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Financial Protection

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The 4 Levels of Financial Freedom

  1. Financial Protection
  2. Security
  3. Freedom
  4. Absolute freedom

1 Financial Protection

  • The Financial Protection covers your minimum cost of living (food, rent, health insurance, transport, information e. g. € 1,500) for 3 to 6 months
  • Example calculation: € 1,500 times 3 to 6, depending on your well-being = € 4,500 to € 9,000
  • Investment type: immediately available, cash, checking account, overnight money,
  • This money shall never be touched, the best thing is, to give it to a friend, so that you need to ask someone to release it. And he should do it in an urgent emergency only.

The goal of Financial Protection:

This solves already 95% of all of your financial problems!

2 Financial Security

  • Pays minimum living expenses from the interest
  • Example calculation: 120 times your monthly living expenses of 1,500 € = 180,000 € (= 20 to 40 times your financial protection)
  • Investment style: relatively safe long-term investments, ETFs with an average long-term profit expectation of 8% per year

Goal: If all earnings break away, you can survive on it maintaining a frugal lifestyle.

Morning Gratitude Challenge Task 6 – Frugal Meaning

3 Financial freedom

  • Pay your dreams from the interest!
  • For example 120 times the monthly costs of a good lifestyle for € 3,000 a month = € 360,000 (= 40 to 80 times of your financial protection)
  • Investment style: diversified, relatively secure long-term investments, ETFs with a profit expectation of 8 to 12% per year. Only the profits that go beyond your private withdrawal are invested in assets with higher profit expectations (and risk) of 12 to 15% per year.

Goal: You work because you chose to, not because you have to. If all other income breaks away, you can live comfortably on a high standard on the interest of your assets, without touching the substance of your assets.

4 Absolute Financial Freedom

  • Pay your utopian dreams from the interest
  • Example: 80 times the monthly costs of your good dream life for € 15,000 a month = € 12,000,000 (= 300 to 600 times of your financial protection)
  • Investment form: Investments with higher profit expectations of 15 to 20% per year. And only from their profits you can do short-term speculations, with an even higher chance of over 20%. In return, you can get over the associated risk.

Goal: You can live an extravagant life in pure luxury on less than the interest of your assets, without touching the substance. So you are free to contribute substantially to charity.

What does it take?

Only after the money for financial protection is put aside, does what is leftover gets saved for financial security. And only when this is achieved, does additional money gets saved in the freedom account. Finally, what is leftover now, gets invested for absolute freedom.

How to achieve your financial protection and beyond?


This works well for a short time, but discipline alone always fails in the long run.

You need pain and pleasure!

With a monthly overview of your assets and their growth, you can get the fun you need. If things go wrong, you have to make painful swabs somewhere and commit yourself to them. So you need to have someone else watch over you, who has the authority to "torture you". And chose someone who is not a friend, but rather a coach or mentor. Because friends are willing to let you get away without discipline, just to maintain your friendship.


Are you feeling bad if collecting money beyond your financial protection?

This is a common problem, that sabotages your growth! Noone ever got enlightened while he had to fight for his daily survival. Living in financial security or even freedom gives you all the time, and lets you focus on your spiritual development.

The solution is so simple

Make it a habit to contribute a part of your income to charity. Right from the beginning of your journey to financial security. It is not about the amount, but the effect, it does on you. It is to establish a habit to show your gratitude for your growing assets. Donate a certain percentage like 1, 2, 5, or 10% of your income, right after you got your paycheck! If you are donating, you feel good about the money you save for your financial security and far, far, ... far beyond!

Vital and happy regards
Klaus Forster

6 thoughts on “Financial Protection

  1. Everyone loves what you guys are up too. This kind of clever work and coverage! Keep up the wonderful works guys I’ve included you guys to my blogroll.


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