Tony Robbins is well-known as a motivator and it shows in his personal finance book Money: Master the Game. Readers who just want financial facts and advice will be frustrated that the vast majority of the over 600 pages are devoted to motivation of many types. Given the sad state of most people’s personal finances, maybe what they really need is a master motivator to get them to save more and spend less.
The chapter I found most interesting was devoted to expert opinions on the amazing technologies we can expect to improve our lives in the coming decades. This later blended into an appeal to contribute to some of Robbins’ charities.
Robbins defends his motivational writing style saying “knowing information is not the same as owning it and following through.” However, I’ll confine the bulk of this book review to the personal finance aspects.
The centerpiece of this book is an asset allocation called the “All Seasons” portfolio devised by Ray Dalio. Here are the asset classes and percentages:
40% long-term U.S. bonds
15% intermediate U.S. bonds
The first thing to notice is that the largest allocation is to long-term bonds. Robbins focuses heavily on the high-return and low-risk performance of this portfolio during the 30 years from 1984 to 2013. U.S. interest rates have fallen like a rock during that period. As long as the next 30 years bring us interest rates that continue to fall dramatically to minus 10% or thereabouts, long-term bonds should keep performing well.
In case it wasn’t obvious, that was sarcasm. I have no idea if interest rates are rising any time soon, but I’ll go out on a limb saying that interest rates can’t drop in the next 30 years as much as they dropped in the last 30 years. This All Seasons portfolio looks overly conservative and overly fitted to the past 3 decades.
Robbins makes a strong pitch for using annuities to deal with longevity risk. Although he acknowledges that “variable annuities are invariably bad” and other types of annuities are often loaded with fees. “Most variable annuities should come with more warnings than a Viagra commercial.” Robbins helped to set up his own annuity provider. I’ll wait for some expert opinions before deciding that his annuities are better than the rest.
A common theme in the book is that most investors are best off in index funds. However, Robbins seems to contradict himself when he talks about methods of finding low-risk high-reward investments.
Interspersed among the motivational speeches were a number of good quotes and pieces of advice. One example is Elliot Weissbluth saying “The largest financial institutions are set up to make a profit for themselves, not their clients.”
Some revelations for retail investors: “chasing returns never works,” and “nobody beats the market long-term,” “except for a few ‘unicorns’” whose “doors are closed to new investors.”
Robbins gives a good characterization of typical mutual funds: “imagine someone comes to you with the following investment opportunity: he wants you to put up 100% of the capital and take 100% of the risk, and if it makes money, he wants 60% or more of the upside ... and if you lose, he still gets paid.”
In one example, Robbins says a woman named Angela could draw a retirement income of $34,000 per year from initial savings of $640,000. It’s hard to see how this greater than 5% withdrawal rate could be safe if Angela expects to increase her spending by inflation each year.
One quote I quite liked because it’s something I tell my sons: “it’s not what you earn that matters, it’s what you keep.”
Robbins is a fan of getting financial advice, but only from “fiduciary advisors.” This is a good short-form for emphasizing the importance of fiduciaries.
Robbins believes it isn’t possible to spend only on the things you absolutely need. He says we should have a “dream bucket.” This is a place to put a fixed fraction of your income to spend in ways that make you happy in the short term. This sounds like a good idea. It allows you to enjoy yourself in a way where the “fun” spending is controlled.
The book contains transcripts of interviews with several well-known investors. Asked about investing advice for the masses, Warren Buffett said “it’s so simple ... indexing is the way to go.” When activist investor Carl Icahn bought a big block of Netflix shares, he soothed their fears explaining the Icahn rule: “Anybody who makes me eight hundred million in three months, I don’t punch them in the mouth.”
Overall, because I was not particularly interested in the motivational aspects of this book, I found it frustrating trying to get to the parts I cared about. However, maybe Robbins is right that most people need this style of motivation to generate excitement and drive them to action.