Step 9 - How It Works
Three Pillars of Financial Independence
CAPITAL
Money saved and invested – the income-producing basis of your investment program.
As noted in Step 8, capital is money you have saved to invest in income-producing investment vehicles. The goal of Step 9 is to SECURE that capital. At this point you have established enough income from your capital to meet your needs, so you do not need to continue growing your capital. It’s more important to make sure that your capital is always earning you a steady, predictable income to meet your needs, regardless of employment.
CUSHION
A cash reserve, earning interest in a readily accessible account, to handle emergencies, large unexpected expenses and lean times between investment income distribution.
Aim to have enough cash to cover at least six months of average expenses, as determined in Step 8. Never withdraw from your CAPITAL in order to meet your daily expenses.
CACHE
Extra money, beyond your capital and cushion, that exceeds your established needs.
Cache is a surplus of money (over and above what you have determined is ENOUGH for your needs) that accumulates for future use. It could come from increased savings based on continuing to follow Step 6 or from gifts, inheritance or other incidental income.
Since cache is not crucial to your fulfillment, you can be creative with it. You could add it to your “rainy day” cushion. You could invest in vehicles that may not meet your usual criteria for investing capital. You could be generous in your donations, gifts or endowments. This is money you can play with, without impacting your independence!
Disintermediation
The purpose of Step 9 is to empower YOU to be in control of your own financial life and to make your own decisions to secure your financial success.
A very important tenet is called DISINTERMEDIATION, or “cutting out the middle man.” This means informing yourself about investment vehicles that meet YOUR goals and values and then buying them yourself. By going directly to the source of investment to make your purchase, rather than giving your money to an intermediary (broker, financial planner, banker) who will invest your money for you (often buying the same investment instruments you could buy yourself), you will save all manner of management fees, load fees and other charges.
We cannot give you an investment recipe to blindly follow that will work for you, guaranteed, for the rest of your life. It is up to YOU to know what the best opportunities are that fit YOUR values and long-term needs.
We can, however, teach you some basics and suggest criteria you can use to create an investment program to secure financial independence as defined above.
Disintermediation means:
Your Investment Criteria
Be empowered to decide for yourself! You can choose how to weigh the various investment criteria listed below. Make your choices according to your values, current investment options, and your willingness to go back to paid employment if things don’t turn out as you project. The suggested criteria on the following page are for people who don’t want to worry about income for the foreseeable future of their lives. It’s definitely not a quick way to make money, and it’s not going to vastly increase your wealth. If you have followed through on the previous steps you have achieved “ENOUGHNESS” and now the most important thing is to be free!
Free to get off the work treadmill. Free from monetary concerns. Free to choose how you want to live.
Nothing in life is guaranteed, but applying these criteria strictly and continuing to practice financial integrity for the rest of your life will create the surest likelihood that you never have to work again.
Remember, Step 9 is simply to become knowledgeable, adept and sophisticated about long-term, steady income-generating investment vehicles
WHY long-term? You’re now thinking in terms of the whole of your life and how to ensure sufficient income for the foreseeable future. By putting your money in long-term investments, you can expect a higher rate of return and you can lock in that rate for a longer period of time.
WHY steady income? You know how much income you need to live with maximum fulfillment, so you need investments that will guarantee that amount – and guarantee that the income will come in steadily so that you can be assured of covering your expenses.
WHY knowledgeable, adept, and sophisticated? You don’t have to become knowledgeable about ALL types of investments, just the ones that meet your criteria. The financial world is constantly changing, with new investment options showing up all the time. But an investment, like any other purchase, is an exchange you make with your life energy – and people are going to try and sell you something with their benefit in mind. Luckily, you’ve learned how to become adept, knowledgeable and sophisticated about financial decisions, thanks to the previous eight steps. Now apply the skills learned in the previous steps to your investments with Step 9.
CAPITAL
Money saved and invested – the income-producing basis of your investment program.
As noted in Step 8, capital is money you have saved to invest in income-producing investment vehicles. The goal of Step 9 is to SECURE that capital. At this point you have established enough income from your capital to meet your needs, so you do not need to continue growing your capital. It’s more important to make sure that your capital is always earning you a steady, predictable income to meet your needs, regardless of employment.
CUSHION
A cash reserve, earning interest in a readily accessible account, to handle emergencies, large unexpected expenses and lean times between investment income distribution.
Aim to have enough cash to cover at least six months of average expenses, as determined in Step 8. Never withdraw from your CAPITAL in order to meet your daily expenses.
CACHE
Extra money, beyond your capital and cushion, that exceeds your established needs.
Cache is a surplus of money (over and above what you have determined is ENOUGH for your needs) that accumulates for future use. It could come from increased savings based on continuing to follow Step 6 or from gifts, inheritance or other incidental income.
Since cache is not crucial to your fulfillment, you can be creative with it. You could add it to your “rainy day” cushion. You could invest in vehicles that may not meet your usual criteria for investing capital. You could be generous in your donations, gifts or endowments. This is money you can play with, without impacting your independence!
Disintermediation
The purpose of Step 9 is to empower YOU to be in control of your own financial life and to make your own decisions to secure your financial success.
A very important tenet is called DISINTERMEDIATION, or “cutting out the middle man.” This means informing yourself about investment vehicles that meet YOUR goals and values and then buying them yourself. By going directly to the source of investment to make your purchase, rather than giving your money to an intermediary (broker, financial planner, banker) who will invest your money for you (often buying the same investment instruments you could buy yourself), you will save all manner of management fees, load fees and other charges.
We cannot give you an investment recipe to blindly follow that will work for you, guaranteed, for the rest of your life. It is up to YOU to know what the best opportunities are that fit YOUR values and long-term needs.
We can, however, teach you some basics and suggest criteria you can use to create an investment program to secure financial independence as defined above.
Disintermediation means:
- Taking responsibility for being knowledgeable about how to invest your money, in accordance with your goals and values.
- Taking responsibility for purchasing and managing those investments yourself, rather than going through an intermediary.
Your Investment Criteria
Be empowered to decide for yourself! You can choose how to weigh the various investment criteria listed below. Make your choices according to your values, current investment options, and your willingness to go back to paid employment if things don’t turn out as you project. The suggested criteria on the following page are for people who don’t want to worry about income for the foreseeable future of their lives. It’s definitely not a quick way to make money, and it’s not going to vastly increase your wealth. If you have followed through on the previous steps you have achieved “ENOUGHNESS” and now the most important thing is to be free!
Free to get off the work treadmill. Free from monetary concerns. Free to choose how you want to live.
Nothing in life is guaranteed, but applying these criteria strictly and continuing to practice financial integrity for the rest of your life will create the surest likelihood that you never have to work again.
Remember, Step 9 is simply to become knowledgeable, adept and sophisticated about long-term, steady income-generating investment vehicles
WHY long-term? You’re now thinking in terms of the whole of your life and how to ensure sufficient income for the foreseeable future. By putting your money in long-term investments, you can expect a higher rate of return and you can lock in that rate for a longer period of time.
WHY steady income? You know how much income you need to live with maximum fulfillment, so you need investments that will guarantee that amount – and guarantee that the income will come in steadily so that you can be assured of covering your expenses.
WHY knowledgeable, adept, and sophisticated? You don’t have to become knowledgeable about ALL types of investments, just the ones that meet your criteria. The financial world is constantly changing, with new investment options showing up all the time. But an investment, like any other purchase, is an exchange you make with your life energy – and people are going to try and sell you something with their benefit in mind. Luckily, you’ve learned how to become adept, knowledgeable and sophisticated about financial decisions, thanks to the previous eight steps. Now apply the skills learned in the previous steps to your investments with Step 9.
- Do your research and consider the long-term impact of your decisions.
- Minimize expenses (money and time) and look for long-term value.
- Maximize income – within your prudent criteria.
- Apply your values and goals to your decision-making.
- Stay open and aware of new opportunities for growth and learning.