Do you know the false money myths that can sabotage your path to abundance and financial independence?
How can we avoid unnecessary efforts and see our savings and investments inadvertently penalized?
Knowing the rules of the game is an essential step in developing the art of mastering money.
How can we avoid unnecessary efforts and see our savings and investments inadvertently penalized?
Knowing the rules of the game is an essential step in developing the art of mastering money.
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This article is dedicated to the 2nd step to achieving your financial independence according to the book "Money, the Art of Mastering It" by Tony Robbins.
The first step, the 1st rule of getting rich, is to make the most important financial decision of your life. It is this: decide what percentage of your payroll you are going to keep to yourself.
I have made a article on this first step, which I advise you to watch (or review).
You can read these two steps here:
Given the success and appreciation of the first video, I decided to make a new one on the second of the 7 Steps of Tony Robbins' system for achieving abundance and financial independence.
Once in place, this system can operate on autopilot, with very little monitoring on your part.
The path to financial independence is characterized by 2 phases: the first is the accumulation of capital, which will generate passive income. The aim is to limit the duration of this phase as much as possible.
Once a certain critical mass has been reached, the return on your capital will allow you to cover all your living expenses. The second phase, that of de-cumulation, begins: here you benefit from your previous efforts, and it should last for the rest of your life.
It is normal to want to know right away how to invest your money !!
But before that, it is essential to know the rules of the game well. Otherwise, you risk your accumulation phase dragging on, destroying your financial future.
Indeed, we have been exposed to certain ideas about investing for so long that we have come to believe them without ever really questioning them.
In this video, I suggest you unveil 5 of the 9 false financial myths denounced by Tony Robbins.
Be careful, as with any other investment advice, it is essential that you make up your own mind about the validity of the ideas I have written down in this video.
It is your full responsibility to decide how to invest your money!
1st Myth: Invest with us. We will do better than the market!
The best long-term investment for over 100 years has been in stocks. It is therefore normal that this market represents a good part of an investment portfolio.
But how do you find the right action? And how do you choose the best time to buy or sell it?
Very busy with our professional and personal life, we understand that we cannot develop knowledge as extensive as that of professionals in the field.
Relying on the experts to make these choices for us therefore seems a wise choice.
Among successful financial products, actively managed investment funds have pride of place.
It comes down to buying the expertise and ability of the fund manager to identify the right stocks to buy as well as the right time to buy, in the hope that their choices will be better than ours.
Unfortunately, several studies conducted over extended periods of time have shown that 96% of actively managed investment funds underperform the market over the long term.
You therefore have only a 4% chance of finding, among all the available investment funds, the one that will keep its promise to outperform the market. In other words, it is (almost) mission impossible !!
2nd myth: Our fees? They are a small price to pay!
Another element to consider before investing in a mutual fund is management costs. When Tony Robbins published his book, the average fee for holding units in an active investment fund, all costs combined, was 3.17% per annum.
1% here and 1% there doesn't seem like much, but combined over a long period of time they make all the difference between financial independence for the rest of your life, and the need for help from the State or your relatives.
Take for example 3 childhood friends who each invest € 100,000 at the age of 35. The 3 manage to obtain a gain of 7% per year on their capital. 30 years later, they meet and compare their investment accounts:
- Mathieu, who pays 3% fees per year, after investing € 100,000 over 30 years at a rate of 7% per year, has € 324,340 in his bank account.
- François, who pays 2% fees per year, with the same gain of 7% per year, has € 432,194 in his account.
- Benoît, who pays 1% fees per year, with the same return, ends up with € 574,349.
3rd myth: Our performances? You are going to have what you see!
A final element to be aware of when choosing your investment is that of the fund's return as published by the manager in the advertising brochures.
The methods used to calculate these returns are sometimes a little tricky: they are not necessarily inaccurate, but can spark returns that are greater than those actually earned by investors.
Since they must make people want to buy the investment product, the published returns are a bit like profile photos for online dating sites: the portrait is chosen to give the best possible version of reality !!
A common reaction, once you know these first 3 myths, is to believe that you cannot trust anyone in the investment field, that you are forced to play solo even if you don't. don't know much.
This is not true: there are many capable professionals who really care about their clients. What is certain is that you shouldn't just believe everything you are told about investing.
You need to dig and educate yourself before you invest. The same effort you put into making money has to be in choosing how to invest it.
An alternative to overcome the 3 myths discussed so far is that of passive investment funds, or ETFs, which are limited to replicating stock market indices, such as the CAC40 in France or the S & P500 in the United States.
Thanks to the fact that they exactly replicate stock market indices, they provide the same performance as the market (and therefore do better than 96% of active investment funds).
Due to the fact that the buying and selling of shares is very limited, management costs can be very low, around 0.1% - 0.2%.
4th myth: To have big rewards you have to take huge risks!
A widely held belief in the investment world is that it is necessary to take very high risks in order to obtain good returns.
But big investors don't speculate with their hard-earned and saved money: they choose the right strategies !!
As with entrepreneurs, the key lies in finding an opportunity that provides an asymmetric risk/reward ratio.
Good investments, especially when we are approaching retirement age and the de-cumulation phase, are those which make it possible to limit the risk on the invested capital, and which at the same time make it possible to benefit from a good part of the financial market gains.
There are several financial products that make it possible to protect all of the invested capital, or less to limit losses, while partly participating in market rises.
5th myth: the lies we tell ourselves
A final myth that we must overcome, in order to be able to build a future of abundance, is that of the lies we tell to ourselves. Those that the reason we cannot be successful in our financial desires is because we lack certain skills or abilities, because the circumstances in our life do not allow it, or because of someone or something that does not. not depend on us.
Our false beliefs about ourselves and what we can accomplish are probably the most powerful force that can keep us from moving forward on our path to financial freedom.
If so too, then just focus on 3 steps to changing your financial life. In fact, these 3 steps apply to any aspect of your life that you want to change.
1- The strategy :
you must know how to achieve your goals. The quickest and most effective method is to model your behavior on that of people who have already achieved the same results you want, and who have managed to keep them for the long haul. Avoid being influenced by others who know as much as you about the area that interests you: even with all their best intentions, they won't be able to help you. Rather, go see how the best in this field are doing !!
2- The inner story:
when we encounter obstacles or failures in achieving our goals, we end up creating explanations for the reasons for those difficulties. Often these are false stories, which severely limit our progress: I will never make it, I was not made for that, those who succeeded were not in my situation. 80% of success depends on our psychology, while 20% of the strategies we use. We absolutely must choose the stories we tell ourselves so that they support, rather than hinder, our goals.
3- State of mind :
impossible to change our inner narrative when we find ourselves in a bogus state of mind. We need to change our state first to feel good, powerful. To improve our state of mind in an instant, we can rely on our body. Moving and playing sports, or more simply adopting positive postures or controlling breathing, are very powerful tools to achieve this !!
So put yourself in a positive frame of mind, change your inner narrative about your relationship with money, and model the behavior of those who have been successful in their financial lives. This is the recipe for unlocking your internal brakes.
Here is the second step Tony Robbins advises for a successful financial life: Know the rules of the game to make it as easy as possible to build up the capital that will allow you to achieve abundance and financial independence.
What other myths have negatively conditioned your financial decisions so far?
How can you go about achieving your goals as quickly as possible?
If you enjoyed this second step in learning the art of mastering money, and would like to learn more, feel free to leave a comment below!