Obtaining financial knowledge is one of many keys on the path to becoming wealthy. Most people pick up their financial wisdom from a variety of sources, including MoneyTips. However, author Tony Robbins has consolidated a great amount of information about how to master your money all in one place: his latest book, MONEY: Master the Game: 7 Simple Steps to Financial Freedom.
While it is impossible to summarize this 688-page book in one short article, we did want to highlight the seven key steps Tony explores in his work.
No one ever grew wealthy by being solely a consumer. America is a nation full of consumers and the rich love that. Why? The rich profit from consumers.
Rather than spending your money, your goal should be to grow your money. To grow your money successfully, you must learn to invest instead of constantly consuming. An easy example would be buying Microsoft stock (NASDAQ: MSFT) instead of the newest version of their software.
Once you decide to become an investor, you must learn to understand the intricacies that exist within the market. Many investment advisors could take advantage of you to pad their personal bank accounts when they should actually be focused on growing your investment accounts.
You must understand how mutual funds, stocks, index funds and other investments work. A key concept you should learn early on is the effect that fees will have on your future nest egg. Helpful hint: lower fees will result in more money in the future, all else equal.
If you do not know where your goal is, there is no way you can score. Do not wander aimlessly toward financial freedom. Take the time to figure out how much money you will need to be financially free.
Once you are armed with that information, you will be able to work backwards from that number to figure out how you can get there.
The most important investment decision of your life is your asset allocation. This will influence how much you need to commit to reach your goals, so learn about different asset classes. Choose an allocation that satisfies your risk tolerance, while helping you to achieve your goals within your ideal time range.
Instead of focusing solely on assets, you should concentrate on creating a lifetime income plan. Many financial professionals are compensated by how much money they manage. Do not let them trick you into thinking paper assets, such as stocks and bonds, are the only way to retire. Instead, plan how you will earn income throughout your life. Alternatives do exist, such as rental real estate.
Do not learn how to invest from your coworkers. Their investing knowledge is probably mediocre at best. Instead, learn from the best and brightest investors by watching their interviews, speeches or even their investment decisions if they are disclosed. For instance, Warren Buffett writes an annual letter to his shareholders every year at Berkshire Hathaway.
Just do it. Get started today. Do not wait to start growing your wealth. The earlier you make the commitment, the more time your money will have to grow and work for you.
Another great way to double down on your commitment and accountability is to share your newfound knowledge with friends and encourage them to join you on your journey.
If you want to pursue these seven steps, then your first investment should be a copy of Tony Robbins' latest tome to get all of the details.