Secrets to Financial Success by Dr John F Demartini (Audio Set)

Just like John’s other Audio Sets (especially The Art of Communicating), I enjoy listening to this one. If you have read How to make One hell of a Profit and still get to Heaven you will find this CD set is repeating most of the concept. I enjoy listening to it though and by hearing some of the concepts repeatedly, they are easier to understand.

This CD set is quite long (8 CDs) and it is a recorded version of John’s Secrets to Financial Success Seminar. It addresses both personal finances and finances for businesses and many of the concepts for these areas are similar and grounded in the same ideas. I focused more on the personal finance ideas as this is more applicable in my life at the moment.

Similarly to the book, the basic concept of this Audio Set is to progress your financial literacy and investments by starting with the basics, such as a high interest savings account and progress from there. The slogan is “Earn the right to risk”!

• High interest savings account (Saving)
• Term deposit (Saving)
• Government Bonds (Investing)
• Blue Chip Shares / Established Real Estate (Investing)
• Other shares / Other Real Estate (Investing)
• Initial Public Offerings / Speculative Real Estate (Speculating)
• Equity Funding (Speculating)

This system is based on the fact that we can digest a fluctuation of up to 10 percent in our financial portfolio without any psychological stress. Anything more would cause severe stress and psychological instability.

So the trade-off of having smaller returns in a high interest saving account than in a share portfolio is the security of knowing the money in our savings account is safe whatever happens to the stock or property markets.

Considering the downturn in the economy at moment, and the fact that many younger generations haven’t really experienced a downturn of the economy before, this concept seems like a good idea. Although it can be hard, to watch others make incredible returns during good times, the idea is that the slow and steady will win the race.

I like the practical advice John gives to encourage us to start saving:

As per the 10 percent fluctuation rule, he recommends to either save 10 percent or a nominated amount each pay period (which ever is greater). Every three months, we should increase this amount by 10 percent. If we started at $100 per week, we would increase this to $110 after three months and $121 after six months.

If we ever find ourselves with some spare cash, this can of course also go into the savings account. But remember, the savings account is not to be touched for anything but saving or investing! Once we have managed to save our first cushion (about 60-90 days, or three months worth of wages), we start to save the same amount (60-90 days or three months) for the next category on the list (see above).We can use the time it takes us to save the next amount to learn about the new investment category and therefore “Earn the right to risk”.

John also has some tricks up his sleeves to motivate us to keep saving: For example future projections on how much money we will have in one years time, two years time, five years time, etc. To do this we calculate our current savings amount, consider the 10 percent increase every three months and the reinvestment of the interest. This will slowly lead to exponential growth of our savings! Eventually, we will have saved enough money that we can live of the interest alone!
The time this takes is of course dependent on the amount of money we save each week. But no matter how long it takes, I find it very motivating and inspiring that a slow and steady approach can have returns that will eventually make us financially independent.

I took the advice to heart and have opened an additional savings account. There are heaps of internet based savings accounts that pay great interest rates and don’t charge any fees. Now I have one transaction account, one savings-then-spending account and one savings-then-investing account! My Savings-then-investing account gets fed automatically every fortnight! Now I only need to do those calculations to see how long it will take me to become financially independent…