The Simple Financial Life

The Simple Financial Life:

How to get what you want without debt or living paycheck to paycheck.

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[]Create a Wealth Reserve of $943.423 [] Use the best tax shelter FREE [] Self-insure family and assets [] Borrow from your own 'bank' and earn 12% not pay 12% [] Save $3,000 every year on financial services you have [] Gain financial freedom—the 5 secrets to being independent.

The 3 uses of money—build a simple financial life.

Only THREE mutual funds are needed for the simple financial life.

You can do it yourself and save!®

• Financial freedom—the 5 secrets to being financially INDEPENDENT.

The five secrets of financially independent people are actually actions they take every day. It is how they live their lives. You don’t have to be wealthy or a genius. The secrets provide the ground for living the simple financial life.

1. People who are independent have goals.

This secret is part of their everyday life. They don’t make goals in their 20’s and then forget them. They discuss them all the time and make changes as necessary. They have a purpose in their lives. The goals do not dominate their daily zest for living. They guide their spending and investing habits. They are part of their value system. The goals are sometimes big—having a retirement nest egg of $3 million by age 60. Sometimes they are noble—be able to provide funding for a church choir leader within 10 years.

2. People who are independent have a strategy.

This follows the goals. To be able to have a retirement nest egg of $3 million by age 60 requires that you know how to start investing, invest regularly, invest properly, monitor accumulations along the way, and get help when you need. It takes only 1/2 hour per quarter to manage our Simple, Easy and Wise Plan. Members explain the plan in the FREE Insider's Guide to Making Your Financial Future.

3. People who are independent have patience.

This may seem a simple matter but many people who are not independent do not understand that you have to be patient in order to cultivate the "assets that grow by themselves." Independents buy assets that grow; not "things" that require them to pay out income for the rest of their lives. Master investor Warren Buffett says: “We continue to make more money when snoring than when active.” Time rewards you if you are patient.

4. People who are independent protect what they have.

This doesn’t mean buying a lot of insurance. It means understanding the role of risk and reward in everyday decision-making. For instance, why pay for medical insurance in your car insurance when you already have medical insurance? Your self-insurance fund, a Wealth Reserve, as we call it, allows you to carry large deductibles on all policies and accounts. Skip the “bells and whistles”--buy only what you need—catastrophic risk insurance. The thrifty buy only the protection they need. The best protection is having a Wealth Reserve of various "assets that grow by themselves."

5. People who are independent enjoy what they have.

This means appreciating what is important to you--family, friends, and a hobby--and not buying a lot of “things” you think will make you feel good. Independents realize that you only have so much money and time. Time with your family and friends is precious. You can’t buy time. You can waste a whole life of time making the money it takes to pay for “things.”

• The 3 uses of money: build a simple financial life

People who have mastered the simple financial life have incorporated the 3 uses of money into their everyday transactions. Whatever independent people do for a living—no matter how much money they receive—successful people put some of that money to work. Independent people have learned to use a small fraction of their income to buy "assets that grow by themselves." They don’t use up every penny of their income. They create a Wealth Reserve: assets that could sustain them for 10 years even if they didn’t work. Because these assets grow by themselves, independents become wealthy. The FIRST use is buy "assets that grow by themselves." Make money work for you!

Independents that have become self-sufficient have learned the discipline of spending only 90% of what they receive. Today, this requires great courage when everyone around us seems to be spending MORE than they earn. However, independents realize that they will not be able to earn as much as they will need to reach their goals. Thus, they use about 10% of their earnings to buy properties, businesses, and financial instruments which, if held and cultivated, will grow more valuable over time. Independents realize that life is a whole lot easier if you have assets that could earn $36,000, over time, for every $1,000 they invest.

For instance, if an independent’s goal is to have a retirement nest egg of $1 million by age 60 in order to receive $45,000 (inflation-adjusted) a year for the rest of their lives (life expectancy is now 90 years), they need to buy assets that grow to a million dollars during their working lives. There are few assets that can grow to a $1 million in 40 years, considering the effects of inflation. Businesses that sell what other people need have traditionally been the only asset type that can grow ahead of inflation over 40 years.

For those who do not have the inclination or opportunity to own their own business, the next best thing is to own a business as a ‘silent partner.’ The most convenient way to do that is to own the shares of growing companies. Since no one knows which companies will be successful in the future, we need to buy a part of many good ones. Over the last 50 years, the stocks and dividends of many American companies have grown at the rate of about 12% per year. This rate allows people to reach their goals by investing small amounts on a regular basis and letting the miracle of compounding do the rest. This is called "discounted" cash. You invest $3.33 a day for 40 years ($48,000) for $1 million. Independents use a chart like the one in our FREE Guide to plan how much they need to invest to reach each of their goals—home, education, vacations, and retirement.

This use of money allows independents to reach their goal of retirement security in 40 years at a cost of just $3.33 per day ($100 per month). Since almost everyone can afford $3.33 a day, our FREE Insider’s Guide to Making Your Financial Future shows you the easy way to start buying "assets that grow by themselves" today.

Unfortunately, a simple plan like this one is not taught in school. The story of how one couple learned the 3 uses of money is available in our Insider's Guide to Your Wealth Reserve.

The SECOND use of money. The simple financial life incorporates another use of money. Independents have learned to pay for their purchases in the least expensive way possible: "Discounted" Cash--no credit. The key is planned spending for expenses. Some independents carry out planned spending by having a budget written down. Others plan their spending having a rough idea of what they can afford in each category of spending. Unfortunately, most of us are not very good at living within our means because we don’t realize how impulse buying can add up. Or we may not be able to foresee all the expenses needed to own a house, for instance.

Compare your spending habits with the average for working families from the most recent government data.

Housing expenses 26% Medical 18% Food 16% Transportation 11% Clothing 6% All the rest 23%

Independents tend to buy and keep a home for longer than others. When their income rises, their mortgage remains the same, thus allowing them to invest more. They do not regularly “trade up” for a larger or newer home, car, appliances, equipment, accessories, furniture, hot investment ideas, or clothing. They avoid the tendency to live “above their means.” This does not mean that their lives are dull or mundane. It means they do what they have planned to do in all things, including spending, using free time, helping others, and just having a good time.

The THIRD use of money. The simple financial life includes savings for large purchases. Independents avoid buying anything on time, except housing. Since they tend to keep their possessions longer than others, they save and use "discounted" cash for their purchases. They recognize that savvy shoppers can buy the best for less if they take the time to become informed and knowledgeable about the items they want. Saving for the best of what they really want makes independents less prone to buy on impulse. They are able to save for the purchase because they have an ongoing saving habit. Planning is the key to buying big-ticket items. Independents are more likely to buy a used luxury car with cash so that they avoid losing 40% of a new car’s value in the first 3 years. They drive 3-5 year-old luxury cars and actually spend less overall than the person who buys a new car on time. See our Insider's Guide to Vehicle Purchases.

Almost every family wants to own their own home. Independents would be more likely to have the 20% down payment for a new home than others. They save the cost of the insurance required by the lender to cover the lender’s risk. Independents are more likely to have higher deductibles on all their other insurance so that they benefit from years of saving $500 to $1000 on their premiums.

Independents are savvy about saving for major purchases. They are more likely to shop around after doing their homework than to buy because they happen to wander through a store. They are more likely to use balanced and bond mutual funds than a traditional saving account or certificate of deposit. Depending on the amount needed and date of purchase, independents are comfortable using securities to accumulate the cash they need for major purchases. On average, a balanced mutual fund may earn 6-8% per year with more consistency than a stock mutual fund. You can experiment with the amounts and times needed to save for a purchase at www.moneychimp.com/calculator/compound_interest_calculator.htm. Enter $2000 per year for 30 years at 12% interest credited 12 times a year and compare what your nest egg could be.

Finally, independents try to keep their financial lives simple by using only one mutual fund family. Since our members' experiences are with low-cost mutual funds, consider their money methods in our FREE Insider’s Guide to Making Your Financial Future.

• Only TWO funds for the simple financial life

Independents try to keep their financial lives simple by using only one mutual fund family. Many independents find that they only really need TWO funds to take care of their investing strategy. Since they believe that the cost of investing matters for short- and long-term returns, they buy and hold stocks and bonds or use low-cost mutual funds. Our members' experiences indicate that investors need to make regular and automatic additions to their accumulations. For long-term needs, stock ownership provides the best chance of success in accomplishing your goals. For short-term needs (less than 10 years), balanced fund ownership provides a balance between earning 7-10% and preserving wealth.

The most efficient way to own companies long term is to buy and hold the stocks or the whole market with a dollar cost averaging program of $100-$500 a month. Over periods greater than 10 years, studies show your returns will exceed those of 88% of investors. An equity index mutual fund with low fees can meet the requirements of most couples for long term wealth--$500 a month may reach a million dollars in 25 years if left to compound tax-FREE, using a Roth IRA.

Since the stocks or the market can lose value in the short run, a balanced or bond mutual fund with low fees can provide a way to accumulate funds for emergencies and smaller dollar purchases. Balanced funds with stocks and bonds can provide a better return than bank CDs or money market rates. In addition, this asset type sometimes provides a counterweight to the stock market’s swings.

Few mutual fund families offer high quality services to the consistent investor at low cost. Insiders explain how two provide a structural assurance of customer-focused service and integrity. The independent investor need look no further than these two fund families for a wide selection of equity and bond funds. They provide exposure to full participation in every sector, and size and style that capitalism has to offer. No one company,sector or poor manager will harm your accumulation over the long term if you use these firms. Your assets are growing by themselves at the lowest costs.

One fund family lets the new investor start small. Using a Roth IRA account, you can begin with $100 a month. Both families earn high marks from financial rating agencies. In fact, Morningstar said, “The firm is widely known among the institutional crowd, and has a reputation for providing good, low-cost, risk-controlled funds, which this one definitely is. At 0.30%, 'its annual price tag is rivaled only by a scant few competitors', which helps burnish its very investor-friendly profile.”

Both provide long term performance because less of your money is taken for managers, brokers and marketing. The equity funds provide the returns of the market—about 12% over any period of over 10 years for retirement and education funding. There is no guarantee for the future but the probability is very high that capitalism will continue to provide the best hedge against inflation you can buy. The balanced funds offer a less volatile return of 6-8% on average for a down payment and major purchases. Our FREE Insider’s Guide to Making Your Financial Future takes one hour to execute with either firm.

This makes for a Simple, Easy and Wise Plan. Begin TODAY!


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