Lessons From Chapter 3 of Unshakeable by Tony Robbins

Happy Today!

This week it’s time to talk about Chapter 3 of Unshakeable by Tony Robbins. The book is not the type of book you read for casual reading, it is a beginners guide to understanding finances and investing. Thus far, we have posted about what to expect with Chapter 1 and quotes from Chapter 2 which were an explanation of financial principles.

As you read this book, you must remember the intent of the authors. This book is intended as a means of an introductory financial education manual. If you keep this in mind, reading this book will be easy.

So what does Chapter 3 cover? The title of the chapter is Hidden Fees and Half-Truths: How Wall Street Fools You into Overpaying for Underperformance. This is a spot on description of the information enclosed.

The objectives of this chapter were to teach the reader how to:

1. Recognize excessive fees,

2. Minimize fees, and

3. Decrease taxes paid on investments.

Based on these objectives, here are the Lessons from Chapter 3

The problem with fees

Why you want to become knowledgeable about fees

“You know the old saying “Ignorance is bliss”? Well, let me tell you: when it comes to your finances, ignorance is not bliss.”

“You put up 100% of the capital, you took 100% of the risk, and you got 33% of the return!”

“By minimizing fees, you’ll save years—or, more likely, decades—of retirement income.”

The problem with taxes

“Because the largest expense in your life is taxes, and paying more than you need to pay is insane—especially when it’s absolutely avoidable!”

Benefits of index funds

“Index funds are almost entirely on autopilot: they make very few trades, so their transaction costs and tax bills are incredibly low.”

“Instead of sitting on cash, they remain almost fully invested at all times.”

“When you look at the results on an after-fee, after-tax basis, over reasonably long periods of time, there’s almost no chance that you end up beating the index fund.”

David Swenson, Chief Investment Officer for Yale University

“Warren Buffett, who has outpaced the market by a huge margin, also advises regular people to invest in index funds, so they can avoid the drain of excessive fees.”

Use the right mutual funds

“The grand total? If the fund is held in a nontaxable account like a 401(k), you’re looking at total costs of 3.17% a year! If it’s in a taxable account, the total costs amount to a staggering 4.17% a year!”

“The grand total? If the fund is held in a nontaxable account like a 401(k), you’re looking at total costs of 3.17% a year! If it’s in a taxable account, the total costs amount to a staggering 4.17% a year!”

To summarize, consider investing in index funds as mutual funds which are managed by hedge fund managers may not give you the return on your investment. All quotes indicated came from Tony Robbins unless otherwise indicated.

Til next time,

For more information about mutual funds, see Forbes Magazine “The Real Cost of Owning a Mutual Fund,”