The Three Pathways to Achieving Financial Autonomy

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The Three Pathways to Achieving Financial Autonomy

If you’ve been listening to this podcast for a while, and certainly if you’ve read my book, you’ll be aware that we adhere to a framework in helping people gain choice. A core element of that framework is the three pathways. The entire Financial Autonomy framework, and in particular these three pathways, are the product of my 20 odd years as a practising financial planner. I’ve observed how hundreds of Australians have accumulated wealth, and the various ways in which they’ve used that wealth to impact their lives. The Financial Autonomy framework isn’t some theoretical idea that popped out of the ether.

I sometimes refer to which of the pathways a particular podcast episode relates during the introduction. I do this in the foolish assumption that everyone listening has read the Financial Autonomy book or at least checked out our website and knows what it is I’m talking about. But of course there will be many listening who have only recently stumbled across the podcast, so let’s take a moment in this episode to bring you up to speed on this foundational element of what we do here at Financial Autonomy.


There are three pathways in the Financial Autonomy framework. These are:

  1. Invest in Stocks
  2. Invest in Property
  3. Self Employment/Side Hustle

The first thing to make really clear is that success is unlikely to entail choosing one of these pathways only. The framework was developed by looking at the clients I’ve worked with who had achieved their life objectives the most completely. I then reverse engineered how they got there. I found that they all benefited from some combination of these three pathways.

It could be that someone starts a business, and after battling through the tough early years, gets to a point where it’s throwing off some tidy cash flow that they then push out into stocks and/or property.

Or you could have someone who’s successful in their career, who having paid off their home, ploughs their surplus cash flow into a share portfolio and through the accumulation of that wealth gains the ability to determine the timing of their retirement and the adventures they’d like to pursue in this phase of life.

People often combine stock and property investment. Someone might build up their savings in some sort of stock related fund and then when it gets large enough, cash that in and use it to buy a home. At the other end we often have people who’ve owned an investment property for a period of time and reach a point where they can no longer be bothered with the headaches associated with being a landlord. They sell their property and redeploy the cash into stock investments for an effortless return over time.

The Financial Autonomy book takes you through each of the three pathways in detail. On our website we have access to our self-assessment tool to help you identify which of the pathways might best suit you at the moment, as you plan how best to gain choice.

Invest in Stocks

The stock market pathway has the advantage of being very flexible. You can invest relatively small amounts of money and do it on a gradual basis. Stocks are headache free to hold, and can be liquidated in a matter of days. Plus, it’s incredibly easy to achieve very broad diversification both locally and internationally, significantly reducing your risk.

Invest in Property

The property pathway has two primary advantages. The psychological one is that it’s an asset that you can see and touch and a lot of people take great comfort in this. From a financial planning perspective the key benefit is that property is easily geared, that is to say it’s easy to use borrowings to acquire property. As I mentioned in episode 216, When to use Gearing in your Investment Strategy, gearing magnifies outcomes. The ability of property investments to require a small deposit and a high amount of debt means that this magnification can be very strong indeed.

Of course no assets are ever perfect. Being a landlord is a headache. Stamp duty on purchase and potentially land tax, can be very significant imposts. And unless you’re in a position to hold multiple properties, there’s no diversification. You’re reliant on a single tenant, and the appreciation of a single asset in a defined location to achieve your result.

Self Employment / Side Hustle

The third pathway, self-employment, is the one I get the most feedback about, and the one that most evidences that our framework is born of real life experience. Many of the happiest and most successful clients that I work with achieved their financial security and freedom through building and selling a business. It’s incredible that so few financial books acknowledge this fact.

I think of this pathway broadly as the entrepreneurial pathway. It is the case that many of the client examples I’ve seen are people for whom their business was their full time occupation. However increasingly I’m working with people where their entrepreneurialism comes about through side hustles, or them working as a single consultant, with no business to sell at the end but a high income reflecting their unique skill set.

In all of these cases, courage is required and the determination to stick it out through the inevitable challenging early years.

I might wrap things up there. It’s a short episode this one, but the pathways are such a key element of what I share here on the podcast, that I just wanted to ensure all listeners know what it is I’m referring to when I reference these. I strongly encourage you to pick up the Financial Autonomy book to get a more complete understanding of the framework. It’s an easy read, with plenty of diagrams, and there are lots of tools to help you create a strategy that’s right for you. There’s even a free downloadable workbook, something that’s particularly helpful for those with the audiobook version.

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