add any value at all over 15 years!

If you insist on buying an actively managed fund, what you’re really betting on is your ability to pick one of the 4 percent that outperformed the market. This reminds me of a gambling analogy that appeared in a Fast Company magazine article entitled “The Myth of Mutual Funds.” Its authors, Chip and Dan Heath, highlight the absurdity of expecting to pick a fund from that 4% group: “By way of comparison, if you get dealt two face cards in blackjack [each face card is worth 10, so now your total is 20], and your inner idiot shouts, ‘Hit me!’ you have about an 8% chance of winning.”

I don’t know about you, but I prefer not to let my inner idiot run the show! So why would I bet on my ability to identify the tiny minority of fund managers who’ll outperform over many years?

You might be a hard-core researcher who loves to read the Wall Street Journal and Morningstar, searching for the illustrious five-star fund—the outperformer. But there’s another problem that few anticipate: today’s winners are almost always tomorrow’s losers. The Wall Street Journal wrote about one study that went all the way back to 1999 and looked at what happened over the next 10 years to all of the top-performing funds that had received a “five-star” rating from Morningstar. What did the researchers discover? “Of the 248 mutual stock funds with five-star ratings at the start of the period, just four still kept that rank after 10 years.” The fancy term for this process is “reversion to the mean”: a polite way of saying that most highfliers will eventually fall, reverting back to mediocrity.

Unfortunately, many people pick top-rated funds without realizing that they’re falling into the trap of buying what’s hot—usually right before it turns cold. David Swensen explains: “Nobody wants to say, ‘I own a bunch of one- and two-star funds.’ They want to own four-star funds and five-star funds and brag about it at the office. But the four- and five-star funds are the ones that have performed well, not the ones that will perform well. If you systematically buy the ones that have performed well and sell the ones that have performed poorly, you’re going to end up underperforming.”


Mutual fund companies are notorious for opening lots of funds in hopes that a few of them might outperform. They can then quietly close all the funds that did badly and heavily market the few that did well. After all, they can’t sell shoddy past performance, no matter how glossy the brochure. Jack Bogle explains: “A firm will go out and start five incubation funds, and they will try and shoot the lights out with all five of them. And, of course, they don’t with four of them, but they do with one. So they drop the other four and take public the one that did very well, with a great track record, and sell that track record.”

Bogle adds that, statistically, you’re bound to have a few outperformers if you create enough funds: “Tony, if you pack 1,024 gorillas in a gymnasium and teach them each to flip a coin, one of them will flip heads ten times in a row. Most would call that luck, but when that happens in the fund business, we call him a genius!”

Does all of this mean it’s impossible to beat the market over long periods of time? Actually, no. It’s extremely hard, but there are a few “unicorns” out there who have outperformed the market by a mile over several decades. These are superstars such as Warren Buffett, Ray Dalio, Carl Icahn, and Paul Tudor Jones, who not only are brilliantly clever but also have ideal temperaments, enabling them to remain calm and rational even when markets are imploding and most people are losing their minds. One reason why they win is that they base every investment decision on a deep understanding of probabilities, not on emotion or desire or luck.

But most of these unicorns run enormous hedge funds that are closed to new investors. For example, Ray Dalio used to accept money from investors who had a net worth of at least $5 billion and who entrusted him with a minimum of $100 million. Nowadays he won’t accept any new investors, regardless of how many billions you’ve got hidden under your mattress!

When I asked Ray how hard it is to beat the market over the long run, he didn’t pull his punches. “You’re not going to beat the market,” he told me. “Competing in the markets is more difficult than winning in the Olympics. There are more people who are trying to do it and much bigger rewards if you succeed. Like competing in the Olympics only an infinitesimal percentage succeed, but unlike winning in the Olympics, most people think they can do it. Before you try to beat the market, recognize that your likelihood of being successful is extremely small and ask yourself if you spent the time to train and prepare to be one of the few who actually wins.”

[image: Images]

You can’t ignore it when one of the giants who has actually beaten the market over decades tells you that you shouldn’t even bother trying but should stick instead with index funds.

Warren Buffett, who has outpaced the market by a huge margin, also advises regular people to invest in index funds, so they can avoid the drain of excessive fees. To prove his point that almost all active managers underperform index funds over the long run, he made a $1 million bet in 2008 with a New York–based firm called Protégé Partners. He challenged Protégé to select five top hedge fund managers who could collectively beat the S&P 500 over a 10-year period.

So what happened? After 8 years, Fortune reported that these hedge funds were up only 21.87%, versus 65.67% for the S&P 500! The race isn’t over yet. But as it stands, these active managers look like contestants in a three-legged race trying to catch Usain Bolt, the world’s fastest man.

Meanwhile, Buffett says he’s left instructions that, after his death, the money he leaves in trust for his wife should be invested in low-cost index funds. His explanation? “I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, or individuals—who employ high-fee managers.”

Even from his grave, Buffett is absolutely determined to avoid the corrosive effects of high fees!

Brilliant guidance from the Oracle of Omaha himself.


Do you remember when I told you earlier that knowledge is merely potential power? It’s only when you take your knowledge and act on it that you possess true power. In this chapter, you’ve learned what an astounding impact fees can have on your financial future. But what will you do with that knowledge? How will you act on it and benefit from it?

Imagine for a moment that you stop buying actively managed funds that charge exorbitant fees. Instead, from now on, you invest only in low-cost index funds. What’s the result? At the very least, I would estimate that you can cut your fund expenses by 1% a year. But as you know, that’s not the only benefit of switching to index funds. Hypothetically, let’s imagine that your index funds outperform those actively managed funds by 1% annually. In total, you’ve just added 2% a year to your returns. This alone can give you 20 years of extra retirement income.III

Now do you see how much power you possess to take charge of your financial future? Take that power and use it to dramatically drive down your costs. This will help you immeasurably to become unshakeable!

Meanwhile, let’s take a breath. Then let’s step into another area where you can save yourself a fortune: your 401(k). Turn the page. . . . We’re about to embark on a mission to rescue your retirement account.

I. “Nine in 10 Americans make this 401(k) mistake: Retirement Scan,”

II. It’s called capital gains tax, and you get hit by it even though you didn’t earn those capital gains. Owning a fund for a long period of time doesn’t necessarily ensure long-term capital gains. Quite the opposite. Owning an active fund means you will get tax bills each year due to profit taking by the fund manager, and those profits are typically taxed at ordinary income tax rates.

III. This assumes 2 investors with a starting investment of $100,000 and equal returns of 8% over 30 years, but with 1% fees and 2% fees, respectively. Assuming equal withdrawal amounts at retirement, the investor paying 2% in fees will run out of money 10 years sooner.



[image: Images]

Power and Peace of Mind in a World of Uncertainty


An unwavering and undisputed confidence;

a steadfast commitment to the truth;

presence, peace of mind, and a calm amidst the storm

What would it feel like to know in your mind, in your heart, and in the very depth of your soul that you’ll always be prosperous? To know with absolute certainty that no matter what happens in the economy, stock market, or real estate, you’ll have financial security for the rest of your life? To know that you’ll possess an abundance that will enable you not only to take care of your family’s needs but also to delight in the joy of helping others?

We all dream of achieving that tremendous inner peace, that comfort, that independence, that freedom. In short, we all dream of being unshakeable.

But what does it really mean to be unshakeable?

It’s not just a matter of money. It’s a state of mind. When you’re truly unshakeable, you have unwavering confidence even amidst the storm. It’s not that nothing upsets you. We can all get hooked. But you don’t stay there. Nothing rattles you for any length of time. You don’t allow fear to take you over. If you’re knocked off balance, you find your center quickly and regain your inner calm. When others are afraid, you have the presence of mind to take advantage of the turmoil swirling all around you. This state of mind allows you to be a leader, not a follower. To be the chess player, not the chess piece. To be one of the few who do, not one of the many who merely talk!

But is it even possible to become unshakeable in these crazy times? Or is it just a pipe dream?

Do you remember how you felt in 2008 when the financial crisis savaged the global economy? Do you remember the fear, the anxiety, the uncertainty that gripped us all when the world seemed to be falling apart? The stock market collapsed, maybe crushing your 401(k). The property market was beaten to a pulp, maybe wrecking the value of your home or that of someone you love. Big banks fell over like toy soldiers. Millions of good, hardworking people lost their jobs.

I can tell you right now, I’ll never forget the suffering and terror I witnessed all around me. I saw people lose their life savings, get kicked out of their homes, and not have the money to send their kids to college. My barber told me that his business was in tatters because people didn’t even want to spend money getting their hair cut. Even some of my billionaire clients called me in a panic because their cash was all tied up, the credit markets had frozen, and it suddenly looked like they might be in danger of losing everything. Fear was like a virus, spreading everywhere. It began to take over people’s lives, infecting millions with a sense of total uncertainty.

Wouldn’t it be wonderful if all that uncertainty had ended in 2008? Didn’t you think the world would be back to normal by now? That the global economy would be back on track and growing dynamically again?

But the truth is, we’re still living in a crazy world. All these years later, central bankers are still fighting an epic battle to revive economic growth. They’re still experimenting with radical policies that we’ve never seen in the entire history of the global economy.

You think I’m exaggerating? Well, think again. First-world countries such as Switzerland, Sweden, Germany, Denmark, and Japan now have “negative” interest rates. You know how insane that is? The whole purpose of the banking system is for you to make a profit by loaning money to banks, so they can lend it out to others. But people around the world now have to pay banks to accept their hard-earned savings. The Wall Street Journal wanted to discover when the world last experienced a period of negative yields. So the newspaper called an economic historian. You know what he told them? It’s the first time this has happened in 5,000 years of banking history.

That’s how far we’ve come from living in a normal world: borrowers get paid to borrow, and savers get punished for saving. In this upside-down environment, “safe” investments such as high-quality bonds offer such terrible returns that you wonder if someone’s having a laugh at your expense. I recently learned that the finance arm of Toyota had issued a three-year bond that yields just 0.001%. At that rate, it would take you 69,300 years to double your money!

If you’re struggling to make sense of what all this means for the future of the global economy, join the club. Howard Marks, a legendary investor who oversees nearly $100 billion in assets, recently told me, “If you’re not confused, you don’t understand what’s going on.”

You know we’re living in strange times when even the greatest financial minds admit to being confused. For me, this reality was driven home emphatically last year when I arranged a meeting of my Platinum Partners: an intimate group of friends and clients who gather once a year to gain financial insights from the best of the best.

We had already listened to the opinions of seven self-made billionaires. But now it was time to hear from a man who, for two decades, had wielded more economic power than anyone else alive. I was seated in one of two leather wingback chairs on a stage in a conference room at the Four Seasons hotel in Whistler, British Columbia. Outside the snow was falling gently. The man sitting across from me was none other than Alan Greenspan, former chairman of the US Federal Reserve. Appointed by President Ronald Reagan in 1987, Greenspan ultimately served as the Fed chief to four presidents before retiring in 2006. We could hardly have asked for a more experienced insider to cut through the confusion and shed light on the future of the economy.

As our two-hour conversation drew to a close, I had one final question for this man who had seen it all, who had guided the US economy through thick and thin for 19 years. “Alan, you’ve had 90 years on this planet and have seen incredible changes in the world economy,” I began. “So, in this world of intense volatility and insane central banking policies around the globe, what is the one thing you would do if you were still the Fed chairman today?”

Greenspan paused for a while. Finally, he leaned forward and said: “Resign!”


What are you supposed to do when even an economic icon of Alan Green-span’s stature is tempted to throw up his hands in dismay, unable to make sense of what’s going on or guess where it will end? If he can’t figure it out, how on earth can you and I predict what will happen?

If you’re feeling stressed and confused, I understand. But let me tell you the good news: there are a few people who do have the answers—a few brilliant financial minds that have figured out how to make money in good times and bad. After spending seven years interviewing these masters of the financial game, I’m going to bring you their answers, their insights, their secrets, so you can understand how to win even in these incredibly uncertain times.

And I’ll tell you this: one of the greatest lessons I’ve learned from these money masters is that you don’t have to predict the future to win this game. Etch that idea into your big, beautiful brain, because it’s important. Really important.

Here’s what you do have to do: you have to focus on what you can control, not on what you can’t. You can’t control where the economy is headed and whether the stock market will soar or plunge. But that doesn’t matter! The winners of the financial game know that they can’t control the future, either. They know their predictions will often be wrong because the world is just too complex and fast changing for anybody to foresee the future. But, as you’ll learn in the pages to come, they focus so intently on what they can control that they’ll thrive no matter what happens to the economy or the financial markets. And with the help of their insights, you’ll thrive, too.

Control what you can control. That’s the trick. And this book will show you exactly how to do it. Above all, you’ll finish the book with a strategic plan that provides you the tools to help you win the game.

We all know that we’re not going to become unshakeable through wishful thinking, or by lying to ourselves, or by merely thinking positive, or by putting photos of exotic cars on our “vision boards.” It’s not enough to believe. You need the insights, the tools, the skills, the expertise, and the specific strategies that will empower you to achieve true and lasting prosperity. You need to learn the rules of the financial game, who the players are, what their agendas are, where you can get hurt, and how you can win. This knowledge can set you free.

The big purpose of this small book is to provide you with that essential knowledge. It will give you a complete playbook for financial success, so that you and your family won’t ever again have to live in fear and uncertainty but can enjoy the journey with true peace of mind.

Many people just dabble in and out when it comes to their financial lives, and they pay an enormous price for it. That’s not because they don’t care. It’s because they get swamped by all the stresses and strains of their daily lives. Plus, they don’t have expertise in this area, so it seems intimidating, confusing, and overwhelming. None of us likes putting effort into things that make us feel unsuccessful and out of our depth! When people are forced to make financial decisions, they often act out of fear—and any decision made in a state of fear is likely to be wrong.

But my commitment here is to be your coach, to guide you and help you, so you can put together an action plan that gets you from where you are today to where you want to be. Maybe you’re a baby boomer who worries that you can’t get to financial security because you started too late. Maybe you’re a millennial who thinks, “I’ve got so much debt, I’ll never be free.” Maybe you’re a sophisticated investor who’s looking for an edge so you can build a legacy that benefits generations to come. Whoever you are and whatever stage of life you’re at, I’m here to show you that there is a way.

If you commit to stay with me through the pages of this book, I promise to provide you with the knowledge and tools you need to get the job done. Once you absorb this information and put your plan in place, it will likely take you only an hour or two each year to keep things on target.

This is an area of life that requires commitment. But if you’re committed to understanding and harnessing the insights in this book, the rewards will be incredible. How much stronger and more confident will you feel when you know the rules that govern the financial world? When you have that knowledge, that mastery, then you can make smart financial decisions based on real understanding. And decisions are the ultimate power. Decisions equal destiny. The decisions you will be equipped to make after reading this short book can bring you a whole new level of inner peace, fulfillment, comfort, and financial freedom that most humans only dream of achieving. I know that sounds like hyperbole. But as you’ll discover for yourself, it’s not.


My life’s obsession is to help people create the life of their dreams. My greatest pleasure is to show them how to rise from pain to power. I can’t bear to see others suffer, because I know how it feels. I grew up dirt poor, with four different fathers over the years, and with a mother who was an alcoholic. I often went to bed hungry, not knowing if there’d be anything to eat the next day. We had so little money that I bought T-shirts for 25 cents at the thrift store and went to high school in Levi’s cords that were four inches too short for me. To support myself, I worked as a janitor at two banks in the middle of the night, and then caught a bus home and slept for roughly four to five hours before dragging myself back to school each morning.

Today I’m blessed with financial success. But I can tell you right now, I’ll never forget what it was like to live in that state of constant anxiety about the future. In those days, I was trapped by my circumstances and filled with uncertainty. So when I saw what happened to people during the 2008–09 financial crisis, there was no way I could turn my back on them.

What drove me crazy was that much of that economic mayhem had been caused by the reckless ways of a small minority of bad actors on Wall Street. Yet nobody in a position of power and privilege seemed to pay any price for the pain that was created. Nobody went to jail. Nobody addressed the systemic issues that had made the economy so vulnerable in the first place. Nobody seemed to be looking out for the regular people who bore the brunt of this financial chaos. I saw them getting used and abused every day, and I couldn’t take it anymore.

That launched me on a quest to figure out how I could help people to gain control over their financial lives so they’d never again be passive victims of a game they didn’t understand. I had one key advantage: personal access to many of the giants of the financial world. It helped that I’ve coached Paul Tudor Jones, one of the greatest traders of all time. Paul, an extraordinary philanthropist, a brilliant thinker, and a dear friend, helped to open a lot of doors for me.

Over seven years, I interviewed more than 50 masters of the financial universe. Their names may mean nothing to you. But in the financial world, these guys have the star power and the name recognition of celebrities such as LeBron James, Robert De Niro, Jay Z, and Beyoncé!

The list of legends who ended up sharing their insights with me includes Ray Dalio, the most successful hedge fund manager in history; Jack Bogle, the founder of Vanguard and the revered pioneer of index funds; Mary Callahan Erdoes, who oversees $2.4 trillion in assets at JPMorgan Chase & Co.; T. Boone Pickens, the billionaire oil tycoon; Carl Icahn, America’s most formidable “activist” investor; David Swensen, whose financial wizardry transformed Yale into one of the world’s wealthiest universities; John Paulson, a hedge fund manager who personally earned $4.9 billion in 2010; and Warren Buffett, the most celebrated investor ever to walk the earth.

If you don’t know these names, you’re not alone. Unless you work in finance, you’re probably more aware of how your fantasy football team is doing or what’s in your Net-a-Porter shopping cart. But you’re really going to want these financial titans to be on your radar, too, because they can literally change your life.

The result of all that research was my 670-page behemoth of a book, Money: Master the Game. To my delight, it skyrocketed to number one on the New York Times Business Best Sellers list and has sold more than a million copies since its publication in 2014. The book has also received an extraordinary array of endorsements from the financial elite. Carl Icahn, not an easy man to win over, declared, “Every investor will find this book extremely interesting and illuminating.” Jack Bogle wrote, “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.” Steve Forbes wrote, “If there were a Pulitzer Prize for investment books, this one would win, hands down.”

I’d like to think this praise was a testament to my literary brilliance! But the success of Money: Master the Game really reflects the generosity of all those financial giants in sitting down with me for hours on end and sharing their knowledge. Anyone who takes the time to study and apply what they told me should attain huge financial rewards that can last a lifetime.

So why bother to write a second book on how to achieve your financial ambitions? After all, there are plenty of easier and more painless ways to spend my time than writing books. Like, say, selling my organs on the black market. But, my goal is to empower you, the reader, while also making a difference for millions of forgotten people who are in desperate need.

I’ve donated all my profits from Money: Master the Game and now for this book, Unshakeable, to provide free meals for the hungry through my partnership with Feeding America, the nation’s most effective charity for feeding the hungry. So far, between these books and the additional personal donations I’ve made over the last two years, we’ve provided over 250 million free meals to families in need. In the next eight years, I plan to bring that total to a billion meals. If you’re holding this book, you’ve contributed to that cause. Thanks! And feel free to buy copies for all your friends and family!

Beyond that mission, I have three urgent reasons for writing Unshakeable. First, I want to reach as many people as possible by writing a short book that you can read in a couple of evenings or a weekend. If you want to go deeper, I hope you’ll also read Money: Master the Game, but I understand if that big monster seems intimidating. Unshakeable is designed to be a concise companion that contains all of the essential facts and strategies you need to transform your financial life.

In writing a short book that’s quick and easy to read, I’m looking to increase the likelihood that you’ll not only master this material but also act on it. People love to say that knowledge is power. But the truth is that knowledge is only potential power. You and I both know that it’s useless if you don’t act on it. This book gives you a power-packed action plan that you can put into effect immediately—because execution trumps knowledge every day of the week.

My second reason for writing Unshakeable is that I see so much fear around me today. How are you and I going to make smart, rational financial decisions if we’re full of fear? Even if you know what to do, fear keeps you from doing it. I’m concerned that you might make the wrong moves if you’re fearful, damaging yourself and your family in ways that I believe are entirely avoidable. Step-by-step, this book will enable you to systematically free yourself from that fear.


As I write this, the stock market has risen for seven and a half years in a row, making this the second-longest bull market in US history. There’s a widespread sense that we’re due for a fall, that what goes up must come down, that winter is coming. By the time you read this, the market may already have tumbled. But, as we’ll discuss in the next chapter, the truth is that nobody—I repeat, nobody—can accurately predict with any consistency where the financial markets are headed. That includes all those smooth-talking TV pundits, those Wall Street economists in pinstripe suits, and all those other high-paid purveyors of snake oil.

We all know that winter is coming, that the stock market will fall again. But none of us knows when winter is coming or how severe it will be. Does that mean we’re powerless? Not at all. Unshakeable will show you how the masters of the financial world prepare themselves—how they profit by anticipating winter instead of just reacting to it. As a result, you’ll be able to benefit from the very thing that harms those who are unprepared. Ask yourself this: When an ice storm comes, do you want to be the one who’s stuck outside, freezing in the bitter cold? Or do you want to be the one who’s wrapped up warmly by the fire, toasting marshmallows?

Let me give you a recent example of how it pays to be prepared. In January 2016 the stock market plummeted. In a matter of days, $2.3 trillion went up in smoke. For investors, it was the worst ten-day start to a year in history. The world was freaking out, convinced that the Big One was finally here! But Ray Dalio, the most successful hedge fund manager of all time, had done something priceless in Money: Master the Game: he’d shared with me a unique investment portfolio that could prosper in “all seasons.”

In the middle of this market nosedive, Ray was in Davos, Switzerland, where the global elite gather each year to discuss the state of the world. He went on TV, appearing against the backdrop of a snow-covered mountain, to explain how people could protect themselves from this terrifying turmoil. His advice? They should pick up a copy of my book, Money: Master The Game. “Tony Robbins did the layman’s version of this all-weather portfolio,” he explained. “That might be helpful for people.”

So what would have happened if you’d followed Ray’s advice and built the all-weather portfolio described in my book? While the Standard & Poor’s (S&P) 500 stock index (a list of the top five hundred companies in the United States) dropped 10% in the first few days of 2016, you would have actually made a small profit (just under 1%). This portfolio is not meant to be one-size-fits-all, nor is it intended to be the greatest performer. It’s meant to provide a smoother ride for those unable to stomach the volatility of a portfolio with a higher percentage of stocks (which can also lead to higher returns).

But what’s really amazing is that this portfolio for all seasons would have made money 85% of the time over the last 75 years. That’s the power of having the right strategy—a strategy that comes directly from one of the best in the world.


My third reason for writing this book is that I want to show you how to avoid getting eaten by sharks. As we’ll discuss later, one of the biggest obstacles to achieving financial success is the difficulty of figuring out who you can and cannot trust.

There are plenty of fantastic human beings working in the financial field—people who always remember their mom’s birthday, who are kind to dogs, and who have impeccable personal hygiene. But they’re not necessarily looking out for your best interests. Most people who you think are providing unbiased financial “advice” are actually brokers, even if they prefer to go by other titles. They make hefty commissions by selling products, whether it’s stocks, bonds, mutual funds, retirement accounts, insurance, or whatever else might pay for their next trip to the Bahamas. As you’ll soon learn, only a tiny subset of advisors is legally required to put your best interests ahead of its own.

After writing Money: Master the Game, I saw once again how easy it is to get fooled by Wall Street. Peter Mallouk, a certified financial planner and attorney whom I respect tremendously, arranged a meeting with me to share what he cryptically described as “some crucial information.” The investment magazine Barron’s rated Peter and his company, Creative Planning, the number one independent financial advisor in America in 2013, 2014, and 2015, while Forbes named it the top investment advisor in the United States in 2016 (based on 10-year growth), and CNBC ranked it as the number one US wealth management firm in 2014 and 2015. When someone with Peter’s expertise and reputation reaches out to me, I know that I’ll learn something of real value.

Peter flew specially from his home in Kansas to meet me in Los Angeles, where I was conducting an Unleash the Power Within event. It was there that he dropped the bomb, explaining how some financial “advisors” who market themselves as straight shooters were actually exploiting a grey area in the law to sell products that benefited themselves. They claimed to be fiduciaries: a small minority of advisors who are legally obligated to put their clients’ interests first. In reality, they were unscrupulous salespeople who profited by misrepresenting themselves. Unshakeable will give you all the information you need to protect yourself from wolves in sheep’s clothing. Equally important, we’ll give you the tools and criteria to help you identify honest, conflict-free advisors who will truly look out for your best interests.

That meeting formed the basis of a close friendship with Peter and led to his becoming the coauthor of this book. You couldn’t ask for a more knowledgeable, honest, or straight-talking guide for this journey. He tells it like it is, and he knows where the bodies are buried!

Peter’s firm, which manages $22 billion in assets, is unique. Many billionaires have what’s called a “family office”: an in-house team that provides them with sophisticated advice on everything from investing and insurance to tax preparation and estate planning. Peter offers this same level of comprehensive advice to clients with assets of $500,000 or more: doctors, dentists, lawyers, small business owners. They’re the heartbeat of the American economy, and he believes they deserve no less care and attention than the ultrarich.

I was so impressed with Peter’s vision in creating a “family office for all” that I joined the board of Creative Planning, became its chief of investor psychology, and engaged the firm to manage my investments and financial planning. I then approached Peter with a radical idea: Would he be willing to create a division that provides the same type of comprehensive service to clients who are early in their wealth-building journey—those with as little as $100,000 in total assets? Peter, who shares my commitment to helping as many people as possible, has done exactly that.

I’m happy to tell you that his company will provide a review of your current situation and goals and, at no cost, help you create a customized financial plan. You may decide that you’d prefer to handle your finances alone. But if you ever decide that it might be helpful to get a second opinion from the top-ranked firm in the country, you’re welcome to reach out to Creative Planning, at


Before we go any further, I want to quickly show you a map of the road ahead, so you can see for yourself how the chapters that follow will help you. Unshakeable is divided into three sections. The first is your Rule Book for Wealth & Financial Success. Why start with a rule book? Because if you don’t know the rules of the game, how can you expect to win?

What holds many of us back is a feeling that we’re in over our heads. It doesn’t help that the financial world seems overwhelmingly complex. There are more than 40,000 stocks to choose from in the world today, including 3,700 on various US stock exchanges. By the end of 2015, there were more than 9,500 mutual funds in America alone, which means there are far more funds here than stocks! How ridiculous is that? Add to that nearly 1,600 exchange-traded funds, and you’re faced with so many different investment choices that your head starts to spin. Can you imagine standing at an ice-cream counter and having to choose from 50,000 flavors?

You and I need some robust rules so that we can bring order to this chaos. As you’ll discover in chapter 3, one of the simplest yet most important rules is this: fees matter.

The vast majority of mutual funds are actively managed, which means they’re run by people who attempt to pick the best investments at the best time. Their goal is to “beat the market.” For example, they’ll attempt to outperform an unmanaged basket of leading stocks such as the S&P 500 index, which is just one of many different indexes that track specific markets throughout the world. But the difference is, actively managed mutual fund companies charge fat fees in return for this service. Sounds fair enough, right?

The problem is, most funds do a terrific job of charging high fees but a terrible job of picking successful investments. One study showed that 96% of mutual funds failed to beat the market over a 15-year period.I The result? You overpay for underperformance. It’s like paying for a Ferrari and then driving home from the dealership in a beaten-up tractor splattered with mud.


For those unfamiliar, a hedge fund is a private fund available only to high-net-worth investors. The managers have complete flexibility to bet on both directions of the market (up or down). They charge hefty management fees (typically 2%) and share in the profits (typically 20% of profits go to the manager). A mutual fund is a public fund available to anyone. In most cases, they are actively managed by a team who assembles a portfolio of stocks, bonds, or other assets and continually trades their holdings in hopes to beat the “market.” An index fund is also a public fund but requires no “active” managers. The fund simply owns all the stocks in the index (for example, they would own all 500 stocks in the S&P 500 index).

Even worse, those fees add up massively over time. If you overpay by 1% a year, it will cost you 10 years’ worth of retirement income.II Once we’ve shown you how to avoid funds that overcharge and underperform, you could easily save yourself as much as 20 years of income.

If that’s all you learn from the first section of this book, it will transform your future. But there’s much more. As we mentioned earlier, we’ll also show you how to avoid salespeople who provide self-serving “advice” that’s hazardous to your financial health, and how to find sophisticated advisors who aren’t conflicted. As the saying goes, “When a person with experience meets a person with money, the person with experience ends up with the money; and the person with money ends up with an experience.” We’ll show you how to navigate this game so you’ll never get taken again.

The second section of Unshakeable is a financial playbook. It will show you exactly what to do so you can put your action plan in place right now. Most important, you’ll learn the “Core Four”: a set of simple yet powerful principles that are derived from my interviews with more than 50 of the world’s greatest investors. Though they have many different ways of making money, I’ve observed that they all share these fundamental decision-making principles. I’ve found the Core Four transformational in my own financial life, and I’m excited to make this knowledge available to you, too.

Next, you’ll learn to “slay the bear”: in other words, to build a diversified portfolio so that your nest egg won’t be destroyed when a bear market finally comes. In fact, you’ll learn to profit massively from the opportunities that fear and turmoil create. What most people don’t realize is that investment success is largely a matter of smart “asset allocation”—of knowing precisely how much of your money to put in different asset classes such as stocks, bonds, real estate, gold, and cash. The great news is that you’ll learn to do this from money masters like Ray Dalio, David Swensen, and our very own Peter Mallouk.

If you already know a bit about investing, you may be wondering—as one financial journalist asked me recently—“Isn’t it just a simple matter of buying and holding index funds?” Well, Dalio, Swensen, Warren Buffett, and Jack Bogle all told me that indexing is the smartest strategy for regular people like you and me.III One reason why is that index funds are designed to match the returns of the market. Unless you’re a superstar like Warren or Ray, you’re better off capturing that market return instead of trying—and almost certainly failing—to beat the market. Even better, index funds charge minuscule fees, saving you a fortune over the long run.

I wish it were that simple, though. As a lifelong student of human behavior, I can tell you this: most people find it really hard to sit tight and stay in the market when everything is going haywire. Buy and hold tends to go out the window. If you have nerves of steel like Buffett or Bogle, that’s great. But if you want to know how the majority of people behave under stress, just check out a study by Dalbar, one of the financial industry’s leading research firms.

Dalbar revealed the gigantic discrepancy between the market’s returns and the returns that people actually achieve. For instance, the S&P 500 returned an average of 10.28% a year from 1985 to 2015. At this rate, your money doubles every seven years. Thanks to the power of compounding, you’d have made a killing just by owning an index fund that tracked the S&P 500 over those 30 years. Let’s say you’d invested $50,000 in 1985. How much would it have been worth by 2015? The answer: $941,613.61. That’s right. Almost a million bucks!

But while the market returned 10.28% per year, Dalbar found that the average investor made only 3.66% a year over those three decades! At that rate, your money doubles only every 20 years. The result? Instead of that million-dollar windfall, you ended up with only $146,996.

What explains this massive performance gap? In part, it’s the disastrous effect of excessive management fees, outrageous brokerage commissions, and other hidden costs that we’ll discuss in chapter 3. These expenses are a constant drain on your returns—the equivalent of a merciless vampire sucking your blood each night while you’re asleep.

But there’s another culprit, too: human nature. As you and I know, we’re emotional creatures with a gift for doing crazy stuff under the influence of emotions such as fear and greed. As the legendary Princeton University economist Burton Malkiel told me: “Emotions get ahold of us, and we, as investors, tend to do very stupid things.” For example, “we tend to put money into the market and take it out at exactly the wrong time.” You probably know people who got carried away during a bull market and took reckless risks with money they couldn’t afford to lose. You may also know people who got scared and sold all their stocks in 2008, only to miss out on huge gains when the market rebounded in 2009.

I’ve spent almost four decades teaching the psychology of wealth. So, in the third section of Unshakeable, I’ll show you how to adjust your behavior and avoid common mistakes that are driven by emotion. Why is this so important? Because you can’t apply the winning strategies in this book unless you learn to “silence the enemy within.”

Then, together we’ll answer what may be the most important questions of all. What are you really after? How do you achieve the ultimate level of happiness you desire in your life? Is it really money you’re chasing, or is it the feelings that you think money can create? Many of us believe—or fantasize—that money will bring us to a point where we finally feel free, secure, excited, empowered, alive, and joyful. But the truth is, you can achieve that beautiful state right now, regardless of your level of material wealth. So why wait to be happy?

Finally, in the appendix, we’ve included an invaluable road map to use with your financial advisors and attorney. These four checklists will guide you in protecting your assets, building your financial legacy, and insuring against the unknown. Plus, you’ll discover even more ways to save on taxes!


But first I want to tell you about the very next chapter, because I’m convinced that it will change your financial life. In fact, even if you read only chapter 2 and ignore everything else in this book, you’re getting on track to reap amazing rewards!

As I mentioned earlier, this is a time of tremendous uncertainty for most people. The global economy is still limping along after all these years. Middle-class salaries have stagnated for decades. Technology is disrupting so many industries that we don’t even know what jobs will exist in the future. And then there’s that nagging feeling that a bear market is overdue after years of strong returns. I don’t know about you, but all this uncertainty is making many people fearful—and this prevents them from building wealth by investing in the financial markets and becoming long-term owners of this economy, not just consumers.

The next chapter is the antidote to that fear. We’ll walk you through seven specific facts that will transform your understanding of how the market works, and of the economic and emotional patterns driving it. You’ll learn that corrections and crashes occur with surprising regularity but never last. The best investors prepare for this volatility—these dramatic ups and downs—and turn it to their advantage. Once you understand these patterns, you can act without fear, not because you’re in denial but because you have the knowledge and clarity of mind to make the right decisions.

[image: Images]

This reminds me of an old story you may remember about a Buddhist monk traveling home one night on a rural path. He catches sight of a poisonous snake blocking his way, panics, and runs for dear life in the opposite direction. The next morning, he returns to this scene of terror. But now, in the brightness of day, he realizes that the coiled snake in his path was just a harmless piece of rope.

Chapter 2 will show you that your own anxiety is equally unfounded—that the snake you fear is really just a rope. Why does this matter so much? Because you can’t win this game unless you have the emotional fortitude to get in it and stay in it for the long term. Once you realize that there’s no snake blocking your way, you can walk calmly and confidently on the path to financial freedom.

Are you ready? Then let’s begin!


There are a couple of additional resources to accelerate your journey. First, we created a mobile app containing videos, planning tools, and a personalized calculator that will help you discover how much you need to accumulate in order to achieve different levels of financial security and freedom. Second is the Unshakeable podcast. Peter Mallouk and I recorded a series of brief conversations around the core principles of becoming Unshakeable.

I. Industry expert Robert Arnott, founder of Research Affiliates, studied the performance over 15 years of all 203 actively managed mutual funds that had at least $100 million under management.

II. This assumes two investors with a starting investment of $100,000, equal returns of 8% over 30 years, but with 1% fees and 2% fees, respectively. Assuming an equal withdrawal amount at retirement, the investor paying 2% in fees will run out of money 10 years sooner.

III. According to the financial website Investopedia: “Active managers rely on analytical research, forecasts, and their own judgment and experience in making investment decisions on what securities to buy, hold, and sell. The opposite of active management is called passive management, better known as ‘indexing.’ ”


As I look back on some 40 years of this mission, I see the faces of so many extraordinary human beings. Briefly here, I’d like to express my deep gratitude to those who have touched this particular project.

First, my family, of course. This begins and ends with my wife, Bonnie Pearl—my Sage. I love you. I give thanks for the grace that breathes our love and our life. To my entire family and all of our extended family, I love you.

To my friend Peter Mallouk, I’m forever grateful for that fateful conversation you had with me in LA. I couldn’t have asked for a more brilliant, honest, and sincere human being for a business partner. Thank you.

To Josh, thanks for going on this journey with me again. Creating and laughing, I’ve loved every moment of our time together, and I’m so proud of our work. To Ajay Gupta and the entire Creative Planning team and to Tom Zgainer, my sincere gratitude.

To my core team at Robbins Research International—Sam, Yogesh, Scotty, Shari, Brook, Rich, Jay, Katie, Justin, and all the rest of our fiercely loyal and mission-driven executive staff—I count my blessings for you every day. Thanks to Kwaku and to Brittany and Michael. And I couldn’t have pulled this book off without my right arm Mary Buckheit and my wickedly smart creative team, especially Diane Adcock. I love you; thank you, ladies.

To Jennifer Connelly, Jan Miller, Larry Hughes, thank you. To all personnel at San Diego HQ and all our partners that make up the Tony Robbins Companies, thank you for all you do in our quest to create breakthroughs in every area of life.

My life has been powerfully shaped by deep friendships with four brilliant men. To my role models Peter Guber, Marc Benioff, Paul Tudor Jones, and Steve Wynn, thank you for your love and for being such brilliant, creative, impeccable human beings. To be your friend is such a gift. Each day I spend with you is another day I am inspired to take my game to another level.

Through events and appearances around the world, I am afforded the opportunity to meet hundreds of thousands of gorgeous people each year who touch my life deeply. But this book, at its core, and its predecessor, MONEY Master the Game, was uniquely shaped by a group of more than 50 extraordinary souls whose insights and strategies have been massively impactful to me and to all who read these pages. My deepest thanks, respect, and admiration for those who shared their precious time and life’s work in our interview sessions. I am eternally grateful. To Ray Dalio, Jack Bogle, Steve Forbes, Alan Greenspan, Mary Callahan Erdoes, John Paulson, Harry Markowitz, and Howard Marks: your wisdom is unrivaled, I am truly inspired by your mastery, and I’m privileged to learn from each one of you. Thank you.

More thanks to T. Boone Pickens, Kyle Bass, Charles Schwab, Sir John Templeton, Carl Icahn, Robert Schiller, Dan Ariely, Burton Malkiel, Alicia Munnell, Teresa Ghilarducci, Jeffrey Brown, David Babbel, Larry Summers, David Swensen, Marc Faber, Warren Buffett, and George W. Bush. Thanks to all those who provided interviews or who gave of their time at my Platinum Partnership Wealth Mastery events, and for those who have shared your insights over the years and who have served as examples of what is possible—you all inspire me, and your insights are echoed in these pages in many ways.

Thanks again to all my partners at Simon & Schuster, namely Jonathan Karp and Ben Loehnen. To William Green for your intelligence and British humor, and most of all, for joining us on this project and for caring so deeply about every last word and em dash. Thanks also to Cindy DiTiberio for your commitment to this manuscript.

Of course, the mission of this book is to serve not only those who will be reading. And so my deepest thanks to everyone at the Anthony Robbins Foundation and our strategic partners, namely Dan Nesbit at Feeding America for helping us coordinate this never-before-attempted approach to provide food to our hungry neighbors. The distribution of my initial donation of one hundred million meals and the efforts of all those working tirelessly to secure matching funds that will enable the delivery of a billion meals over the next 8 years.

To the grace that has guided this entire process, and to all those friends and teachers along the path of my life—too many to mention, some famous and some unknown, whose insights, strategies, example, love, and caring are the shoulders I have had the honor to stand on. On this day, I give thanks to you all, and I continue my never-ending quest to each day be a blessing in the lives of all those I have the privilege to meet, love, and serve.

1230 Avenue of the Americas

New York, NY 10020

Copyright © 2017 by Tony Robbins All rights reserved, including the right to reproduce this book or portions thereof in any form whatsoever. For information, address Simon & Schuster Subsidiary Rights Department, 1230 Avenue of the Americas, New York, NY 10020.

First Simon & Schuster hardcover edition February 2017

SIMON & SCHUSTER and colophon are registered trademarks of Simon & Schuster, Inc.



Interior design by Paul Dippolito Jacket photo and design supplied by author Library of Congress Cataloging-in-Publication Data is available.

ISBN 978-1-5011-6458-3

ISBN 978-1-5011-6460-6 (ebook)

This book is designed to provide information that the author believes to be accurate on the subject matter it covers, but it is sold with the understanding that neither the author nor the publisher is offering individualized advice tailored to any specific portfolio or to any individual’s particular needs, or rendering investment advice or other professional services such as legal or accounting advice. A competent professional’s services should be sought if one needs expert assistance in areas that include investment, legal, and accounting advice. This publication references performance data collected over many time periods. Past results do not guarantee future performance. Additionally, performance data, in addition to laws and regulations, change over time, which could change the status of the information in this book. This book solely provides historical data to discuss and illustrate the underlying principles. Additionally, this book is not intended to serve as the basis for any financial decision; as a recommendation of a specific investment advisor; or as an offer to sell or purchase any security. Only a prospectus may be used to offer to sell or purchase securities, and a prospectus must be read and considered carefully before investing or spending money. No warranty is made with respect to the accuracy or completeness of the information contained herein, and both the author and the publisher specifically disclaim any responsibility for any liability, loss, or risk, personal or otherwise, which is incurred as a consequence, directly or indirectly, of the use and application of any of the contents of this book. In the text that follows, many people’s names and identifying characteristics have been changed.



What Your 401(k) Provider Doesn’t Want You to Know

The 401(k) plan was a beautiful invention. Created in 1984, it gave regular people like you and me a chance to build wealth by making tax-deductible contributions to a retirement account directly from our paychecks. What a great concept! You and I were given this opportunity to own a piece of the American dream, to invest in our own futures, to take full responsibility for achieving our own financial freedom. Now nearly 90 million Americans participate in 401(k) plans. To put that in perspective, only 75 million Americans own a home. With more than $6 trillion currently invested in 401(k)s, this is the single most important vehicle for the financial security of the US population.

But you know what happened? Somewhere along the line, the dream got derailed. With trillions of dollars up for grabs, financial firms dreamed up countless ways to dip all of their fingers, thumbs, and toes into the pie. This is the uglier side of our nation’s gift for innovation! And it places us under enormous pressure to learn how to protect ourselves from these money grubbers.

You might not believe this, but for almost three decades, the companies providing 401(k) plans were not even required by law to disclose how much they were charging their customers! Only in 2012 did the government finally force these firms to make detailed disclosures of how much they were extracting from your savings. In what other industry would customers tolerate this “Trust me!” style of doing business? Can you imagine a clothing store with no price tags? Can you imagine booking a vacation and leaving it up to the airline and the hotel to decide how much to drain from your bank account without informing you?

Needless to say, financial firms resisted the temptation to take advantage of this lack of disclosure, since they understood that handling our retirement money is a sacred trust. Just kidding! Of course they took advantage!

Now that the law has changed, would you guess that the problem has been fixed? Hardly! The whole 401(k) system is still a black box. Today financial firms provide disclosure documents that are often 30 to 50 pages long and filled with impenetrable language. Surprise, surprise: not that many people devote their weekends to reading these ultracomplicated documents. Instead of digging through the fine print, most plan participants simply trust that their employers are looking out for them. And most employers are trusting the broker who sold them the plan over a round of golf. Remember, 71% of people enrolled in 401(k)s think there are no fees, and 92% admit that they have no clue what they are! But the truth is, the vast majority of plans are characterized by huge broker commissions, expensive actively managed funds, and layer after layer of additional—and often hidden—charges.

Robert Hiltonsmith, a senior policy analyst at a think tank called Dēmos, took the trouble to study and decipher the prospectuses of 20 funds in his 401(k) plan. He hacked his way through the forest of bewildering legalese and confusing acronyms, and then wrote a report entitled The Retirement Savings Drain: The Hidden & Excessive Costs of 401(k)s. What did he find? Customers like him—and you and me—were hit with 17 different fees and additional costs!

Just to be clear, we’re not referring here to the absurdly high fees that you’re being charged by the mutual funds in your 401(k) plan. It’s not enough for you to pay for all those actively managed funds—the ones that Forbes says could be costing you 3.17% a year! No, these are the additional fees that you’re also being charged by the plan provider that’s administering your 401(k). These providers are typically insurance or payroll companies—but you might want to think of them as another set of exceptionally well-paid toll collectors.

You’ve got to hand it to these providers: they’re truly ingenious when it comes to dreaming up different ways to siphon off the money in your 401(k)! Here’s a short sample of the many categories of fees they’ve invented: investment expenses, communication expenses, bookkeeping expenses, administrative expenses, trustee expenses, legal expenses, transactional expenses, and stewardship expenses. Why not just add a category called “expense expenses”?

I’m always amazed by what you can find buried in the fine print of providers’ disclosure documents—the vague terminology that obscures exactly what’s being done to you. For example, you’ll often see intentionally meaningless terms such as “net asset charge,” “asset-management charge,” “contract asset charge,” “AMC charge,” or “CAC charge.” One provider—a leading insurance company—was so brazen as to add a line item called “required revenue.” Required by who? What for? To pay for the CEO to buy a yacht?

How much does all of this cost you? Hiltonsmith calculated the impact of these additional 401(k) fees on an average worker who earns about $30,000 a year and saves 5% of his or her annual income. Over a lifetime, this worker would lose $154,794 in fees. That’s more than five years of income. A worker who earns about $90,000 a year would lose $277,000 in 401(k) fees.

You know as well as I do how hard it is for most people to save money for retirement. It requires real sacrifices. But excessive expenses can easily destroy the benefits of all that effort. Some plans take the excessive fees to a whole other level. Certain providers, not content with their typical take, charge a front-end “sales load” on all initial deposits. One of the worst we have seen takes a whopping 5.75% of every single dollar you sock away. It’s like a tithe to the corporate gods running these companies. Add that to the 2% in annual fees they charge, and you’re down 7.75% before you’re out of the gate.

Sadly, teachers, nurses, and nonprofit employees are most vulnerable to this huge skimming operation. This is because their 403(b) plans—their equivalent of a 401(k)—aren’t covered under the same ERISA (Employee Retirement Income Security Act of 1974) laws that are (at least in theory) designed to protect employees. It makes me sick to think that those who sacrifice the most to make our society better are being screwed by brokers who somehow manage to sleep at night—probably on 2,000-thread-count sheets.

In a New York Times article titled “Think Your Retirement Plan Is Bad? Talk to a Teacher,” reporter Tara Siegel Bernard does a brilliant job exposing how these poor folks are mugged. In one of the most ghastly scenarios imaginable, “The teachers were each charged a fee of at least 2% of their savings to manage the money, in addition to sales charges of up to 6% each time they made a deposit . . . Moreover, the calculations didn’t include the expenses of the dozens of mutual funds they were invested in, some of which exceeded 1%.”

That’s 9% in first-year expenses alone. That’s not a hole in your boat. That’s the whole back of the boat ripped off and dragging in the water.

This is why it’s so important to be aware of how the financial industry stacks the odds against you. Knowledge is your first defense. After all, how can you protect yourself from a threat to your financial well-being unless you know that this threat exists?

One person who shares my outrage about 401(k) expenses is the comedian John Oliver, who investigated the subject for his HBO show Last Week Tonight with John Oliver. When the members of his research team dissected their own 401(k) plan, they discovered that their provider’s fees amounted to 1.69% a year, excluding the exorbitant fees they were also being charged to invest in the actively managed funds in their plan. Oliver explains how “seemingly tiny fees can mount up” until “you’ve lost almost two-thirds of what you would have had.” He warns: “Think of fees like termites: they’re tiny, they’re barely noticeable, and they can eat away your f———g future.”


What makes all of this so upsetting is that a 401(k) should be—and can be—a powerful tool for building wealth, if it’s used correctly. Instead, the vast majority of plans are riddled with opaque fee arrangements and conflicts of interest. In 2015 the Obama administration announced that “hidden fees and backdoor payments” were costing Americans more than $17 billion per year. And Secretary of Labor Thomas E. Perez has said, “The corrosive power of fine print and buried fees can eat away like a chronic illness at a person’s savings.”

In early 2016 Congress passed new laws designed to force 401(k) providers to act in their clients’ best interests. Sadly, by the time lobbyists had done their worst, these regulations had lost their teeth. For example, 401(k) brokers can still charge commissions, sell you their own overpriced name-brand funds, and whack you with front-loaded sales charges. Business as usual.

If you ask me, one of the worst abuses is that nearly all of the big-name providers routinely accept payments from the mutual funds they offer in 401(k) plans. This legal but grubby arrangement is called revenue sharing, or “pay to play.” It’s the equivalent of buying shelf space in a store to ensure that it will stock a crappy product that shoppers really ought to avoid.

What’s the result? Many of the funds you get to choose from in your 401(k) plan are on the list only because the fund company paid the provider to include them! These funds tend to be actively managed, so they’re expensive. And they’re rarely the best performers. In some cases, they even charge a “front-end load”: a fee that often amounts to 3% of your assets just to buy the fund in the first place.

So why not just pick low-cost index funds when you’re investing in your 401(k) plan? Great question! The trouble is, most providers make index funds available only if the plan has a high level of assets. Why? Because index funds aren’t sufficiently lucrative for the provider. So they prefer to exclude them from the menu, if they can get away with it. If you work for a smaller company, chances are that you’ll be forced to invest in funds with higher fees. In fact, 93% of 401(k) plans have less than $5 million in total plan assets. These are small and midsized companies that don’t have the buying power to demand better investment options for their employees. Yet it’s entirely unfair to penalize people for working at smaller companies.

[image: Images]

Some 401(k) providers do offer index funds to smaller plans, but they typically charge a significant markup. One major insurance company is offering an S&P 500 index fund for 1.68% annually, when the actual cost is just 0.05%. That’s a 3,260% markup! Think of it this way: your friend buys a Honda Accord for the regular retail price of $22,000. But you’re forced to pay a 3,260% markup. Your cost for the exact same car: $717,200! Welcome to the world of high finance.

Another well-known insurance company charges a 3% sales load to buy a Vanguard index fund, and then charges 0.65% a year in fees for the fund—a steal at a mere 1,300% markup. This is the white-collar equivalent of ruthless mobsters coming round to your small business and hitting you up for protection money. The only justification is that you have money, and they want it.

Meanwhile, some providers will allow you to open your own “self-directed” 401(k) account if you want access to low-cost index funds or want to manage your own investments. Sounds like a good option, right? One friend of mine thought so. He opened a self-directed account, bought some index funds, and congratulated himself on bypassing all the ridiculously expensive funds in his plan. Then he found out that the provider was charging him an additional 1.9% a year for the privilege of using a self-directed account! In other words, heads you lose, tails I win.

These tricks of the trade are, at last, coming back to haunt many 401(k) providers. As I write this, at least ten major providers have been sued by their employees for charging excessive fees in their own 401(k) plans! One of the biggest 401(k) providers settled two class-action lawsuits for $12 million after accusations by its own employees that its 401(k) fees were too high. Imagine going to a restaurant and discovering that the waiters and kitchen staff refuse to eat the chef’s food! When the insiders don’t like what their company is selling, should you and I just smile politely and accept that it’s good enough for the likes of us?

One reason why I feel so passionate about this is that I’ve experienced firsthand how easy it is to get exploited by unscrupulous 401(k) providers. When I began to see these widespread abuses at companies across America, I called the head of human resources at one of my companies to learn more about the plan we were providing for our employees. I think of them as family, and I wanted to make sure we were treating them with all the care they deserve.

To my horror, I discovered that our name-brand 401(k) plan—administered by a major insurance company—was loaded with expensive mutual funds, excessive “administrative expenses,” and fat commissions that we paid to the broker who sold us the plan. It turned out that the total expenses in our 401(k) plan amounted to 2.17% a year. Over time these fees would erode much of the money that our employees were saving scrupulously for their future. I was beside myself.

So I began to look around for a solution. After much investigation, I was introduced by a friend to Tom Zgainer, CEO of a company called America’s Best 401k (ABk). As you’d imagine, I was more than a little skeptical. Why should I believe that his firm would live up to its less-than-modest name? But it didn’t take long to realize that he’s a truth teller who’s determined to challenge his industry’s unseemly practices. As Tom told me, the 401(k) business is “the largest dark pool of assets where nobody really knows how or whose hands are getting greased.”

By contrast, ABk is entirely transparent. For example, he has no interest in the sordid pay-to-play game. Instead of accepting kickbacks from mutual fund companies that want him to sell their overpriced funds, he offers only inexpensive index funds from firms such as Vanguard and Dimensional Fund Advisors. Tom’s company charges one fee—with no markups or hidden costs. It’s a fully bundled solution that eliminates brokers, commissions, and high-paid middlemen.

I’m delighted to tell you that I quickly and easily moved my company’s old plan into a new plan administered by America’s Best 401k. The total costs for our new 401(k) plan—including investment expenses, investment management services, and record-keeping fees—add up to a grand total of just 0.65% a year. That’s a savings of about 70% in our annual expenses. Over the years, this should put as much as $5 million back into the pockets of my employees. And Tom charges nothing for companies to make the switch.

I was so impressed that I referred many other friends to ABk. To my delight, they were all thrilled. No wonder. Tom’s firm saves his average client more than 57% in fees! I got excited and decided to partner with Tom on his mission to rescue the retirement plans of millions of people. It’s time to break the ruthless chokehold this industry has on our families’ financial futures.

Whether you are a business owner or an employee, you can see how your company’s 401(k) plan stacks up by using his free online Fee Checker tool at It will analyze your plan and calculate within seconds how much you’re being charged in fees. Business owners can go one step further and provide a copy of their “fee disclosure” for a more detailed look under the hood. Most important, this quick process can also show you how much you can save over time by switching to a better plan. I won’t be surprised if you save yourself hundreds of thousands of dollars over the years.

I was chatting about this with my dentist and friend Dr. Craig Spodak. He has more than 40 employees, and he wanted to make sure they weren’t being ripped off. I don’t want to name specific names here because these problems are systemic, not just limited to a handful of companies. But when Craig told me the name of the infamous company that provided his 401(k) plan, I couldn’t help but cringe. My diagnosis was immediate: his dentistry practice would need to undergo an urgent extraction. Otherwise the pain would only get worse.

I put Craig in contact with my partners at America’s Best 401k. In a matter of minutes, he emailed them his plan’s “fee disclosure” form, and they drilled down to expose his fees. He was shocked by the results. It turned out that his plan contained a long list of overpriced mutual funds and an additional layer of bloated “contract asset charges.” The total costs he and his employees paid for this terrible plan were north of 2.5% a year! Suddenly Craig understood why his broker used to bring him donuts as a gift—and why the man was always grinning from ear to ear!

You won’t be surprised to hear that Craig fired his broker, dumped his provider, and entrusted his plan instead to America’s Best 401k.

As you can see in the box below, employers need to wake up—just as Craig and I did—so they can ensure that their employees aren’t being exploited. Otherwise there could be a high price to pay, not just for the employees but also for the employer.

If you’re an employee, after you use the Fee Checker, you can forward the report to your company’s owner or to senior management. Once they know the truth about what’s going on, they may well want to improve your 401(k) plan. After all, their financial future is also at stake.


If you own or run a company that offers a 401(k) plan, you’re officially regarded as the plan’s “sponsor”—whether you know it or not. That means it’s your legal obligation to act as the “fiduciary” to your plan and to your employees, which means that you have to operate in their best interests. If you trip up, you could easily find yourself with a major liability that could damage your business and even your own finances. It’s a bit like owning a house that’s structurally unsound: you might be fine for years—until you’re not. So, ignore this at your peril!

What do you have to do? First, you need to demonstrate to the Department of Labor (DOL) that you’re taking the necessary steps to fulfill your role as the plan’s sponsor. This includes periodically benchmarking your plan against other plans to ensure that the fees being charged in your plan are reasonable. Most business owners I talk to have no idea about this obligation. This potentially exposes them to the mighty wrath of the DOL. In 2014 the department determined that 75% of the plans it examined were illegal. The average fine: $600,000.

And that’s just the beginning. You’re also exposed to the risk that your own employees could sue you personally. In 2015 the US Supreme Court issued a major ruling against Edison International, the power giant. This decision should make it easier for 401(k) plan participants to sue their employers for choosing investments with excessive fees. Small businesses are particularly vulnerable—not just because it’s hard for them to afford hefty fines but also because they tend to have small 401(k) plans, which typically charge the highest fees.

One practical step that could save you a fortune is to contact my partners at America’s Best 401k and ask them to provide you with a free benchmark for your plan. All it takes is a few minutes to furnish them with the fee disclosure statement for your plan. The fact that you’ve obtained this benchmark demonstrates to the DOL that you’ve taken your legal responsibility seriously. Even better, many companies discover that they can easily cut their plan’s fees in half—or more. If so, that will endow you and your employees with a huge windfall for many years to come.

Where are we headed next? Before we turn our focus to your investment playbook, we’ve got one more invaluable lesson to cover: how to find sophisticated, conflict-free financial advice that will turbocharge your journey to financial success.

You’ll learn how to avoid all those salespeople in disguise who get rich by dishing out so-called advice that benefits them, not you. As you’ll see, choosing the right advisor can mean the difference between poverty and wealth, between insecurity and freedom. The choice is yours.

So let’s find out: Who can you really trust?



Introduction: Steve Forbes, publisher of Forbes magazine and CEO of Forbes Inc.

Foreword: Jack Bogle, legendary investor and founder of Vanguard




Power and Peace of Mind in a World of Uncertainty


These Seven Facts Will Free You from the Fear of Corrections and Crashes


How Wall Street Fools You into Overpaying for Underperformance


What Your 401(k) Provider Doesn’t Want You to Know


Pulling Back the Curtain on the Tricks of the Trade



Chapter 6: THE CORE FOUR

Four Principles That Can Help Guide Every Investment Decision You Make

Chapter 7: SLAY THE BEAR

How to Navigate Crashes and Corrections to Accelerate Your Financial Freedom




The Six Biggest Mistakes Investors Make and How to Avoid Them

Chapter 9: REAL WEALTH

Making the Most Important Decision of Your Life

Creative Planning


Tony Robbins Companies


Your Checklists for Success: Fortifying Your Kingdom—How to Protect Your Assets, Build Your Legacy, and Insure Against the Unknown

About Tony Robbins




This short, wisdom-rich, and crisply written book couldn’t be more timely. Even better, its insights and recommendations are timeless. Investors and, more important, those who currently are not investing should read it and take what it says to heart.

Never have we had such a long bull market that has been accompanied from the beginning by such caution and outright pessimism about the durability of the rise. The stock market never goes in a straight line, up or down, and every dip it has taken since 2009 has been met with wails of woe that we are in for another horrific slide. A result of this aversion to investing is that tens of millions of people who should be in the market, particularly millennials, are not. Tony Robbins aptly points out that regarding the accumulation of assets, especially for retirement, they are making a very costly long-term mistake by staying on the sidelines.

What helps make this volume so credible is that the author is up front in dealing with the pervasive anxieties about our economic future, worries that made the 2016 election cycle so stunning. He acknowledges that, yes, eventually we will experience a real bear market. But the possibility of such an event is no reason for individuals to stay away and simply sit on their hands. Big downturns in the market happen periodically, but the long-term trend of stocks has always been upward. By taking to heart the truth that emotions are enemy number one when it comes to investing, individuals can devise strategies that will enable them to outperform the market and most professional managers.

Robbins carefully and thoughtfully shows how you can be the master of your investment fate instead of sitting fearfully on the sidelines or getting whipsawed by reacting to market volatility in panicky, damaging ways. What should you do when stocks plummet? How can you find opportunity when everyone else sees disaster? He provides sensible rules that will keep you from making costly mistakes and, even better, explains what actions to take—such as recalibrating your allocation of assets—that can lay the foundation for fulsome future returns.

Enemy number two is fees. Expenses come not only from advertised costs but also from a variety of hidden charges. Thanks to compounding, these outlays over time can literally reduce your nest egg by hundreds of thousands of dollars. Remember that each dollar in expenses means one less dollar that can grow in coming years. This is why you should take a careful look at your 401(k) to discover what exactions might be eating away at it, like termites do with a house. Even index funds can hit you with unnecessary charges. As for a popular investment instrument, annuities, their charges can do to your money what Godzilla did to cities. An informed investor will be a far richer investor.

A lot of regulatory changes are taking place in the world of managing money, most notably from the US Department of Labor (DOL). This book helpfully walks you through these.

Finally, Robbins makes the point that wealth creation is not an end in and of itself but is a crucial aspect of achieving a purposeful life, a truth too often ignored. My grandfather B. C. Forbes, who founded our company just about a century ago, observed in the first issue of the magazine that bears his name that “the purpose of business is to produce happiness, not to pile up money.”

We can hope only that more people, especially the younger ones just starting their working careers, will take Robbins’s investment message to heart: get in!

He’s right. Millennials are making the same mistake a previous generation made decades ago—a generation that was scarred by the catastrophe of the Great Depression. Those folks’ fear of stocks was all too understandable. From 1929 to 1932, the Dow Jones Industrial Average went down what today would be the equivalent of 17,000 points! That’s a plunge of almost 90%. The 1930s was plagued by high unemployment. Then came World War II. No wonder most Americans vowed never to go near a stock.

Yet after WWII, the United States entered a great period of prosperity. Stock prices went up manyfold. Sadly, all too many people stayed out or overinvested in seemingly safe bonds; they could hardly know that the debt market was starting what turned out to be a 35-year bear market. Investors lost staggering sums to the inflation that pummeled the bonds’ principle. These people missed out on a fantastic opportunity to enrich their lives.

So never forget about these two ferocious foes of stock market success: fear and fees.

Will this sage book make Tony Robbins rich? No. All the proceeds are going to Feeding America, which provides free meals to those who need them. In this, Robbins exemplifies a basic truth that is often ignored: commerce and philanthropy are not polar opposites; they are two sides of the same coin. In free markets, you succeed only by providing a product or service that others want—that is, you prosper by meeting the needs and wants of others. Philanthropy is about meeting the needs of others. The skill sets required in each of these spheres may differ, but t