Hello again! Sorry for the late post (again). This month has been pretty crazy between work, kids, wifey going back to work so I have to watch the kids solo that I’ve had very little “personal” time to work on my projects. But, that’s also an excuse so I will make time this week to get next week’s post on time, I promise! And I’ve written it down so I hope you all hold me to that. Now, without further ado, the actual post!

In Tony Robbins’ book - MONEY Master the Game: 7 Simple Steps to Financial Freedom, Mr. Robbins talks about a range of topics all related to money management. In my opinion, the parts with the interviews can be skipped (I personally didn’t get much out of it) but the rest of the book was extremely informational. I’ll try to condense the parts that I found the most useful.

First, you have to be responsible on managing your money. It’s your money, you should know how it’s doing, where it’s getting invested and how much interest are those investments are doing. No one else cares about how your money is doing, everyone else is concerned with their own interests so it’s up to you to know what’s going on with your money. Also, if you aren’t investing in something you are actually losing money as the effect of inflation (the price of everything is going to keep going up) means your money is going to be worth less tomorrow than it is today. So invest your money in something!

Second, 96% of mutual fund managers (the ones who manage your finances when you invest in a mutual fund) "fail to beat the market over any sustained period of time”. The analogy Tony uses is that a mutual fund manager is like a gambler in the casino. And you know what the rule in a casino is right? “The House always wins!” The mutual fund managers who do consistently win (aka beat the market) are so rare and inaccessible that Tony Robbins refers to them as unicorns. They’ve stopped taking clients, so there isn’t a way to get them to manage your money. Unless perhaps you become a billionaire one day?

Third, mutual funds have these hidden fees called IMFs (Invest Management Fees) or MERS (Management Expense Ratio). Both mean the same thing: a portion of the interest you make is taken as a fee by the company managing your funds. Tony Robbins had an example where the same amount was invested over a 30 year period and a 2% IMF/MER was the difference between the account having 574K and 324K! I’d love to have that problem, but dang! 250k! So keep in mind that a lower IMF/MER is what you should look for if you do choose to put your money in a mutual fund. Here’s an example of what it means: if your IMF/MER is 2% and the interest you generated is 7%, you actually only made 5% that year.

Fourth, index funds are the way to go if you want to invest in something with very low IMFs/MERs. Compare them by looking them up at your bank and you should see index funds have a much less of IMF/MER than mutual funds. An index found is like a slice of the market (for example technology) that attempts to match, and not beat, the market. They consistently perform better than mutual funds, and with their low IMFs/MERs you will have less of your money taken from you at the end of the year.

Fifth, if your country has an account type that lets you invest into without the money you make from the interest getting taxed, take advantage of it! Normally any money you make is taxable (even gifts) but there are are accounts where you can put money into up to a certain amount each year and you won’t get taxed on any interest that money makes. In Canada it is called TFSA, and in the USA it’s called the Roth IRA.

Now, I’d like to talk to you about which index funds I invest into… but I’ve run out of time for this session. Next week I’ll break down a fantastic index fund that we can access here in Canada and how to go about opening an account. I’ll also go into detail how much money I’ve made in it so you can compare with what you’re currently making in your accounts.
Have a good week!