‘Unshakeable’ Book of the Month

My August Book Recommendation ‘Unshakeable’ by Tony Robbins 

Having spent a lot of time with Tony Robbins organisation in the USA back in the noughties (2001 – ) I am pleased to be able to whole heartedly recommended this book, which was recommended to me by several financially wise friends. Only yesterday I said to a client, if you were to only ever read one book about finance and investing, this could be the best one to pick.

Tony covers a whole range of issues from your financial mindset to practical strategies to permanently free yourself from the money worries that dominate many people’s lives. In creating the content of this book Tony Robbins has leveraged the wisdom of many financial masters that he has worked closely with over the years.

You have probably heard about the accumulative power of ‘compound interest’, well the fees, charges and taxes that many people pay without even realizing it will massively erode the value of your investments over time.

There are many takeaways from this book, but the number one takeaway has to be a typical example given where: If your pension is a managed fund (like most are) rather than an index fund you may have to retire 15 to 20 years later to have the same level of retirement funds (based on the same monthly contribution amount)!

The insights and information provided by Tony’s co-author Peter Mallouk is most significant. Together they uncover how the banking, investment and finance world is pre-dominantly structured to maximize their returns from your investments with the importance of your investment returns coming in a clear second place!

 Whilst the shady practices of investment advisors highlighted in this book are focused on advisors based in the USA; to varying degrees many similar shady practices can be found around the world. Although Tony makes the point that UK laws to protect the consumer are better than in the USA, UK investors also incur similar significant hidden or un-noticed costs including buying and selling fees, greater impact of capital gains tax (due to more frequent buying and selling of shares) and last but by no means least, the costs of consistent fund underperformance (compared to the market indexes such as FTSE 100, NYSE 100 and NASDAQ 100).

On the back of reading ‘Unshakeable’, I am already actively steering away from investing in ‘managed funds’ and favouring ‘index funds’ instead, for the following reasons highlighted in the book:

  • Managed Funds (where a lot of people’s pension contributions end up) involve fund managers who charge commissions to supposedly pick out the best performing companies and ‘outperform the market’. Index funds, which typically automatically track the top 100 FTSE, NASAQ or NYSE companies and do not incur the same level of ‘managing’ and ‘fee charging’ YET ‘Index Funds’ outperform ‘Managed funds’ 96% of the time over the last 50 years!!
  • Managed funds attract lots of hidden fees and commissions. The typical ‘0.5% here, and 1.5 to 3% a year there’ adds up and massively erodes your compounded interest returns. Over 20 years this can more than halve the value of your investment!
  • Managed Funds attract more taxes each year further eroding your compounded returns, this is because if you sell a share to buy another one you have to pay any capital gains tax.

The overall effect of the above is that over longer periods of 10, 20 and 30 years your managed funds will yield returns that can be a fraction of the returns form index funds.

Tony’s Hidden Agenda?
95% of books I have read on investing have a hidden agenda, which is why I believe that it is always wise to examine the author’s agenda. The First point to note here is that Tony is donating 100% of the profits from the sale of this book to feed impoverished families, this sets this book apart from 99% of books written on investing (not that there is anything wrong with making a profit from writing a book). Tony does unashamedly promote Peter Mallouk’s company (Creative Planning) on which Tony is on the board. However, it is hard for me to criticize this self-promotion as my further research indicates that Creative Planning has a very rare level of transparency over fees and the costs that other providers covertly and quietly add on. Creative Planning in fact charge on average less than 1 percent of the value of your portfolio with NO additional costs.

I am currently trying to identify other investment providers that are similar to Creative Planning in terms of their transparency and fixed low fees and costs in both the USA and the UK, please let me know any suggestions you may have.

With gratitude