Anthony Robbins’ new book on personal finances, released in November of 2014, was ranked #1 Personal Finance book on Amazon.com and it is now down to #10 in the same category. According to the back cover, this book will teach you how to “invest like the wealthy, where you participate in market gains but are guaranteed to never lose when the market drops”. (This claim, in an of itself, should raise eyebrows.)
This lengthy book (688 pages) aims to motivate readers to achieve financial independence and to teach them “insider secrets” of the world’s wealthiest individuals.
The book contains a lot of sound financial advice for beginners, such as investing a minimum of 10% of one’s income in passively managed funds (i.e. index funds), it encourages readers to take advantage of tax-sheltered accounts (Roth IRAs, Roth 401(k), etc), and maximize their returns by minimizing fees which can impact a portfolio’s long-term performance. The book also provides a free app which can be used to estimate how much money one will need in order to achieve different levels of wealth.
Although a long read, only a small percentage of the book contains practical information. The first few chapters make bold claims which will leave many readers disappointed by the time they finish reading the book. For example, the book’s cover claims that you can participate in market gains without losing money (through indexed annuities). While technically true, readers should be aware of the fact that this method could severely limit your returns, which is a risk in and of itself. Inveduco does not recommend indexed annuities for most investors, especially younger investors who have many years left before retirement because they can afford to take on additional risk. Although nothing is guaranteed in the stock market, investing too conservatively -especially as a young age- could fail to generate a large enough nest-egg and could prevent one from being able to retire. Readers need to remember that there is no free lunch. Every investment carries with it a certain amount of risk. The methods described in this book are no exception, even though they claim otherwise.
Finally, Robbins can’t seem to decide whether one should invest in passively-managed index funds or whether it is better to pursue “asymmetric returns” through active strategies (both methods are discussed in the book). Ultimately, the book leaves readers with a lot of motivation and a few good ideas but no overall strategy or plan for how to organize their financial lives.
How practical is the information in the book?
Inveduco rating: C-
The book is quite repetitive and the relatively small amount of practical information could easily have been covered in a few dozen pages at most. Many readers will also be frustrated by the book’s constant promises of further information in “later chapters”.
How sound is the advice in the book?
Inveduco rating: B-
The book contains some questionable advice (see “Cons” section above) which could limit your market returns while at the same time not guaranteeing the safely of your principle (for example, if you purchase an annuity through an insurance company, if the insurance company declares bankruptcy you could potentially lose your invested capital). Finally, the app’s financial projections are likely too optimistic and should be taken with a grain of salt.
Does the book live up to its claims?
Inveduco rating: C
The book barely passes this test. Some of the claims in the book will likely leave readers disappointed, especially seasoned investors. For example, Robbins claims to reveal “insider” information, but many of the topics covered in the book, such as index funds, have been discussed at length by numerous other books and articles. That is not to say that they should not have been mentioned in the book. But they should not have been portrayed as “insider” secrets.
Inveduco rating: C+
While this book contains some useful advice for novice investors and might motivate some individuals to start investing more, there are better books available for beginners, some of which will be reviewed on this site. Most intermediate and long-term investors will be disappointed and frustrated by the low amount of new and practical information in the 688-page book.
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