The largest financial institutions are set up to make a profit for themselves, not their clients.
- What do I really want? (Vision.) 2. What is important about it? (Values.) 3. How will I get it? (Methods.) 4. What is preventing me from having it? (Obstacles.) 5. How will I know I am successful? (Measurements.)
Money is certainly one of the ways we can turn the dreams we have into the reality we live.
success leaves clues. People who succeed at the highest level are not lucky; they’re doing something differently than everyone else does.
I’ll put you in the room with these and many other superstars who get consistent results, decade after decade, in up markets and down, booms and busts. Together we will uncover the core secrets to their investment success and see how to apply them even to the smallest amount of money.
The idea is to know how to survive and thrive in any market condition. These real experts will explain how.
Bookmark - Location 714
they can anticipate the road ahead. Remember this: anticipation is the ultimate power.
This book is committed to one primary outcome: to set you up so you have an income for life without ever having to work again. Real financial freedom! And the good news is, it can be achieved by anyone.
It is not realistic to finance a 30-year retirement with 30 years of work. You can’t expect to put 10% of your income aside and then finance a retirement that’s just as long.
No matter where you live, if you don’t have another source of income, you could end up the best-dressed greeter at Wal-Mart.
It’s an amazing feeling to know you’ll never run out of income.
We know we need to save more and invest. So why don’t we do it? What’s holding us back?
SECTION 1: WELCOME TO THE JUNGLE: THE JOURNEY BEGINS WITH THIS FIRST STEP
SECTION 2: BECOME THE INSIDER: KNOW THE RULES BEFORE YOU GET IN THE GAME
SECTION 3: WHAT’S THE PRICE OF YOUR DREAMS? MAKE THE GAME WINNABLE
SECTION 4: MAKE THE MOST IMPORTANT INVESTMENT DECISION OF YOUR LIFE
SECTION 5: UPSIDE WITHOUT THE DOWNSIDE: CREATE A LIFETIME INCOME PLAN
SECTION 6: INVEST LIKE THE .001%: THE BILLIONAIRE’S PLAYBOOK
SECTION 7: JUST DO IT, ENJOY IT, AND SHARE IT
Compound interest is such a powerful tool that Albert Einstein once called it the most important invention in all of human history.
200 years after Franklin’s death, a period of time that had seen stocks grow at an average compounded rate of 8%,
our earned income will never bridge the gap between where we are and where we really want to be. Because earned income can never compare to the power of compounding! Money is better than poverty, if only for financial reasons.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give.
You have to move from just working for money to a world where money works for you.
You’re already a financial trader. You might not think of it in just this way, but if you work for a living, you’re trading your time for money. Frankly, it’s just about the worst trade you can make. Why? You can always get more money, but you can’t get more time.
If you stop working, you stop making money. So let’s take you out of the equation and look for an alternative approach. Let’s build a money machine to take your place—and, let’s set it up in such a way that it makes money while you sleep.
the most important financial decision of your life. The decision? What portion of your paycheck you get to keep. How much will you pay yourself—off the top, before you spend a single dollar on your day-to-day living expenses?
Whatever that number is, you’ve got to stick to it. In good times and bad. No matter what. Why? Because the laws of compounding punish even one missed contribution.
Can anybody remember when the times were not hard and money not scarce?
But here’s the key to success: you have to make your savings automatic.
It’s time to take the first of the 7 Simple Steps to your Financial Freedom! The most important financial decision of your life needs to be made right now! It’s time for you to decide to become an investor, not just a consumer. To do this, you simply have to decide what percentage of your income you will set aside for you and your family and no one else.
If you don’t want to work, you have to work to earn enough money so that you won’t have to work.
The bottom line is, if we feel like we’re losing something, we avoid it; we won’t do it. That’s why so many people don’t save and invest. Saving sounds like you’re giving something up, you’re losing something today. But you’re not. It’s giving yourself a gift today of peace of mind, of certainty, of the large fortune in your future.
Obviously money meant very different things for Adolf Merckle and Chuck Feeney. What does money really mean to you? Do you use money, or does money use you? Like I’ve said from the beginning: if you don’t master money, at some level, it’s going to master you.
Whatever emotion you’re after, whatever vehicle you pursue—building a business, getting married, raising a family, traveling the world—whatever you think your nirvana is, I have found it’s only an attempt by your brain to meet one or more of six human needs.
“What’s the secret to wealth?” And he said, “Tony, you know it, and you know it well. You teach it to everyone. It’s gratitude.”
BECOME THE INSIDER: KNOW THE RULES BEFORE YOU GET IN THE GAME
You have to learn the rules of the game, and then you have to play better than anyone else.
Whether you are a seasoned investor or just beginning to see yourself as an investor, the jungle that Ray Dalio so vividly described holds the same dangers for all of us. But most of the danger lies in the fact that what you don’t know can hurt you.
Money Power Principle 1. Don’t get in the game unless you know the rules!
But the system isn’t set up for your broker to have endless options and complete autonomy in finding what’s best for you. And this could prove costly.
Risk comes from not knowing what you’re doing.
The core concept of successful investing is simple: Grow your savings to a point at which the interest from your investments will generate enough income to support your lifestyle without having to work.
There are two phases to your investing game: the accumulation phase, in which you are socking away money for growth, and the decumulation, during which you are withdrawing income.
The goal of the nonprofessional should not be to pick winners—neither he nor his “helpers” can do that—but should rather be to own a cross section of businesses that in aggregate are bound to do well. A low-cost S&P 500 index fund will achieve this goal.
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.
Note - Location 1705
中国特色股市除外
From 1984 to 1998, a full 15 years, only eight out of 200 fund managers beat the Vanguard 500 Index. (The Vanguard 500, put together by founder Jack Bogle, is a mirror image of the S&P 500 index.)
Just how badly does chasing performance hurt us? Over a 20-year period, December 31, 1993, through December 31, 2013, the S&P 500 returned an average annual return of 9.28%. But the average mutual fund investor made just over 2.54%, according to Dalbar, one of the leading industry research firms. Ouch! A nearly 80% difference.
Because we buy high and sell low. We follow our emotions (or our broker’s recommendations) and jump from fund to fund. Always looking for an edge. But when the market falls, when we can’t take the emotional pain any longer, we sell. And when the market is up, we buy more.
As a famous money manager named Barton Biggs observed, “A bull market is like sex. It feels best just before it ends.”
The goal in investing is to get the maximum net return for a given amount of risk (and, ideally, the lowest cost).
Life isn’t about waiting for the storm to pass; it’s about learning to dance in the rain. It’s about removing the fear in this area of your life so you can focus on what matters most.
- Stocks have by far been the best place to be for long-term growth over time. • Stocks are volatile. In the pages ahead, you will learn from the “market masters” how to “smooth out the ride” by investing in and diversifying across multiple different indexes. • Don’t be sold that someone is going to beat the market. Instead, align yourself with the market! Once you put your indexing plan in place (which we will do step by step), you won’t have to spend your time trying to pick which stock to buy because the index will have done it for you. This will save you a tremendous amount of time and angst in trying to pick a winner. • Begin to think like an insider! Never again will you tolerate the “herd” mentality in your own life.
MYTH 2: “OUR FEES? THEY’RE A SMALL PRICE TO PAY!”
The mutual fund industry is now the world’s largest skimming operation, a $7 trillion trough from which fund managers, brokers, and other insiders are steadily siphoning off an excessive slice of the nation’s household, college, and retirement savings.”
You put up the capital, you took all the risk, and they made money no matter what happened.
Note - Location 1960
基金经理
MYTH 3: “OUR RETURNS? WHAT YOU SEE IS WHAT YOU GET”
Most people are familiar with the boilerplate disclaimer that past performance doesn’t guarantee future results. Far fewer are aware of how past performance numbers themselves can be misleading.
So if the fund advertises a 6% return, its investors achieved closer to 3%.
“Follow the money. Always follow the money.”
MYTH 4: “I’M YOUR BROKER, AND I’M HERE TO HELP”
“It is difficult to get a man to understand something, when his salary depends on his not understanding it.”
THE CHEF DOESN’T EAT HIS OWN COOKING
it was found that 49% of the managers owned no shares in the fund they manage. That’s right. The chef doesn’t eat his own cooking.
So the obvious question is, if the people who manage the fund aren’t investing in the fund they run, why in the world would I? Good question!!! The chef doesn’t eat his own cooking if the ingredients are bad or if he knows what the kitchen really looks and smells like. These fund managers are smart—they work under the hood.
MYTH 6: TARGET-DATE FUNDS: “JUST SET IT AND FORGET IT”
MYTH 7: “I HATE ANNUITIES, AND YOU SHOULD TOO”
MYTH 8: “YOU GOTTA TAKE HUGE RISKS TO GET BIG REWARDS!”
Remember Warren Buffett’s top two rules of investing? Rule 1: don’t lose money! Rule 2: see rule 1.
allow you and me to participate in the gains of the stock market without risking any of our principal!
But here’s the truth: the ultimate thing that stops most of us from making significant progress in our lives is not somebody else’s limitations, but rather our own limiting perceptions or beliefs.
Everybody has a fear of failure at some level; at times we’ve all been fearful that perhaps we are not enough.
Money is nothing more than a reflection of your creativity, your capacity to focus, and your ability to add value and receive back.
I want you to know that you’re the creator of your life, not just a manager. Sometimes
The day you stop racing is the day you win the race.
You can make them more conservative or more aggressive. You’re in control, so put in numbers that fit with your lifestyle, your current reality, and your future dreams.
One of the most powerful ways to accelerate the pace at which you achieve your financial goals—and the most painless way I know—is to implement the Save More Tomorrow plan,
She had left out a huge piece of future earnings, one that many people neglect to include in their financial planning: Social Security.
And yet contrast is a beautiful thing. When you get around people who are playing the game of life at a higher level, you either get depressed, pissed off, or inspired.
SPEED IT UP: 1. SAVE MORE AND INVEST THE DIFFERENCE
If everything seems under control, you’re not going fast enough.
The goal of these next minichapters is to get you thinking about how to make your financial dreams come true faster than you ever thought possible.
You can be rich by having more than you need, or by needing less than you have.
the best strategy to get around your belief system is to develop a new belief!
What if—in one fell swoop, in one single move—you could save a huge chunk of money toward your Financial Freedom, and it wouldn’t cost you a dime more?
You want to know the banker’s secret? Your interest payments will tack on an additional 100% or more to your loan value.
Prepay your next month’s principal, and you could pay off a 30-year mortgage in 15 years in many cases! Does that mean double your monthly payments? No, not even close! Here’s the key: Money Power Principle 3. Cut your mortgage payments in half! The next time you write your monthly mortgage check, write a second check for the principal-only portion of next month’s payment.
Take your $4 habit and boost it to $10 a day, and now you’re drinking away over $141,250 in savings over 20 years. That’s the cost of a four-year college education!
At the end of the day, the question to ask yourself is this: Do my expenses, big and small, bring me the thrill they once did?
“How do you truly become more valuable? Learn to work harder on yourself than you do on your job.
“All you have to do to earn more money in the same amount of time is simply become more valuable.”
And if you employ yourself, your raise becomes effective when you are!
“For things to change, you have to change. For things to get better, you have to get better.”
SPEED IT UP: 3. REDUCE FEES AND TAXES (AND INVEST THE DIFFERENCE)
Remember you get to spend only what you keep; if you invest with a 3% net return, it takes 24 years to double your money.
SPEED IT UP: 4. GET BETTER RETURNS AND SPEED YOUR WAY TO VICTORY
If you’re prepared, and you know what it takes, it’s not a risk. You just have to figure out how to get there. There is always a way to get there.
SPEED IT UP: 5. CHANGE YOUR LIFE—AND LIFESTYLE—FOR THE BETTER
My favorite things in life don’t cost any money. It’s really clear that the most precious resource we all have
Never test the depth of the river with both feet.
Asset allocation is the most important investment decision of your lifetime,
He told me that there are only three tools for reducing your risk and increasing your potential for financial success: 1. Security selection—stock picking; 2. Market timing—short-term bets on the direction of the market; and 3. Asset allocation—your long-term strategy for diversified investing.
It means dividing up your money among different classes, or types, of investments (such as stocks, bonds, commodities, or real estate) and in specific proportions that you decide in advance, according to your goals or needs, risk tolerance, and stage of life.
good people often fail because they do the right thing at the wrong time.
I don’t gamble, because winning a hundred dollars doesn’t give me great pleasure. But losing a hundred dollars pisses me off.
when you buy shares of an ETF, you are not buying the actual stocks, bonds, commodities, or whatever else is bundled in the fund—you are buying shares in an investment fund that owns those assets.
if you have your money machine in full gear, and you have the desire, there’s nothing wrong with setting aside a tiny percent of your Risk/Growth Bucket to pick some stocks and do some day trading. “Index your important money, then go have fun,” Burton Malkiel told me. “It’s better than going to the racetrack.” But, he said, limit yourself to 5% or less of your total assets or portfolio.
What if I put my money in the stock market at its peak, and it starts dropping? Or if I buy into a bond fund, and the interest rates begin to spike? Markets are always going to fluctuate, and we’ve learned that nobody, I mean nobody, can consistently and successfully predict when it’s going to happen. So how do we protect ourselves from all the ups and downs and really succeed?
“We tend to put money into the market and take it out at exactly the wrong time.”
Nobody could guess that the US government would do something that no government has ever done in human history—it decided to prop up the markets by “printing” $4 trillion, while telling the world that it would continue to do so indefinitely, literally until the economy recovered!
if you think you can time the markets, you’re wrong.
Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.
Remember, the goal is to take emotion out of investing because emotion is what so often destroys investing success, whether it’s greed or fear.
You can actually make higher returns by investing regularly in a volatile stock market.
to be a successful investor, you need to rebalance your portfolio at regular intervals.
allocation is everything! So you want to diversify between your Security Bucket and your Risk/Growth Bucket. You want to diversify across asset classes, markets, and time. 2. You don’t want to hesitate to get in the market trying to have perfect timing; instead, use dollar-cost averaging and know that volatility can be your friend, providing opportunities to buy investments cheaply when the market is down. This technique will increase your portfolio’s value when the markets come back up. 3. Have a Dream Bucket that gives you emotional juice and excitement so you can experience the benefits of your investing prowess in the short term and midterm instead of just someday far in the future. 4. Use rebalancing and tax harvesting to maximize your returns and minimize losses.
Here is the reality: most people couldn’t stomach another 2008 without selling some or all of their investments.
Remember, a 66% loss would require nearly 200% gains just to get back to even—just to recoup the portion of your nest egg that it may have taken your entire life to save!
FREEDOM: CREATING YOUR LIFETIME INCOME PLAN
I have enough money to retire comfortably for the rest of my life. Problem is, I have to die next week.
When I was young, I thought that money was the most important thing in life; now that I am old, I know that it is.
No matter what anyone tells you, or sells you, there isn’t a single portfolio manager, broker, or financial advisor who can control the primary factor that will determine if our money will last.
you are dead, who cares?! What’s painful is if you live too long with no income—that’s when you’ll really suffer.”
The key to abundance is meeting limited circumstances with unlimited thoughts.