How to Master Your Finances | Insights from Tony Robbins in 15 Minutes

In 2014, Tony Robbins wrote "Money: Master the Game," which became an instant bestseller on the New York Times list. The book contains information stemming from interviews with over 50 financial experts. If you wanna learn about mastering your money, Tony Robbins has done the work. Mentor me, Tony.

I want everybody who's watching to remember one thing. The biggest myth you have, not the one that's been sold to you, that hurts you is, The average person thinks finance is so complex because frankly, the industry tries to make it sound complex. They use words that you don't know, so you don't know what to do. You know, what does this mean? And so what happens is we just give them our money and say deal with it, and we don't realize that system has been set up. It's not an evil system. It's set up by corporations that are looking to maximize profit for those corporations. They're not looking out for the investor, 'cause the investor's second, and we think we're first, and we're not. So the first piece is you've gotta know that You've got to, you can't wait till you have a ton of money to start investing and think I'm not an investor. What you gotta do is say, rather than my Apple phone, let me own Apple stock. Let me own a piece of all the best companies, not just Apple. I've gotta become an owner or I'll always be in scarcity. If you can invest in business, even a small amount, you can grow. I don't care how small it is, but you gotta automate it. There's a gentleman named Theodore Johnson who is amazing. He worked for UPS. Started as a driver, never made more than $14,000 total in a year. That was his highest salary in a year. In his old age, he's worth $70 million. And how did he do it? All he did was what I teach you as the first step is, you gotta take a percentage of what you earn and pretend it's a tax. You're never gonna see that money again. You automate it, it goes straight to the investment account, and you never see it as money you can spend. He did that with 20%. He said, I can't save 5. Somebody in his family said, if there was a tax, you'd pay it, and they made it 20%. When you save 20% and you compound it, the numbers are incredible. Before you get in the game, know the rules. Be the insider. Because when a person with money meets a person with experience, we all know what happens. Phraseman said, person with experience ends up with your money. So what I wanna do is save you that, and I give you 9 myths, 9 lies that you're gonna make sure never happen to you again. They're all marketed. And one of those myths, to give you an idea, is fees don't matter, or it's only 1%. That's what everybody says. And I go through and show you systematically what it means. If you pay 1%, a real 1%, which almost nobody does, versus 2%, versus 3%, you're buying, you could have 3 people, they start at the same age, put in the same amount of money, they invest in the same stocks, same bonds, same mutual funds, and 30 years later they show up and one's got 77% more money. You know, they start out with a million bucks, you know, they got $7 million, the other guy's got $4 million. If it was $100,000, $700,000 versus $4,000. The amount of money difference of those fees. And if I said to you, Brandon, here's the deal. I want you to make an investment with me. Here's how it's going to work. I want you to give me your money. You're going to put up all the money. You're going to take all the risks. If it loses money, if it loses everything, you lose everything. There's no consequence here. Yeah, no, no. You put up all the money, take all the risk, you take all the losses. But if you make money, and even if you don't make money, I get paid, right? And I get over the course of your lifetime of investing, 30, 40 years, I'm gonna take 60%. Would you make that deal? Nobody would. But they don't know that they are, all day long. That's right. And that is what you do with the average mutual fund today. 'Cause the average mutual fund with Forbes is 3.1%. If you're in a 401(k), instead of saving money, many times when you add all the other fees, according to Forbes, it's 4.1%. What that does to your ability to ever get financially free is it basically decimates it. And how is that possible? Jack Bogle, the head of Vanguard, taught me this. He said, Tony, watch, because people don't know. They don't do the math. For every 1% you give away over the course of your lifetime, that's approximately 20% of your total take. So if there's 3% in fees, you gave up 60%. You took the risks, you were on the line, they took no risks, and they're going to take 60% over the lifetime of what you're doing. He said, it's highway robbery. That's why you can invest in those same stocks with Vanguard on an index, and you pay 14 basis points, which that's another term, by the way. Every time I use a term in the book, I explain it, like basis points. What the hell's basis points? It's 0.14%. If someone says 25 basis points, it means a quarter of a percent. So if I say an index fund, you know what it is? I explain what it is in the book so that— [Speaker] Some of us doubt that we get it. [Speaker] People get it along the way, and I give examples so they see what it is. So what you do is you become an insider. Because what happens is every type of powerful institution or organization or field has its own language 'cause that's how they keep power. So if you go to your lawyer, There's a lot of things you and I could easily do ourselves, but we don't know the right legalese. So the words that you could say in English, they say in legalese, and we can't do it, so we gotta pay them for it, you know? Now, a good lawyer's a good lawyer, but sometimes there are things you could do. You know, some of the online companies are charging $20 for what some lawyers used to charge $2,000 for. The capacity to strengthen and increase your hunger is the one common denominator amongst the most successful people. Richard Branson's a good friend of mine, and Peter Guber, Steve Wynn, all these guys, they've never lost their hunger. Most people are hungry to achieve a certain amount, make a certain amount of money, and then they get comfortable and relax, or to get a certain level of fitness and then they relax. But, you know, Richard is as driven today as when he was 16 years old starting. I mean, he's like on fire and he's 65 years old. Warren Buffett is 85 years old. He's as driven today as when, you know, he began the journey, right? And so people that have that hunger, I believe intelligence, I love people that are wickedly smart and I work to be wickedly smart by educating and training myself and so forth and training my brain. But intelligent, there's a lot of intelligent people can't fight their way out of a paper bag, right? Hunger is the ultimate driver because if you're hungry, you can get the strategy, you can get the answer. If you can't model it, you can find it. Another guy I interviewed, a man named Kyle Bass. Kyle Bass took $30 million, gathered money together, a lot of money, but other people's money, turned it into $2 billion in the middle of the subprime crisis.

That's a very big return.

You could say that in 2 years, right? Oh my God. So I'm like, how did you do this? It's historic. There's several books you read and they open up the chapter in some of the most historic books written recently. The gentleman who wrote Flyboys also wrote one of the books and he starts out talking about Kyle Bass doing this, this incredible piece. It's like being there with him. But the way he did it was he risked 6 cents to make a dollar, and he just leveraged that up. So he could be wrong how many times and still break even? 15, he could be wrong 15 times and make money. So, but he's also smart as hell. He looked at things, he evaluated things, there's more detail that I explain in the book, but the core they all have in common is they risk for valuable returns. The Freedom Fund is this idea nobody wants to save, right? And millennials right now are doing the worst job of it in a long time, and it's not because They don't care, they're irresponsible. Frankly, they don't trust the market. You know, they saw what happened in 2008, they don't know where to really go, and so they're being stimulated like crazy and they're spending like crazy. But if you really want to have freedom, then what you have to do is you've got to take that percentage aside like Theodore Johnson did, and you've got to just say, this is for me, this is my freedom. There's a part of what I earn, as basic as it is, we all know this from investing, there's a part of what I earn that is mine and my family's to keep and no one's going to touch it and I'm going to grow it. And, but I also believe that where you put that really matters. And so indexing is the most basic way to do it for sure. But what all these investors showed me is asset allocation is where the difference is in business, right? In life. If you look at it, the fourth key we talk about in the four steps is you gotta really understand asset allocation. Because when I was with David Swenson, Dave said, Tony, I said, what are the dials you can move? I mean, there's a limited number of dials you can move to increase your returns to get to your financial freedom faster. He said, "No, there's really only 3." He said, "You can make a better choice selection of the actual investments or the securities. You can have better timing or you can have better asset allocation." He said, "Let me give you a clue. The first 2 will never happen." He said, "Because they cost money if you get them from somebody else and everybody's wrong on timing, everybody's wrong on the stocks." This is where all your money is made is asset allocation.

This leads to what sounds— goes against all the conventional wisdom, which you call all-weather allocation.

Yeah, well, let's talk about that. That's—

Which stocks only 30%?

Yes.

Explain.

Yes, well, I sat down with the famous Ray Dalio, right?

Right.

And I prepared for 18 hours for that interview because he's a genius and there's not that much on him and I wanted to absorb it all. So I got every little bit of it, sat down with him. It turned out Ray was a fan of my work, which I was touched by. 20 years ago, I guess he listened to my program, so he was very generous with his time. And we spent these 3 hours, and in the 3 hours, when I got to the end, I said to Ray, I said, listen, I really wanna help the average person. So I got a question for you. I did this with everyone. I said, if you couldn't give your money to your children, any of it, and all you could do would be give them a portfolio or a set of investment strategies or instructions and they were gonna start over and build it, what would it be? And he said, Tony, I spent a decade figuring that out. All my money's already there. My kids' money is there. My money for philanthropy when I'm gone is there. 'Cause I'm not gonna be here and I want something that'll do well in the future. And I don't know what the future's gonna be. Markets are gonna always change. I need something that could work in any market. I call it my all-weather fund. Most of us in the business are familiar with it a little bit. And so he explained it to me and I have a good understanding. And I said, I get it. So what you're saying is the reason why— this was obsessed him— why is it if I have a balanced portfolio in 2008, I got nailed on both sides? Exactly. Why did that happen in 2000? Everybody says portfolio theory, this is supposed to protect me and it didn't work. But he said, as soon as things get better, no one talks about it. We just forget about it. It happens again. Happened in 2000, happened in 2008. He said, I figured it out. When you have a 50/50 portfolio, right, that's 50/50 of where you put your money in assets. 60/40, 50/50, however you look at balanced portfolio, right? But he said the problem is that's not balanced risk. And this is where people are crazy. I've seen people write things up, they see this in the book and say Tony Robbins is promoting— first of all, I'm not promoting anything. Every word in this book is from the best investors on earth. Anything that's from me is about the emotions that I know for 36 years. That's been my expertise. These are their views. But I'll tell you what's amazing. He said, "Tony, when you have stocks and bonds half and half, you're not equal because equities are 3 times more volatile. So your risk is 95/5." He said, "So that's why people get killed in the 2008." And he said, "I try to get this through to people," he said, "but all of our people handle it. You know, you manage money for countries, the largest pension funds on Earth." He said, "But people don't listen. They look at it and go, 'Oh, this is bond heavy. The bond days are over because inflation's going forward.'" He said, "It's not true, Tony." This fund in the 1970s, it was the worst time for bonds and it was an extraordinary time for all-weather because it looks overbalanced because in order to get the same level of risk, you have to go for more long-term bonds or you have to use more leverage on the bond side. And so, when he was all done, it was, you know, for the average person complex. I'm seeing financial people look at this and write things up that are just silly saying, you know, this is never gonna work 'cause we're in the, you know, interest rates are the only place to go. If interest rates go up, it's a balanced fund. The other areas kick in. But here's what's interesting. After he told the whole thing to me, I said to him, I said, look, I said, this is wonderful. You've given me something that very few people understand on the planet. I think I really got it. And I played it back to him. He said, you got it. I said, but here's the problem. The average person is never gonna know what to do with this. And I said, I'm trying to help somebody that needs to know what to do. I said, tell me, you're telling me to make this beautiful chocolate cake and you're saying, Tony, here's how to do it. Use some sugar, right? Use some chocolate, use some dairy products. I need to know the amounts. You know, gimme the amounts. He goes, Tony, that's my secret sauce. And that's when he told me, he said, look, 10 years ago for you to even get in to talk to me, it was $5 billion net worth, $100 million to get in. And he said, and now for 10 years I haven't taken anybody's money. I said, you answered your own question. I said, you're not taking money anyway. It's not gonna compete with you. The average guy, he says, never gonna make it talking to a wealth manager. Tell me what to do. And he's so generous, you know, he's giving up half his net worth like many other people. And in the end he said, okay. He said, but it'll be complex. I said, I can make it simple. He said, "Well, I don't want leverage in it." I said, "Design one without leverage." He goes, "It won't be perfect." I said, "I don't care if it's not perfect. Your idea of unperfect will be somebody else's idea of the best thing they could do." And they laid out the numbers. We ran the numbers and used the same backtesting. So you saw year by year how it really did over the last 75 years of modern investing. And here's what's amazing. Like all weather similar, in 75 years, it's been right 85% of the time. What's even more extraordinary is the 15% when it wasn't doing well, when it didn't do well, its average loss was 1.6%. Not 50, 40, 30, 20. Think of the last 10 years, the 250% hits. His biggest loss in 75 years was less than 4%, -3.95%, and that was 2008 when the market exploded, you know, down to 51% from peak stock.

Here are the allocations in the book, which would make a normal person gag, at least initially. Stocks, only 30%. That's right. Even though it's— the stocks on average are supposed to gain, what, 9% a year?

Yes, 9.2%.

Long-term Treasuries, 40%.

Yeah.

Intermediates, 15, gold 7.5, commodities 7.5. Absolutely counter wisdom.

[Speaker] I know, and it's amazing, you know, when I interviewed David Swensen, he said, he wrote a book, and then when he said the whole secret to success is to be contrary to what everybody else believes. But the math on this is what works. Here's what's interesting, that looks like you're heavy bonds, 40 and 15, 55% bonds. And it looks that way visually, in terms of volume you are, but in terms of risk you're not. You're still, you're making it so you're equally weighted. Think of it this way. What triggers things to grow is inflation or deflation in terms of price. Certain things do really well in inflation, certain do in deflation. Growing economy, shrinking economy. And he's figured out which quadrant you need to put each to actually have equal risk. And that's why it's done well. This year, this formula has done, it's 1% better than the market. It's in 13 and a third right now. And, but more importantly, 3 weeks ago when the market dropped and gave up all of its entire benefits for the entire year and everybody's guts were checking, There was no gut check because it went up a quarter of a point. So the beauty of this is, I'm sure you know, there was a study done over the last 20 years and the studies from 1993 to 2013, and it's by Dalbar, and they found that the market, S&P 500 during that time did 9.2% on average, just as you said. But do you know what the average mutual fund owner got? Investor? 2.5%. That's before tax. Why? Because we as investors always do the wrong thing.

Emotions.

That's right. We sell when we should hang on, we buy when we shouldn't. So the greatest thing that I think that Ray offers somebody the opportunity to do is actually stay in the market. 'Cause if you got 1.6% as your big hit, if 4% was the biggest hit you've ever seen in 75 years, I think you could stay in and you could do what Jack talks about, which is stay in that market through time.

Of course, this means resetting each year.

It's a reset once a year. That's the one, recalibration. So 15 minutes a year and you're in the game.

Thank you guys so much for watching. I hope you enjoyed the video. I'd love to know what you think. Have you read the book? What clips did you find here most relevant, most helpful, most interesting? What changes are you going to make in your life as a result? Leave it in the comments below. I'm going to join the discussion. Thank you guys so much for watching. Continue to believe, and I'll see you soon.