Better Books: Become Financially “Unshakeable” in 2019
We’ve been in a bull market since 2009. Winter is coming. Learn how to prepare for it now and profit.
I’ve resolved to read more books in 2019. To hold myself accountable, I’m also writing a summary of my biggest takeaways for others after each book. This is the first of this series. To get notified every time I write a new summary in 2019, drop your email below.
Why I Read This Book
As a self-improvement geek (hosting my own weekly self-improvement podcast, The Better Show), I’d always heard of Tony Robbins but never took the time to dive into any of his content. However, when he showed up on Kevin Rose’s podcast in October 2018, I listened and was particularly interested in Tony’s latest message — creating financial freedom.
Financial freedom has always been a passion of mine. Much of that is credited to my late grandfather, who when he was alive and I was young, bought me my first stocks, provided me books and magazine articles on investing, and most important of all, preached the “power of compounding interest”.
But Tony’s latest book, Unshakeable, spoke to my position right now, in late 2018, as I just turned 31 on November 28 and celebrate my 8th anniversary at Microsoft as a Product Manager.
Since I was 18 and could invest, my time and energy was focused on creating something out of nothing. However at this stage in my life, I now have a new goal: making more out of something. Unshakeable is all about that and more.
What I Found Most Interesting & Surprising
My goal isn’t to summarize the entire book, but rather to highlight what I personally found most interesting and surprising while reading. Each of these were moments that made me pause and ponder, and hopefully will provide you with some interesting insights to learn from.
- Biggest mistake is being on the sidelines and not invested in the market long-term. This alone wasn’t shocking, but the data Tony provides to prove this point certainly was: from 1996 through 2015, the S&P 500 returned an average of 8.2% per year. BUT if you weren’t invested in the market on the top 10 trading days during those 20 years, your returns would be cut nearly in HALF to just 4.5% per year. The point here is to know when those 10 days would occur is impossible, so you MUST remain invested in the market, not on the sidelines, even when things seem bad, in order to capture massive gains when things eventually get better.
- 401(k) plans are relatively new. As a 30-something, 401(k) plans have been around my entire life, but it turns out not much longer than that. Created in 1984, the 401(k) plan is now the primary investment vehicle for most American’s retirements, but it isn’t even as old (34) as the average American’s career (around 41 years if you start at 22 after college and retire at 63). It really struck me that so many of us put our entire financial future into something that is fairly new and untested. It inspired me to want to more deeply understand how 401(k) plans work & can be optimized (more on that in #3 below).
- 401(k) fees are more complex than simply expense ratios. I’d always known expenses & fees are one of the most important things to keep an eye on within your investments, especially when they compound over time. However, I never knew that there is a list of additional fees in 401(k) plans outside of the “expense ratio” that you typically hear about. In 2011, Forbes published “The Real Cost of Owning a Mutual Fund”, and listed out all the fees (on average) you’re paying on top of the expense ratio. You’re also paying transaction costs (1.44%/yr) and cash drag (.83%/year) and tax cost (1%/yr if fund is in a taxable account). This is an average grand total of 3.17%/yr on your tax-free 401(k) account — much higher than the .9% average expense ratio I was aware of before reading this. Sure made me want to go check in on my 401(k) account fees and see how I can lower them.
- Seek qualified opinions that differ from your own. It’s easier than ever to find news channels, online communities, and friend groups who agree with the opinions you already hold. This acts as an echo chamber to validate your existing thinking. This is dangerous in many aspects, but especially in investing. Instead, find smart people that contradict what you believe, and learn from them by asking smart questions. In his 2014 annual report, Warren Buffet, considered by many the greatest investor in the history of the world, explained how his Vice Chairman, 94-year-old Charlie Munger, had convinced him to change his investment approach, saying “Forget what you know about buying fair businesses at wonderful prices. Instead, buy wonderful businesses at fair prices.” Ray Dalio, considered the greatest hedge fund manager in the history of the world, says he likes to ask “Where could I be wrong? What am I not seeing? What’s the downside? What am I failing to anticipate? Who else should I speak with to deepen my knowledge?” to people he respects with the goal of protecting himself against confirmation bias.
Should You Read This Book?
In short, yes. At ~250 pages it’s a quick read and covers a lot of ground at multiple levels of depth.
If you’re a complete financial newbie, it’ll encourage you to get started and give you smart, safe and time-tested strategies from some of the most successful and pragmatic investment minds in the world.
If you’re financially savvy, it’s a great way to brush up on the fundamentals, while adding some new data and stories to increase your confidence in their importance in your journey to financial freedom.
Unshakeable isn’t going to be the last finance book you ever need to read, as Tony Robbins says, it isn’t mean to be — but it should be one of your first.
Mentions & Resources
- 🔧 Tool: 401(k) fee checker (America’s Best 401k)
- 📰 Article: The Real Cost Of Owning A Mutual Fund (Forbes)
- 📖 Book: Unshakeable: Your Financial Freedom Playbook (Amazon)
Next Book
Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones
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