MONEY Master the Game: 7 Simple Steps to Financial Freedom (Tony Robbins Financial Freedom)

by Anthony Robbins

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 mutual funds sold to me are charging me astronomical fees that could strip me of up to 70% of my future nest egg. Over any sustained period of time, 96% of actively managed mutual funds are underperforming the market (or their benchmarks). I am being charged 10 to 30 times what it would cost me to own a low-cost index fund and “become,” or mimic, the market. The returns the mutual funds are selling are typically way better than the returns I actually receive since they are marketed as time-weighted returns, not dollar-weighted returns. Dollar-weighted returns are what we actually get to keep/spend, whereas time-weighted returns are what fund managers use to fuel advertising. And as the grand finale, your broker will look you in the eye and tell you that he has your best interests at heart. Because more than likely, he sincerely believes he is helping you. He doesn’t understand, nor has he even been educated about the impact of what we described above. Heck, he is probably following the same advice he is giving you for his own personal finances.

We have learned that nobody beats the market (except for a handful of “unicorns”)! And by using low-cost market-mimicking index funds, we can outperform 96% of mutual funds and nearly as many hedge funds. Welcome to the front of the performance pack!

1. Investing in experiences—such as travel, learning a new skill, or taking some courses, rather than acquiring more possessions. 2. Buying time for yourself—“Whenever we can outsource our most dreaded tasks (from scrubbing toilets to cleaning gutters), money can transform the way we spend our time, freeing us to pursue our passions!”