Money: Master The Game

Money: Master The Game holds 7 simple steps to financial freedom, based on the advice of the world’s best billionaire investors, interviewed by Tony Robbins.

If you’ve read more summaries on here from the personal finance category you might think I’m preaching to the choir, but people really don’t understand this.

It’s because exponential growth is so big, it’s hard to grasp for the human mind. The best way to astonish yourself is to look at examples of this, like the folding paper to the moon story or how 10 early years of investing are worth more than 35 years of late investing.

This book makes another great example of this.

When Benjamin Franklin died in 1790, he left $1,000 for both the cities of Boston and Philadelphia, but only after investing it and not touching it for 100 years. Then they could withdraw a portion of it and had to let it sit for another 100 years.

After 100 years, Philadelphia withdrew $500,000 to build the Franklin Institute, a museum. The final balance for the bank account in 1990, another 100 years later, was $2 million.

Boston did an even better job at investing and has turned $1,000 into a glorious $4.5 million.

Insane?

Yes! So please, please NEVER underestimate the power of compounding interest.

If I asked you what the perfect amount of money is for you to make, 9 out of 10 of you would reply with: a million dollars. Why a million dollars? We are drawn to this figure like flies to the light. But it’s just an arbitrary number. Here’s one that’s much more important: $51,000. Why? Because it’s the average annual spending of an American adult. If you can make $51,000 from investments, you never have to work again. That’s all it takes. A million is 20 times as much. Doesn’t that make you feel at ease? This makes it a lot easier to reach your financial goals. How far you want to go is up to you, and setting specific goals will help you be realistic about what you can achieve in which period of time. Here are 3 of the goals Tony suggests: Make enough money from investments to pay for basic living costs: rent, food, utilities, a potential mortgage, and transport. Make enough money from investments to pay for basic living costs plus fun, like travel, going to the movies, buying new clothes regularly, etc. Make enough money from investments to be financially independent and never have to work again, i.e. $51,000 per year. For number 3 you need $640,000 invested so that you’ll get 8% annual return – which is just a little more than the average return of the…