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CHAPTER 4.4

TIMING IS EVERYTHING?

We have met the enemy, and he is us.

—POGO

What’s the secret of success for investors and stand-up comedians . . . ?

Timing. It’s everything.

The best comics know exactly when to deliver a punch line. And the smartest investors know just when to enter the market—except for when they don’t! Even the best of the best fail to hit every beat every single time. For a comedian, a mistake in timing results in an embarrassing, deathly silence in the house—and maybe a few thrown objects. But if you’re an investor, a mistake in timing can destroy your nest egg. So we need a solution that doesn’t require us to be a psychic.

We’ve already seen how diversifying your portfolio across different asset classes and across different markets can protect you in a volatile economy. But haven’t we all had the experience of being at the right place or doing exactly the right thing . . . but at the wrong time? So by now you might be thinking, “Okay, Tony, so now I know how to diversify my investments—but what if my timing is off?” I’ve asked myself the same question. What if I put my money in the stock market at its peak, and it starts dropping? Or if I buy into a bond fund, and the interest rates begin to spike? Markets are always going to fluctuate, and we’ve learned that nobody, I mean nobody, can consistently and successfully predict when it’s going to happen.

So how do we protect ourselves from all the ups and downs and really succeed?

Most investors get caught up in a kind of mob mentality that has them chasing winners and running away from losers. Mutual fund managers do the same thing. It’s human nature to want to follow the pack and not to miss out on anything. “Emotions get ahold of us and we, as investors, tend to do very stupid things,” the Princeton economist Burton Malkiel told me. “We tend to put money into the market and take it out at exactly the wrong time.” He reminded me of what happened during the tech bubble at the turn of the 21st century: “More money went into the market in the first quarter of 2000, which turned out to be the top of the internet bubble, than ever before,” he said. “Then by the third quarter of 2002, when the market was way down, the money came pouring out.” Those investors who bailed instead of riding out the slump missed out on one of the greatest upturns of the decade! “Then in the third quarter of 2008, which happened to coincide with the peak of the financial crisis,” said Malkiel, “more money went out of the market than ever, ever, ever before. So our emotions get ahold of us. We get scared.” And who could blame anyone for being scared during that epic crash! In October 2009, after the stock market had lost more than $2 trillion in value, and when hundreds of thousands of Americans were losing their jobs every month, Matt Lauer at NBC’s Today show called my office. He asked me to come on the air the next morning to talk about what viewers could do to cope with the crisis. I’d known Matt for years and had been on his show a number of times, so of course I agreed. When I arrived on the set, his producer told me, “Okay, you’ve got four minutes to pump the country up.” I thought, “Are you kidding me?”

“Well, pumping people up is not what I do,” I said. “I tell them the truth.” And that’s what I did. I warned the Today show audience in two different segments that the stock market meltdown was not over, that the worst could still be coming. How’s that for pumping them up?

“Many stocks that were selling for fifty dollars not long ago are selling for ten dollars or five dollars, and here’s the truth: some may go down to a dollar,” I said, as news anchor Ann Curry’s eyes grew wider and wider. But I also told the viewers that, instead of freaking out, they should fight their fears and educate themselves about people who had done well in tough times. Like Sir John Templeton, who had made all his money when markets were crashing during the Great Depression. I said that if you studied history, you knew there was a great chance, based on what happened in the ’70s and even in the ’30s, that in a short period stocks that had gone down to $1 would go up again. They might not get back to $50 for a long time, but, historically, many would jump to $5 in a few months. That’s a 400% return, and it could happen in six months! “If you stay strong and smart, and the market continues to recover, you could make a thousand percent or more! This could be the greatest investment opportunity since you’ve been alive!” I said.

It was not exactly the message the Today show expected to hear, but it turned out to be dead-on. How did I know the market was going to keep dropping? Because I was so brilliant? Hardly. I wish I could say that. The reality was that my friend and client Paul Tudor Jones had been warning me about what was happening in the markets almost a year in advance of the crisis. He is one of those unicorns who can actually time the markets on a fairly consistent basis. It’s part of what made him not only one of the most successful investors in history but a legendary figure. He predicted the Black Monday crash of 1987, and when everyone else was freaking out, he helped his clients make a 60% monthly return and 200% for the year.

So you can bet I was grateful for Paul’s insights! In early 2008 he told me a stock market and real estate crash was coming, and soon. I was so concerned that I reached out to my Platinum Partners, an exclusive group of my clients who I work with three to four times a year in intimate, intensive sessions to transform their relationships, businesses, and finances. I called a surprise meeting and asked them all to fly and meet me in Dubai in April 2008 to warn them about the coming crisis and help them prepare for it. Remember, anticipation is power. With a four- to six-month jump, many of my clients were able to actually profit from one of the worst economic times in history.

Yes, sure enough, stock prices plummeted throughout the last quarter of 2008. By March 2009, the market was so bad, Citigroup bank shares had dropped from a high of $57 to—you guessed it!—as I had warned, $0.97. You could literally own the stock for less than it cost you to take your money out of one of its ATMs!

So what should an investor do in this extraordinary kind of situation? If you believe Sir John Templeton’s motto, “The best opportunities come in times of maximum pessimism,” or Warren Buffett’s mantra, “Be fearful when others are greedy, and be greedy when others are fearful,” it was a great time to scoop up bargains. Why? Because smart, long-term investors know that seasons always change. They’ll tell you that winter is the time to buy—and the early months of 2009 were definitely winter! It’s the time when fortunes can be made, because even though it may take awhile, spring always comes.

But what if you got scared or felt you had to sell when the markets collapsed? You might say, “Tony, what if I lost my job in 2008 and had no other source of income? Or my kid’s tuition was due and the banks wouldn’t loan me any money?” If you sold your stocks in 2008, all I can say is, I feel your pain, but I wish you could have found another way to make ends meet. Individual investors who liquidated their funds when the market plunged learned an agonizing lesson. Instead of riding the tide back up, they locked in their losses—permanently. If and when they got back into stocks, they had to pay a much higher price, because as you know, the market roared back to life.

Seeing so many people lose so much in such a short time, and feeling the suffering that all this created, is what started my obsession with wanting to bring the most important investment insights to the general public. It literally was the trigger for the birth of this book.

It also made me search to see if the same level of financial intelligence that created high-frequency trading (where the HFT investors truly have the upside without the downside) could be harnessed in some way for the good of the average investor. Remember, the HFT investors make money and virtually never lose.

So what’s the good news? In the upcoming section of this book, “Upside Without the Downside: Create a Lifetime Income Plan,” you’re going to learn there’s a way for you to never leave the market yet never take a loss. Why? Because there are financial tools—insurance products, to be specific—where you don’t have to worry about timing at all. You make money when the market goes up, and when it goes down 10%, 20%, 30%, or even 50%, you don’t lose a dime (according to the guarantees of the issuing insurance company). It sounds too good to be true, but in reality, it’s the ultimate in creating a portfolio that truly offers you peace of mind. For now let me show you three tools that can help you limit many of your investment risks and maximize your investment returns in a traditional investing format.

The future ain’t what it used to be.

—YOGI BERRA

Prediction is very difficult, especially about the future.

—NIELS BOHR

On March 2, 2009, Paul Tudor Jones told me that the market was hitting its absolute bottom. Prices would start rising again. Spring was coming. So I tweeted: By the way, it was the first time I ever tweeted any information on the potential direction of the stock market! As it turned out, only seven days later, the US stock exchange indexes did exactly that: bottomed out on March 9. Prices started rising gradually and then took off. And sure enough, Citigroup stocks, which were $1.05 on March 9, 2009, closed on August 27, 2009, at $5 a share—a 400% increase!12 What an incredible return you could have had if you’d managed your fear and bought when everyone else was selling!

Now, I’d love to be able to say that past market behavior can predict the future, or that Paul Tudor Jones or anyone else I know could continuously successfully forecast these market swings, but it isn’t possible. Based on analysis from those “in the know,” I put out another heads-up warning for potential challenges in 2010, this time on video, when it looked like the market was overextended and heading for another correction. I wanted people to make a conscious decision whether they wanted to protect themselves from the potential of another huge hit. But this time we were wrong. Nobody could guess that the US government would do something that no government has ever done in human history—it decided to prop up the markets by “printing” $4 trillion, while telling the world that it would continue to do so indefinitely, literally until the economy recovered!

By magically adding zeroes to its balance sheet, the Federal Reserve was able to pump cash into the system by buying back bonds (both mortgage-backed bonds and Treasuries) from the big banks. This keeps interest rates unnaturally low and forces savers and anyone looking for some sort of return into the stock market. And the Fed kept doing it year after year. No wonder US stocks never came down from that sugar high!

So if you think you can time the markets, you’re wrong. Even the best in the world can’t do it every time because there will always be factors they can’t predict. Like stock picking, it’s best to leave market timing to the masterminds who employ large staffs of analysts—ones like Paul, who can also afford to be wrong because of the many different bets they place on the direction of the markets. But this does not mean you can’t take advantage of the concept behind market timing—the opportunities of rising and falling markets—by applying a couple of simple but powerful principles that you’re about to learn here. Both involve taking yourself out of the picture and automating your investment schedule. “You can’t control the market, but you can control what you pay,” Burt Malkiel told me. “You have to try to get yourself on automatic pilot so your emotions don’t kill you.” Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

—PETER LYNCH

SO WHAT’S AN ANSWER TO THE DILEMMA OF TIMING?

One of these techniques is as old as Warren Buffett’s original teacher, Benjamin Graham, the dean of modern investing. Graham, who taught at Columbia Business School in the mid–20th century, championed a gutsy technique with a boring name: dollar-cost averaging. (In fact, Buffett credits Graham with first coming up with the famous top rule of investing: “Don’t lose money!”) It’s a system designed to reduce your chances of making the big investment mistakes we all fear: buying something right before it drops in price, or pulling out of an investment right before its price goes up.

We’ve already learned the first two keys of asset allocation: diversify across asset classes and diversify across markets. But remember, there’s a third key: diversify across time. And that’s what dollar-cost averaging does for you. Think of it as the way you activate your asset allocation plan. Asset allocation is the theory; dollar-cost averaging is how you execute it. It’s how you avoid letting your emotions screw up the great asset allocation plan you’ve just put together by either delaying investing—because you think the market’s too high and you hope it will drop before you get in—or by ignoring or selling off the funds that aren’t producing great returns at the moment.

According to the many fans of dollar-cost averaging—and that includes powerhouses like Jack Bogle and Burt Malkiel—it’s the key to sleeping better at night, knowing your investments will not only survive unstable markets but also continue to grow in the long term, no matter what the economic conditions. Sound great? All you need to do is make equal contributions to all of your investments on a set time schedule, either monthly or quarterly.

Easy, right?

But there are two challenges I have to warn you about. First, dollar-cost averaging is going to seem counterintuitive, and you might feel like you’re going to be making less money using it. But I’ll show in just a moment that what’s counterintuitive is actually to your advantage. Remember, the goal is to take emotion out of investing because emotion is what so often destroys investing success, whether it’s greed or fear. Second, there’s been some recent debate about the long-term effectiveness of dollar-cost averaging, and I’ll show what both sides are saying. But first, let’s talk about the most common way investors use it and its potential impact.

When you invest on a set schedule, with the same amount of money invested each month or week in exact accordance with your asset allocation plan, the fluctuations of the market work to increase your gains, not decrease them. If you have $1,000 to invest each month, and you have a 60% Risk/Growth and 40% Security asset allocation, you’re going to put $600 in your Risk/Growth Bucket and $400 in your Security Bucket regardless of what’s happened to prices. Volatility through time can become your friend. This part might seem counterintuitive. But Burt Malkiel gave me a great example of how it works: Here’s a great test. Take a moment and give me your best answer to this question: Suppose you’re putting $1,000 a year into an index fund for five years. Which of these two indexes do you think would be better for you?

Example 1

• The index stays at $100 per share for the first year.

• It goes down to $60 the next year.

• It stays at $60 the third year.

• Then in the fourth year, it shoots up to $140.

• In the fifth year, it ends up at $100, the same place where you started.

Example 2

• The market is at $100 the first year.

• $110 the second year.

• $120 the third.

• $130 the fourth, and

• $140 the fifth year.

So, which index do you think ends up making you the most money after five years? Your instincts might tell you that you’d do better in the second scenario, with steady gains, but you’d be wrong. You can actually make higher returns by investing regularly in a volatile stock market.

Think about it for a moment: in example 1, by investing the same amount of dollars, you actually get to buy more shares when the index was cheaper at $60, so you owned more of the market when the price went back up!

Here’s Burt Malkiel’s chart that shows how it happens:

After five years of a steadily rising market, your $5,000 turns into $5,915. Not bad.

But in that volatile market, you make 14.5% more in profit, winding up with $6,048! The problem, Malkiel told me, is that most people don’t let the first scenario work for them. “When the market falls, they say, ‘Oh my God! I’m going to sell!’ So you have to keep your head and keep a steady course.” Investors learned a hard lesson during the first ten years of the 2000s, or what’s known in financial circles as the lost decade. If you put all your money into the US stock market at the beginning of 2000, you got killed. One dollar invested in the S&P 500 on December 31, 1999, was worth 90 cents by the end of 2009. But according to Burt Malkiel, if you had spread out your investments through dollar-cost averaging during the same time period, you would have made money!

Malkiel authored a Wall Street Journal article titled “ ‘Buy and Hold’ Is Still a Winner,” in which he explained that if you were diversified among a basket of index funds, including US stocks, foreign stocks, and emerging-market stocks, bonds, and real estate, between the beginning of 2000 and the end of 2009, a $100,000 initial investment would have grown to $191,859. That’s over 6.7% annually during a lost decade.

“Dollar-cost averaging is how you make the volatility of the market work for you,” he told me.

Everyone from Warren Buffett’s mentor Benjamin Graham to Burt Malkiel and many of the most respected academics certainly make a case for using dollar-cost averaging when you’re investing a percentage of your steady stream of income. But if you have a lump sum to invest, it may not be the best approach. If this is your current situation, read the breakout box in this chapter titled “Dollar-Cost Averaging Versus Lump-Sum Investing.” What dollar-cost averaging really means is systematically putting the same amount of money across your full portfolio—not just the stock portion.

Remember, volatility can be your friend with dollar-cost averaging, and it can also allow for another technique that will keep you on track, “rebalancing,” which we’ll address in a moment.

So what’s the best way to put dollar-cost averaging to work for you? Luckily, most people who have 401(k)s or 403(b)s that automatically invest the same amount on a fixed time schedule already reap the benefits of dollar-cost averaging. But if you don’t have an automated system, it’s easy to set one up. I have a self-employed friend who set up her own tax-advantaged retirement account with Vanguard, and she’s instructed it to automatically deduct $1,000 from her bank account every month to distribute among her diversified index funds. She knows she might not always have the discipline to buy when one market feels too high or another drops too low, so she takes herself out of the picture. She’s a long-term investor who doesn’t worry about timing anymore, because her system is automated, and the decision is out of her hands.

There’s a way to make dollar-cost averaging even easier, and that’s by setting up an account with Stronghold, where it will do this for you automatically.

Also, remember, in the next section I’ll show you an extraordinary tool that can protect you from losing your principal in these volatile times. Where, even if your timing is all wrong, you don’t lose a dime in the stock market. And if you’re right, you win even bigger. But before we get there, let’s have a look at a second time-tested pattern of investing that will protect your savings and help you maximize your Freedom Fund as you build true wealth.

THE PATTERN TO AVOID: THE AVERAGE PERSON’S APPROACH TO INVESTING! A REBALANCING ACT

David Swensen and Burt Malkiel sometimes take different approaches to finance. But there’s one lesson they both told me, and all the other experts I’ve interviewed agree on this: to be a successful investor, you need to rebalance your portfolio at regular intervals.

You have to take a look at your buckets and make sure your asset allocations are still in the right ratio. From time to time, a particular part of one of your buckets may grow significantly and disproportionally to the rest of your portfolio and throw you out of balance.

Say you started out with 60% of your money in your Risk/Growth Bucket and 40% of your money in your Security Bucket. Six months later, you check your account balances and find out that your Risk/Growth investments have taken off, and they no longer represent 60% of your total assets—it’s more like 75%. And now your Security Bucket holds only 25% instead of 40%. You need to rebalance!

Like dollar-cost averaging, rebalancing is a technique that seems simple at first, but it can take a lot of discipline. And unless you remember how important and effective rebalancing is in maximizing your profits and protecting against your losses, you’ll find yourself getting caught up in the momentum of what seems to be working in the moment. You’ll be hypnotized into the illusion that your current investment successes will continue forever, or that the current market (stock market, real estate market, bond market, commodity market) can go only in one direction: up.

This pattern of emotion and psychology is what causes people to stay with an investment too long and end up losing the very gains they were so proud of originally. It takes discipline to sell something when it’s still growing and invest that money into something that’s down in price or growing more slowly, but this willpower is what makes someone a great investor.

A powerful example of this principle was the day I was visiting with investment icon Carl Icahn. It was just announced that he had made a profit of nearly $800 million on his Netflix stocks. He’d bought the majority of his shares at $58 the previous year and was now selling them for $341 a share. His son, Brett, who works with Carl and who originally brought this investment opportunity to him, protested the selling of the stock. He was certain that Netflix had more growth ahead of it. Carl said he agreed, but their portfolio needed to be rebalanced. If they didn’t rebalance, they could find themselves losing some of the extraordinary profits that they gained. Carl took his 487% profit and reinvested those profits into other assets in his portfolio, while keeping 2% of his Netflix shares to take advantage of any potential growth. Some of that money he used to buy $2.38 trillion in a little company called Apple, which he believed was undervalued at the time. He sold high and bought low. And rebalancing was a key part of that process.

IF BILLIONAIRES DO IT, MAYBE YOU SHOULD TOO!

So what do you do if you find that you’re out of balance? You were 60% Risk/Growth and 40% Security, but as we described above, your stocks have soared, and you’re now 75%/25% as a result. In this case, your rebalancing action plan requires you to shift your regular contributions to the Risk/Growth Bucket into Security until the 25% is back up to 40%. Or you have to divert the profits or even sell some of the Growth/Risk investments that are booming and reinvest them back into bonds or first trust deeds or whatever combination of assets you’re keeping in your Security Bucket. But this can be agonizing, especially if, say, REITs are roaring, or international stocks are suddenly going through the roof. Who wants to jump off when you’re riding a rocket? All you want is more! But you have to take some of those assets off the table to reduce your exposure to risk and make certain that you keep some of the gains or profits you’ve made.

Just like dollar-cost averaging, you’ve got to take your emotions out of the picture. Portfolio rebalancing makes you do the opposite of what you want to do. In investing, that’s usually the right thing to do.

Let’s take a real-world example: say it’s the summer of 2013, and the S&P 500 index is lurching back to record-breaking levels, while bonds are still coughing up meager returns. Do you want to sell your stocks and buy bonds? No way! But the rules of rebalancing say that’s exactly what you have to do to keep your original ratio—even though a voice inside you is shouting, “Hey, stupid! Why are you putting money into those dogs?!” The rules of rebalancing don’t guarantee you’re going to win every time. But rebalancing means you’re going to win more often. It increases your probabilities of success. And probabilities through time are what dominate the success or failure of your investment life.

Sophisticated investors also rebalance within markets and asset classes, and that can be even more painful.

Say you owned a lot of Apple stock back in July 2012. It would have seemed insane to sell those shares, which had been surging—up 44% in the previous two quarters—and were worth more than $614 per share. But if Apple stock is dominating your portfolio (remember, it has grown 44%, and it’s put you out of balance, likely significantly), the rules of rebalancing say that you have to sell some Apple to get your ratio right. Ouch. But you would have thanked yourself the same time next year. Why? Apple stocks took a roller coaster ride, plummeting from a high of $705 per share in September 2012, to a low of $385 the following April, and ending at $414 in July 2013—a 41% loss that you avoided because you rebalanced.

How often should you rebalance? Most investors rebalance once or twice a year. Mary Callahan Erdoes of J.P. Morgan told me she believes rebalancing is such a powerful tool that she does it “constantly.” What does that mean? “That’s as often as your portfolio gets out of whack with the plan that you originally put in place, or the adjusted plan based on what’s happened in the world. And that shouldn’t be set. It should be a constant evaluation, but not an obsessive evaluation.” Burt Malkiel, on the other hand, likes to ride the momentum of bull markets. He advises rebalancing only once a year. “I don’t want to just be trigger-happy and sell something because it’s going up,” he said. “I like to give my good asset class at least a year in the run.” However often you do it, rebalancing can not only protect you from too much risk—it can dramatically increase your returns. Just like dollar-cost averaging, the discipline once again makes you invest in underperforming assets when their prices are low, so that you own lots of them when their prices go up. Your profits get passed along to the other players on your team, like the ball in an LA Lakers motion offense, or relay runners passing the baton on the way to victory at the finish line.

The number of times you rebalance does have an impact on your taxes, however. If your investments are not in a tax-deferred environment, and you rebalance an asset you have owned less than a year, you’ll typically pay ordinary income taxes instead of the lower long-term investment tax rate!

If rebalancing seems a little intimidating, the good news is this work can be done for you automatically by Stronghold or any other fiduciary advisor you choose. He or she will guide you on being tax-efficient while still tapping into the power of rebalancing.

So now you’ve learned two time-tested ways to reduce your risk and increase your returns just through asset allocation. But there’s still one final trick that can take the sting out of your losses—and your taxes!

IT’S HARVEST TIME

So what happens when it’s portfolio-rebalancing time, and you have to sell some stocks that aren’t in your 401(k) or other tax-advantaged account? Uncle Sam will have his hand out for part of your profits. Are the capital gains taxes making you crazy? Listen, there’s a perfectly legal way for you to lower those taxes while keeping your portfolio balanced: tax-loss harvesting. The benefit you get by tax-loss harvesting is that you reduce your taxes, and that increases your net return! In essence, you use some of your inevitable losses to maximize your net gains.

Burt Malkiel believes that tax-loss harvesting can increase your annual rate of return by as much as 1% per year, so it’s certainly worth investigating.

Billionaires and big institutions increase their returns this way, although few ordinary investors take advantage of these powerful techniques. Few know of them, and even those who do may think rebalancing and tax harvesting sound too complicated to try on their own. Not to worry! You can get access to your own fiduciary advisor or access to software that will make it as easy as ordering a pizza online, or at least updating your Facebook security settings.

Now, bear in mind, my goal is to make investing simple for everyone, and this section is probably the one that tested your brain the most! So first, congratulations on sticking with me. This stuff feels very technical, and most people avoid it like the plague. If you feel a bit overwhelmed by asset allocation and the idea of dollar-cost averaging, rebalancing, and tax-loss harvesting, I want you to know all of this can be automated for you. But it’s still helpful to understand what these strategies are and the principle reasons why they’re effective.

Just remember four things from this section of the book:

1. Asset allocation is everything! So you want to diversify between your Security Bucket and your Risk/Growth Bucket. You want to diversify across asset classes, markets, and time.

2. You don’t want to hesitate to get in the market trying to have perfect timing; instead, use dollar-cost averaging and know that volatility can be your friend, providing opportunities to buy investments cheaply when the market is down. This technique will increase your portfolio’s value when the markets come back up.

3. Have a Dream Bucket that gives you emotional juice and excitement so you can experience the benefits of your investing prowess in the short term and midterm instead of just someday far in the future.

4. Use rebalancing and tax harvesting to maximize your returns and minimize losses.

When I first brought up that I was going to teach asset allocation and these additional refining strategies in this book, many of my friends in the financial world said, “You’re crazy! It’s just too complex. The average person won’t understand it, and few will even take the time to read it.” My answer was simple: “I’m here for the few who do versus the many who talk.” It takes hunger to push yourself to master something new. But in the case of mastering investment principles, it truly is worth the effort. Even if you have to read something a couple of times to get it down, the rewards can be immense—it could mean saving years of your life without having to work. More importantly, mastering these will give you a greater sense of empowerment and peace of mind today.

Mastering this section is a lot like trying to learn to drive a stick-shift car for the first time. What?! I’m supposed to figure out how to use the accelerator, the brake, the clutch, the stick, the rearview mirror, the steering wheel, and watch the road too? Are you kidding me?! But after awhile, you’re driving the car without thinking about it.

Well, we’ve already come a long way together on the 7 Simple Steps to Financial Freedom. Let’s check in where we are now:

1. You’ve made the most important financial decision of your life by deciding to save a percentage of your income—your Freedom Fund—and invest it automatically for compounded interest. Have you acted on this yet by setting up an auto-deduct account? If not, do it today!

2. You’ve learned the rules of investing and how to avoid Wall Street’s nine biggest marketing/investment myths. You’re becoming the chess player, not the chess piece.

3. You’ve taken the third step on your path to financial freedom by making the game winnable. There are three stages within this step: Number one, you’ve calculated your top three financial goals, which for many people are financial security, vitality, and independence. Number two, you have a plan with real numbers. And number three, you’ve looked for and are implementing ways to speed it up so you can enjoy your rewards even sooner.

4. In this section, you’ve made the most important investment decision of your life by allocating your assets into a portfolio with a specific percentage into different buckets (Security, Risk/Growth, Dream). You’ve diversified, and you have a plan that will fuel your financial dreams.

You’re already light-years ahead of other Americans (or investors anywhere in the world) when it comes to understanding your finances and managing your money. And if you’re anything like the men and women who have been gracious enough to read this book in manuscript form, you might already be so excited by what you’ve learned that you’re jumping up and down and grabbing your friends by the collars to show them some of the ways you’ve learned that they can add hundreds of thousands of dollars, or even millions, to their lifetime investment earnings. So you might be surprised to learn: you ain’t seen nothin’ yet! I promise you, the best is still to come. And everything from here on out is much easier than this section!

Now that you’re thinking and acting like an insider, I’ll show you how to truly invest like one. Let’s find out how you can be successful in any financial environment and how you can tap into the power of the upside without the downside, creating a lifetime income stream.