There's some good financial advice here, but it's buried in an unnecessarily large amount of stories, philosophical musings, and repetition. It's also a bit too self-promotional. I mostly agree with the fundamentals of Robbins' approach (as far as I understand it as an amateur): index, use a fiduciary, pay attention to asset allocation, etc. Much of the advice is based on the work and teachings of John Bogle, Burton Malkiel, Warren Buffett, Ray Dalio, and David Swenson. The last several chapters (sections 6 and 7) don't add much value, and are much longer than necessary. There are more concise and worthwhile books on personal finance and investing. I read this because it was recommended on Freelancers' Show. Notes Fiduciary 5 Criteria for Finding a Fiduciary Retirement Plans If you make too much money for a Roth IRA, use a Roth 401(k). If you're a small business owner maxing out your plans, consider a Cash Balance Plan (Pension) on top of your 401(k). Target Date Funds For the average investor with simple needs, a low-cost target date fund from Vanguard can be a decent choice. Upside without the Downside House Don't count your house as an investment. House prices have risen by 0% over the last century, after adjusting for inflation. Dream Bucket Investment Portfolio A 50/50 stock/bond portfolio isn't balanced, because stocks are 3 times riskier than bonds. You must consider the risk factor, not just how the dollars are allocated. David Swensen's Recommended Portfolio Ray Dalio's All Seasons Portfolio Warren Buffett's Recommended Portfolio Annuities Deferred annuities Get annuity from a highly-rated insurance company. Avoid variable annuities. Use a fixed indexed annuity (FIA) to get a guaranteed income for life. You must be 50 or older and have a large lump sum to open an account. LifetimeIncome.com can help you find the right annuity even if you're young or don't have a lump sum to start with. Or work with fiduciary. Combine Ray Dalio's All Seasons Portfolio with FIA to get long-term returns and income for life.
Mutual Funds
96% of active mutual funds fail to match or beat the market over any extended period of time (10+ years). The 4% who beat the market are constantly changing.
Use a Registered Investment Advisor who's a fiduciary. Their fees may be tax-deductible, depending on your tax bracket.
Find a fiduciary at Stronghold Financial or findanadvisor.napfa.org
1. Registered with state or SEC as Registered Investment Advisor (RIA) or Investment Advisor Representative (IAR) of an RIA.
2. Compensated on percentage of assets under management (AUM), not for buying funds. Make sure this is the only fee, and is completely transparent. Make sure there are no 12B-1 fees or pay-to-pay fees.
3. Not compensated for trading stocks or bonds.
4. Not affiliated with a broker dealer.
5. Money held with reputable third-party custodian (Fidelity, Schwab, TD Ameritrade, etc.)
Put as much money into Roth accounts as possible, as tax rates are likely to increase. Conventional wisdom says you'll be in a lower tax bracket in retirement because you'll be earning less, but that may not be true since you won't have mortgage deductions if your house is paid off, and you won't have dependents if you don't have kids at home.
Target date funds assume that bonds are less risky than stocks, which isn't always true. They also assume that bonds have inverse or low correlation to stocks, which isn't always true; they can be correlated during rough times.
• Structured notes. Get through fiduciary. Give you downside protection, and percentage of upside. Best when close to or in retirement.
• Market-linked CDs. Small guaranteed return (coupon). If market falls, you get back investment plus small return. FDIC-insured. Get through fiduciary.
• Fixed indexed annuities (FIA). 100% principal protection. Tax deferred.
Prepay mortgage principal each month to pay off 30-year mortgage in 15 years. This saves the interest on each payment. Doing this over the life of your mortgage will decrease your total mortgage payments by half.
Set aside 5 to 10% for your dream bucket, for enjoyment in short term.
Rebalance once or twice a year. Pay attention to tax impact.
20% domestic stock
20% international stock
10% emerging market stock
20% REITs
15% long-term US Treasuries
15% TIPS
Portfolio protects against inflation or deflation. Fairly aggressive. Outperformed S&P 500, and more stable than it.
30% stocks (S&P 500 or other indexes)
15% intermediate term government bonds (7-10 year Treasuries)
40% long-term government bonds (20-25 year Treasuries)
7.5% gold
7.5% commodities
Portfolio isn't always tax-efficient, so hold it in tax-sheltered accounts
10% short-term government bonds
90% low-cost S&P 500 index fund (Vanguard's)
Immediate annuities are best for those near or in retirement.
• Fixed annuity: fixed, guaranteed return each year
• Indexed annuity: return is tied to stock market; you get percentage of upside of market with no downside and no possibility of loss
• Hybrid indexed annuity: benefits of indexed annuity plus lifetime income rider
