Money - Master the Game

Money - Master the Game is a book about making important financial decisions and how to eventually reach financial freedom.

I didn't like Money - Master the Game because the quite reasonable advice is completely buried under tons of fluff, blabla, self-promotion, namedropping, and repetition. The book could easily be half the size or less. Some advice is also U.S.-centric and hence not that useful for those living outside the USA.

My notes

To avoid criticism, say nothing, do nothing, be nothing.

Welcome to the Jungle: The Journey Begins With This First Step

It's Your Money! It's Your Life! Take Control

At its core, money is about power.

Money is certainly one of the ways we can turn the dreams we have into the reality we live.

How you deal with money reflects how you deal with power. Is it an affliction or a blessing? A game or a burden?

[...] the best way to change your life is to find people who've already achieved what you want and then model their behavior.

The secret of getting ahead is getting started.

What has been very successful for me through my whole life is to not be arrogant about knowing, but to embrace the fact that I have weaknesses; that I don't know a lot about this, that, and the other thing. The more you learn, the more you realize you don't know.

The 7 Simple Steps to Financial Freedom: Create an Income for Life

Sophisticated investors have always known this: it's not what you earn, it's what you keep that matters.

No person is free who is not master of himself.

If you know your limitations, you can adapt and succeed. If you don't know them, you're going to get hurt.

[...] complexity is the enemy of execution.

You may be blessed with a long life, but it may not feel like a blessing if you run out of money.

Tap the Power: Make the Most Important Financial Decision of Your Life

The man on top of the mountain didn't fall there.

Have you ever noticed that no matter how much you earn, you find a way to spend it?

[...] ultimately, we must all become investors if we want to be financially free.

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.

I can't afford to waste my time making money.

Save a fixed percentage each pay period, and then invest it intelligently, and over time you'll start living a life where your money works for you instead of you working for your money.

History proves that those "down and scary times" are the times of greatest opportunities to invest and win.

The most difficult thing is the decision to act, the rest is merely tenacity.

Contrary to popular wisdom, knowledge is not power – it's potential power. Knowledge is not mastery. Execution is mastery. Execution will trump knowledge every day of the week.

Money Mastery: It's Time to Break Through

Money can't change who we are. All it does is magnify our true natures. If you're mean and selfish, you have more to be mean and selfish with. If you're grateful and loving, you have more to appreciate and give.

The first human need is the need for Certainty. It's our need to feel in control and to know what's coming next so we can feel secure. It's the need for basic comfort, the need to avoid pain and stress, and also to create pleasure. [...] It affects how much risk we're willing to take in life – in our jobs, in our investments, and in our relationships. The higher the need for certainty, the less risk you'll be willing to take or emotionally bear.

[The] second human need [is] Uncertainty. We need variety. We need surprise.

The third is Significance [...]. We all need to feel important, special, unique, or needed.

The fourth basic need is Love and Connection.

Number five is Growth. If you're not growing, you're what? You're dying.

[...] the sixth need is Contribution. Corny as it may sound, the secret to living is giving. Life's not about me; it's about we.

Life is really about creating meaning. And meaning does not come from what you get, it comes from what you give. Ultimately, what you get will never make you happy long term. But who you become and what you contribute will.

The ultimate significance in life comes not from something external but from something internal. It comes from a sense of esteem for ourselves, which is not something we can ever get from someone else. People can tell you you're beautiful, smart, intelligent, the best, or they can tell you that you are the most horrible human being on earth – but what matters is what you think about yourself.

The fastest way to feel connection, a sense of how significant your life is, a deep sense of certainty and variety, and put yourself in a state where you can give to others, is to find a way each day to appreciate more and expect less.

Become the Insider: Know the Rules Before You Get in the Game

Break Free: Shattering the 9 Financial Myths

Remember the golden rule: he who has the gold makes the rules.

You have to learn the rules of the game, and then you have to play better than anyone else.

Risk comes from not knowing what you're doing.

[...] to have unconventional success, you can't be guided by conventional wisdom.

Myth 1: The $13T Lie: "Invest With Us. We'll Beat the Market!"

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.

The point is that you need to have your investments set up to stand the test of time. An "All Weather" portfolio.

Life isn't about waiting for the storm to pass; it's about learning to dance in the rain.

A portfolio of low-cost index funds is the best approach for a percentage of your investments because we don't know what stocks will be "best" going forward.

So while investing in the indexes is a great solution for a portion of your money, it shouldn't be for all of your money. Markets are volatile at times so it only makes sense that you will want to protect a portion of your portfolio if or when the markets take another big dive.

Myth 2: "Our Fees? They're a Small Price to Pay!"

[...] it doesn't matter how great your strategy is if excessive fees are eroding the path beneath your feet.

Myth 3: "Our Returns? What You See Is What You Get"

-

Myth 4: "I'm Your Broker, and I'm Here to Help"

[...] if the people who manage the fund aren't investing in the fund they run, why in the world would I?

Myth 5: "Your Retirement Is Just a 401(K) Away"

-

Myth 6: Target-Date Funds: "Just Set It and Forget It"

Asset allocation, where to park your money and how to divide it up, is the single most important skill of a successful investor.

Myth 7: "I Hate Annuities, and You Should Too"

-

Myth 8: "You Gotta Take Huge Risks to Get Big Rewards!"

Superficially, I think it looks like entrepreneurs have a high tolerance for risk. But one of the most important phrases in my life is "protect the downside".

A structured note is simply a loan to a bank (and typically the largest banks in the world). The bank issues you a note in exchange for lending it your money. At the end of the time period (also called the term), the bank guarantees to pay you the greater of: 100% of your deposit back or a certain percentage of the upside of the market gains (minus the dividends).

So what are the downsides of structured notes? First, a guarantee is only as good as the backer! So it's important to choose one of the strongest/largest banks (issuers) in the world with a very strong balance sheet. [...] Next challenge? Your timing could be way off. Let's say you owned a note with a five-year term, and for the first four years, the market was up. You would be feeling pretty good at that point. But if the market collapses in the fifth year, you will still get your money back, but you didn't get to capture any of those gains. You also might have limited liquidity if you need to sell the note before the end of the term.

Market-linked CDs [...] give you some small guaranteed return (a coupon) if the market goes up, but you also get to participate in the upside. But if the market falls, you get back your investment (plus your small return), and you had FDIC insurance the entire time.

Myth 9: "The Lies We Tell Ourselves"

[...] 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.

A breakthrough is a moment in time when the impossible becomes possible – when you don't just talk about something, but you finally take massive action and do whatever it takes to make it happen. You make a move to truly change and improve your world. Often it's frustration, anger, or stress that triggers a breakthrough.

However beautiful the strategy, you should occasionally look at the results.

I always say that 80% of success in life is psychology and 20% is mechanics. How else do you explain how someone can know what he needs to do, wants to do it, has the right strategy to get it done, and still not take action? To solve this riddle we have to delve into the psychology of individuals: the values, beliefs, and emotions that drive us.

If you're not taking action and the answer is sitting there in front of you, there's only one reason: you've created a set of beliefs that you've tied into a story – a story about why it won't work, why it can't work, why it only works for other people. [...] It's easy to come up with a limiting story. So why bother to take action on a strategy that you "know" will fail?

With a disempowering story, failure is nothing less than guaranteed. Which, of course, only reinforces your belief that nothing will work. And so the cycle continues. But the people who make change happen, who get stuff done, who accomplish, who shift, who grow, who learn, they take their strategy and attach a new story to it: a story of empowerment, a story of "I can and I will" instead of "I can't and I won't". It goes from being a story of limitation to a story of empowerment: "I will not be one of the many who can't, I will be one of the few who do".

Money is nothing more than a reflection of your creativity, your capacity to focus, and your ability to add value and receive back. If you can find a way to create value – that is, add value for a massive number of people – you will have an opportunity to have a massive amount of economic abundance in your life.

What's the Price of Your Dreams? Make the Game Winnable

What's the Price of Your Dreams? Make the Game Winnable

I'll be willing to bet that once you find out the real price of your dreams, the number it would take for you to really get where you want to be is a lot less than you think! And always remember the ultimate truth: life is not about money, it's about emotion. The real goal is to have the lifestyle you want, not the things. When you die, someone else gets those things anyway.

[...] when you've reached Financial Independence, you no longer have to work to have the same lifestyle you have today! The annual interest earned on the return from your savings and investments (your Freedom Fund) will provide you with the income that you need – while you sleep. You are now truly financially independent; that is, independent of work.

Financial Freedom would mean you're independent, you've got everything you have today, plus two or three significant luxuries you want in the future, and you don't have to work to pay for them either.

There is only one thing that makes a dream impossible to achieve: the fear of failure.

What's Your Plan?

If you don't know where you are going, every road will get you nowhere.

The only person you should try to be better than is the person you were yesterday.

[...] disappointment isn't always bad. It often serves as a great kick in the pants that pushes you to create massive change. Remember, it's not conditions but decisions that determine our lives. Disappointment can drive us, or it can defeat us.

What you get will never make you happy; who you become will make you very happy or very sad.

Most people overestimate what they can do in a year, and they massively underestimate what they can accomplish in a decade or two.

Speed It Up: 1. Save More and Invest the Difference

If everything seems under control, you're not going fast enough.

You can be rich by having more than you need, or by needing less than you have.

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? It's not about depriving yourself; it's about adjusting your spending habits to mirror your core values and indulge only the experiences that truly matter to you.

Speed It Up: 2. Earn More and Invest the Difference

If saving is one way to speed up your plan, there is an even faster way that literally has no limits – if you unleash your creativity and focus, and become obsessed with finding a way to do more for others than anyone else. That's how you earn more and shift into the fast lane to freedom.

[...] we don't get paid for time, we get paid for value.

For things to change, you have to change. For things to get better, you have to get better.

Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.

One of the key secrets if you really want to become wealthy: get in front of a trend.

Speed It Up: 3. Reduce Fees and Taxes (and Invest the Difference)

-

Speed It Up: 4. Get Better Returns and Speed Your Way to Victory

-

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 is time.

Make the Most Important Investment Decision of Your Life

The Ultimate Bucket List: Asset Allocation

Never test the depth of the river with both feet.

You can lose it all if you aren't careful about where you put your money. Anybody can become wealthy; asset allocation is how you stay wealthy.

Asset allocation is more than diversification. 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.

At some time in our lives, every one of us will need a cushion to cover our needs in case of an emergency or a sudden loss of income. No matter your income level, you need some liquidity – or instant access to cash.

For larger amounts of money that we need to keep safe and liquid, you can buy into ultra-short-term investments called cash equivalents. The most well-known are good old money market funds. [...] These are basically mutual funds made up of low-risk, extremely short-term bonds and other kinds of debt.

With certificates of deposit, you're the one loaning the money to the bank. It takes your cash for a fixed rate of interest, and then returns it – along with your earnings – after a set amount of time.

Playing to Win: The Risk/Growth Bucket

In any moment of decision, the best thing you can do is the right thing, the next best thing is the wrong thing, and the worst thing you can do is nothing.

[...] how much time do you have ahead of you to build wealth and make mistakes with your investments along the way before you need to tap into them? If you're younger [...] you can be much more aggressive because you'll have longer to recover your losses.

People don't know their true tolerance for risk until they've had a real-life experience taking a significant loss.

The Dream Bucket

When you cease to dream, you cease to live.

[...] if you want to take the island, you have to burn your boats.

[...] the key to creating wealth is to unleash your creativity and find a way to do more for others than anyone else is doing. If you find a way to add more value than anyone else, you can find a way to prosper personally.

Every great dream begins with a dreamer.

Timing Is Everything?

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.

Upside Without the Downside: Create a Lifetime Income Plan

Invincible, Unsinkable, Unconquerable: The All Seasons Strategy

Most people try to protect themselves by diversifying the amount of money they put into certain investment assets. One might say, "Fifty percent of my money is in 'risky' stocks (with perhaps greater upside potential if things go well) and fifty percent of my money is going in 'secure' bonds to protect me." Ray [Dalio] is showing us that if your money is divided equally, yet your investments are not equal in their risk, you are not balanced. You are really still putting most of your money at risk! You have to divide up your money based on how much risk/reward there is – not just in equal amounts of dollars in each type of investment.

There are only four things that move the price of assets:

1. inflation
2. deflation
3. rising economic growth, and
4. declining economic growth

If there are only four potential economic environments or seasons, Ray says you should have 25% of your risk in each of these four categories.

[...] complexity is the enemy of execution.

It's Time to Thrive: Storm-Proof Returns and Unrivaled Results

-

Freedom: Creating Your Lifetime Income Plan

Income is freedom! And lack of income is stress. Lack of income is struggle.

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.

[...] the market doesn't give you average annual returns each year. It gives you actual returns that work out to an average.

Time to Win: Your Income Is the Outcome

The question isn't at what age I want to retire, it's at what income.

Secrets of the Ultrawealthy (That You Can Use Too!)

[...] one of the biggest challenges in knowing how much money you will really need in the future is the unknown of what tax rates will be for you in the future. Remember, taxes can easily be raised, and suddenly the amount of spendable income you have shrinks.

Invest Like the .001%: The Billionaire's Playbook

Meet the Masters

All of these masters, while driven to deliver extraordinary returns, are even more obsessed with making sure they don't lose money.

While most investors are trying to find a way to make a "good" return, each of these hall of famers, without exception, looks for something completely different: home runs! They live to uncover investments where they can risk a little and make a lot. They call it asymmetric risk/reward.

The best of the best anticipate; they find the opportunity for asymmetric risk/reward. They really do their homework until they know in their gut that they are right – unless they're not! And to protect themselves, they anticipate failure by diversifying. Because in the end, all great investors have to make decisions with limited information.

We make a living by what we get. We make a life by what we give.

Carl Icahn: Master of the Universe

-

David Swensen: A $23.9 Billion Labor of Love

-

John C. Bogle: The Vanguard of Investing

-

Warren Buffett: The Oracle of Omaha

-

Paul Tudor Jones: A Modern-Day Robin Hood

-

Ray Dalio: A Man for All Seasons

-

Mary Callahan Erdoes: The Trillion-Dollar Woman

-

T. Boone Pickens: Made to Be Rich, Made to Give

-

Kyle Bass: The Master of Risk

-

Marc Faber: The Billionaire They Call Dr. Doom

-

Charles Schwab: Talking to Chuck, the People's Broker

-

Sir John Templeton: The Greatest Investor of the 20th Century?

"Bear markets start on the time of pessimism. They rise on the time of skepticism. They mature on the time of optimism, and they end on the time of euphoria!"

"The great majority of people do not build up any wealth because they do not practice the self-discipline of saving some of their income every month."

Just Do It, Enjoy It, and Share It!

The Future Is Brighter Than You Think

The point of living is to believe the best is yet to come.

The best way to predict the future is to invent it.

Those who have a "why" to live, can bear with almost any "how".

The Wealth of Passion

Happiness is not something ready-made. It comes from your own actions.

Our decisions ultimately control the quality of our lives.

In every moment of our lives, there are millions of things we can focus on. We can focus on the things that are happening right here, right now, or on what we want to create in the future, or we can put our focus back on the past. We can direct our focus to solving a big challenge or to appreciating the beauty of this moment, or to feeling sorry for ourselves about some disappointing experience. If we don't direct our focus consciously, the environment we're in tends to make constant demands to get our attention.

Where do you tend to put your focus? On what you have or on what's missing?

Do you tend to focus more on what you can control or what you can't control?

Ultimately, how we feel about our lives has nothing to do with the events of our lives, or with our financial condition, or what has or has not happened to us. The quality of our lives is controlled by the meanings we give these things.

The Final Secret

Being the richest man in the cemetery doesn't matter to me. Going to bed at night saying we've done something wonderful, that's what matters to me.

I don't think of all the misery, but of the beauty that still remains.