Financial Physics – Part I

If you’ve never heard of financial physics, no worries, it’s just like regular physics. There are fundamental laws of cash flow that apply to every situation. It does not matter if you are a government, business or person. Violate these fundamental truths and you put yourself at risk. I have created these principles by studying the most successful businesses and people and adapted them to financial planning. Over the next few weeks we will blog about these 4 fundamental principles of financial physics that are key components of the Point of Independence. The first is this: The Holy Grail for every business and person is the perpetual income stream.

Do you have risk if you have a secure perpetual income stream that pays all your bills forever? No. But is it easy to find? No. That is why I call it the Holy Grail. The energy, time, money and failure required to creating an idea, brand, product or service that will provide an income stream forever is both expensive and imprecise. Most successful businesses are the current version of several bad ideas. It takes trial and error to find the Holy Grail. But when it works it is beautiful. The perpetual income stream is why Netflix and every other internet company want you to sign up to pay $8 per month on your credit card perpetually. They get paid whether you use the service or not. As we translate that to you, you are independent when you get paid whether you do work on not. In my book, You Should Only Have to Get Rich Once, I shared the story of the nuclear engineer. His pensions provided over 100% of expenses. His net worth could be zero and he could pay every bill forever.

When I sit with clients, the key component of their Point of Independence is creating the perpetual cash flow machine because that creates autonomy. Some clients are fortunate to have a business that lends itself to the perpetual income stream. Unfortunately, most of us have to create it ourselves. The financial factory is keenly aware of our desire for perpetual income and creates products that claim to solve the problem for us. Most only provide the illusion. A critical component of your financial planning process is digging into ways to create your own private perpetual income stream. Spend the time to find it and it will change your life forever. Stay tuned for Part II.