Robert Kiyosaki!
Your mindset about money
“Money isn’t everything…
but it ranks as equal to oxygen.”– Rita Davenport
“You can’t teach old dogs to do new circus tricks,”
my highly biological father father used to say.
I have sat and talked with biological father many times,
trying to explain to biological father the diagram,
which I hope can help him flash new directions in money matters.
As he neared the age of 60,
he realized many of his dreams would never come true.
“I tried but it didn’t work, son,” he said.
My father was referring to his efforts
to succeed in the self-employment group
as a self-employed consultant,
and in the company group
when he used all his savings to start a franchise,
famous ice cream company,
but then completely failed.
Being inherently intelligent,
he understood in theory
that different skills were required for different groups.
He who knows can learn them very quickly if he wants to.
But still something held him back.
One day after lunch,
I talked to rich dad about my biological father.
“Your father and I are not alike from the roots,” said rich dad.
“While we are all human with the same feelings of fear,
anxiety, beliefs,
strengths and weaknesses,
the way we react and handle them is vastly different.”
“Can you tell me the difference?” I asked.
“You can’t do it all in one lunch,”
said rich dad.
“The way we react to these differences is what causes us
to stick with one group or another.
When your father tried to go from the employee to the company,
he could understand the process intellectually,
but not emotionally.
When things started to go wrong and he lost money,
he didn’t know how to solve the problem,
and so I went back to the group of people
he was most comfortable with.”
“Back to the employee group
and sometimes the self-employment group,” I said.
Rich dad nodded.
“When the fear of losing money
and failure became so overwhelming to the heart,
a fear that we both have,
your father chose the secure option
while I chose the finance freedom option.”
“And that’s the fundamental difference,”
I said, waving at the waiter.
“Even though we’re all human,”
repeated rich dad,
“when it comes to money
and money-related emotions,
we all react differently.
And it’s how we react to it.
These emotions often determine how we choose to make money.”
“Different people belong to different groups,” I said.
“That’s right,” the father continued
as we stood up and walked out the door.
“If you want to succeed in any group,
you need to know more than just the required skills.
You also need to know the root differences
that keep people locked up in different groups.
Knowing that,
life will become a lot easier for you.”
I shook rich dad’s hand and said goodbye
as his entourage drove up to him.
“Oh, Dad, one last thing,”
I said hastily.
“Can your father change?”
“Of course you can,” said rich dad.
Money has the power to buy you things.
But a much bigger power of money is in generating more money for you.
Those who are able to understand the latter,
are never short of it. ― Manoj Arora
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“Anyone can change.
But changing the group of people you follow
is not the same as changing jobs
or changing careers.
Changing groups of people is often a revolutionary change
in the child’s personality,
way of thinking and view of society and the world.
That change may be easier for some people than for others simply
because some people like change,
while others are very conservative.
Changing groups is often a life-changing experience.
The change was as intense and radical
as the change from a pupa to a butterfly.
Not only will you change,
but your friends will also change.
While you still get along well with old friends,
your change will affect that bond,
just as butterflies have a hard time functioning like pupae.
Therefore, that change is a real revolution,
and not many people dare to face it and accept it.”
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What is the difference?
How can I tell if someone is in the employee,
self-employment,
company group or investor group
without knowing much about them?
One of the many ways is to listen to what they have to say.
Rich dad used to say,
“If you listen to someone speak,
you’re beginning to understand and feel his or her soul”
People in the employees group often say,
“I’m looking for a stable job
with a guaranteed high salary and many benefits“.
Sayings of self-employment group often say:
“My rate is $35 an hour”
“My normal commission is 6% of the sale price”.
“I never seem to find someone who is diligent and good at it.”
“I worked more than 20 hours on this project.”
Sayings of the company group often say,
“I am looking for a new CEO for my company”.
Sayings of the investor group often say,
“The return of do I calculate it on a net or gross margin?”
Speaking word tools
Once rich dad knew what group the interviewee was essentially in,
at least then he knew what the person wanted,
what conditions he could make with him,
and how to tell him.
People always say,
“Language is a scary tool”.
People often remind us of this.
“If you want to be a investor,
you need to be a master of languages.”
Thus, one of the necessary skills to become a successful person
in company group must be a person
who knows how to master speech,
using words in the right place depending on different subjects.
He taught us to first learn to listen carefully
to what a person says,
and then to know how to use words
and in what context to use them
to make the most impression on the listener.
Rich dad explained,
“One word can inspire one person’s will,
but it can also frighten and avoid another.”
For example,
the word “risky” can excite an investor
while it can make a salaried employee panic and cringe.
In order to be great leaders,
rich dad emphasized that we must first be good listeners,
because otherwise you won’t be able
to feel the emotions and souls of the interlocutor.
And if you don’t feel
and understand them for who they are,
you’ll never know what kind of person you’re talking to.
*****************
Original difference
The reason rich dad said,
“Listen to their words and feel their souls,”
was because underlying those words were different personalities
from the roots of each individual.
Here are some general points
that distinguish one group of people from another.
*****************
Employee group (Team of workers)
Team of workers-When I hear words like “guarantee” or “benefits”,
I can sense who I am talking to.
The word “guarantee” is often used
when dealing with feelings of fear.
If a person feels afraid,
and he or she comes from an employee group,
he or she will always refer to
that word as an expression of a need for security.
When it comes to money and jobs,
there are a lot of people who hate the phobia
that often accompanies economic instability,
and thus make them feel need for security is essential,
feebleness.
The word “benefits” refers to a clear discussion of non-salary rewards,
a solid compensation plan,
such as health insurance or retirement.
The bottom line is that they want their future life to be secured
by commitments on the basis of real documents.
They do not feel happy
when faced with instability.
Only stability and certainty can make them comfortable in life.
Deep in their hearts they always remind,
“I give you this,
you must give me another”.
In order to suppress and overcome fear,
they seek security and firm agreements in employment.
That’s why they have their own reasons for saying,
“I don’t care about money”.
For people in this group,
the concept of security and stability is more important than money.
An employee can become a company president or a group manager.
What matters to these people is not the scope
of work or responsibilities,
but the contractual agreements they enter into
with the company or corporation that employs them.
************************
Self-employment group (Self-employment group people)
Self-employ group people
There are people who want to “do it by themselves”,
or “do it for themselves”.
I call this group of people the “do-it-yourself” group.
Usually, when it comes to money,
a person in the self-employment group
doesn’t like their income being dependent on others.
In other words,
if a person in self-employment group works hard,
they will demand recompense for the effort they put in.
People in this group don’t like their source of income
to be determined by another individual or group of people
who don’t work as hard as they do.
Of course, they also understand very well that
as long as they don’t put in a lot of work,
they won’t get paid much.
As for money,
people in this group are very self-conscious.
So when an employee person usually responds
to a fear of not having money by looking for security,
a person in the self-employment group reacts differently.
People in the self-employment group respond
to that emotion not by seeking reassurance,
but by trying to control
and master the situation to handle
and act in their own way.
That’s why I call group self-employment
“do-it-yourself” group.
When faced with fear and financial risk,
they want to “grasp the buffalo horn
and control it as they please.”
In this group you will easily find many knowledge professionals
who have spent many years in the university
such as doctors,
lawyers and dentists.
Also belonging to this group are those
who follow an education that is different from
or complementary to the traditional one.
Those are salespeople who earn direct commissions
like real estate brokers customers,
as well as small business owners in the form
of individual households
or partners such as shop owners,
cleaning contractors,
restaurant owners,
consultants,
therapists,
travel agents,
auto mechanics,
mechanics plumbers,
carpenters,
electricians,
hairdressers,
speakers and artists.
The best chorus of this group is always:
“No one does it better than me“,
or like: “I’ll do it my way“.
Self-employed people in this group are often “perfectionists”.
They always want to do something special and outstanding.
In their mind,
they never think that someone will do better than them,
so they really don’t believe in someone’s ability
to do well the way they like,
the way they think they can.
“on the right track”.
In some respects,
they are true artists in the style
and method of working that they propose.
And that is why society has hired such people.
If you need a brain surgeon,
you want the doctor to have years of experience and qualifications,
but most importantly,
you want the doctor to be a “perfect” person.
And that same view applies to a dentist,
hairdresser,
marketing consultant,
plumber,
electrician,
fortune teller,
lawyer or corporate consultant.
When hiring such people,
you as the customer of course always want the person
you are looking for to be the best.
For this group,
money won’t be as important as work.
Independence of thought,
freedom of action,
and being respected
as a master in their field are far more important
to them than money.
So when hiring them,
the best way is to tell them what you want to do
and let them take care of themselves.
They neither want nor need any supervision.
If you interfere too much,
they will walk away and tell you to hire someone else.
Money is really not the main issue,
but their independence of work.
This group of people often have a hard time hiring others
to do the work for them,
just because in their head
they always think that no one can do their job.
And that has led this group to complain,
“It’s hard to find good maids these days.”
Another obstacle is that when this group of people trains someone
to do what they are doing,
that novice often becomes just like them,
i.e. “doing it their own way,”
“owning it.” get married”
and “have the opportunity to express my talented identity”.
For that reason,
many self-employments are very reluctant
to recruit and train others just
because they will face further competition
once those apprentices have mastered the craft
and leave them.
That situation pushed them to work even harder and more alone.
Old business or company owner group
This group of people is almost the exact opposite
of the self-employment group.
People who really belong to group company like
to surround themselves
with other smart people from all four employee group,
self-employment group,
company group and investor group.
Unlike the self-employment people
who don’t like to share the work
(because no one can do better than them),
the company people like to divide the work.
The motto of a person in group company is:
“Why take on the work
when we can hire others to do the work for us,
sometimes even better than ourselves.”
Henry Ford is a prime example of this group.
There is an oral story about the thrilling character as follows.
A group of intellectuals loudly criticized
and disparaged Ford as ignorant and ignorant.
Ford invited them into his office
and challenged them to ask any questions Ford could not answer.
So that group of intellectuals surrounded one
of America’s most powerful industrialists,
and kept asking questions.
Ford listened to all the questions,
and when people stopped asking,
he just picked up the phone
and called in a few of his good assistants,
asking them to answer all the questions the brains asked that consciousness.
He ended the meeting with a statement
to the group of intellectuals
that he would rather hire intelligent,
educated people to find the answers
so that he could devote his clear mind
to other important work,
tasks such as “thinking”.
One of Ford’s famous sayings:
“Thinking is the hardest work.
That’s why very few people want to do it.“
Leadership is the possibility of use
of everyone’s preference facilities
Rich dad’s idol is Henry Ford.
He made me read books about characters like Ford,
or John D. Rockefeller – the king of oil.
He regularly encourages his son
and I to hone our key leadership skills and entrepreneurship.
Looking back now,
I can understand many people have one skill or the other,
but to be a successful person in the company group,
one needs to have those two types of skills.
I also realized that those two types of skills can be learned
and cultivated on their own.
For business and engineering leadership skills,
both of which have aspects of science and society.
And both need lifelong learning.
Leadership, as rich dad said,
is “the ability to use people’s strengths.”
That is why He trained me
and His children in the technical skills necessary
to succeed in business,
such as the ability to read financial statements,
the ability to market,
the skills to sell,
sales,
accounting,
administration, production and negotiation.
He places great emphasis on learning
how to work together as well as how to lead others.
He always said,
“Business tricks are not difficult to learn,
but the difficulty is in working with people”.
“If a person has the right view of money,
it can solve most other problems in their life.”– Billy Graham
**********************
Types of become a business
I often hear people say,
“I’m going to start my own business“.
Many people tend to think that the way to security of money
and happiness is to “do what you like”
or “launch a product that no one else has done.”
So they rushed into business.
In this case, they went this way.
************************
That is very risk
Many people who end up as entrepreneurs end up in the self-employment group,
not the company group.
Of course, it’s not necessarily better
that one group is better than the other,
both groups have their own strengths and weaknesses,
to varying degrees,
different risks and rewards.
However, a lot of people want to start right from company group
but end up with self-employment group
and get stuck in it on the way to conquering the world
on the right side of the quadrant.
There are also many people who start their business this way.
But in the end,
he got entangled in the self-employment group and got stuck there.
Many others have tried this line of business.
But only a few people can afford to join the ranks
of the company group.
Why is that? Because the technical skills
as well as the human nature needed
to succeed for each group are often vastly different.
Therefore, to be truly successful in a group,
you need to have the right skills
and mindset of that group.
Difference from self-employments group business
and group companies business
There are true company people who can leave their businesses alone
for more than a year,
only to come back to find their business more profitable
and more efficient than
when they left.
Meanwhile,
for a person in self-employment group,
if he or she has been gone for more than a year,
surely their business will no longer be in order.
So what made that difference?
To put it simply,
self-employment group people own the work.
Meanwhile, company group people own the system,
the process and then hire people who are able to run that system.
In other words,
in most cases,
people in self-employment group are already a “system” themselves,
so they can’t leave their business alone.
Take the example of a dentist.
The dentist spent years of hard work in school
to become an independent system.
You as a client have a toothache.
So you go to the dentist’s office.
The dentist will fix your teeth,
and you pay and go home.
You feel happy and tell your friends about your wonderful dentist.
In most cases,
the dentist does all the work himself.
The problem is that once the dentist works and travels,
his income also “stops” right away.
In contrast,
company business owners can travel for life
because they own a system,
a process, not a job.
When a person in company group goes on a trip,
money still flows into his or her pocket steadily.
So to be a successful company person you need to have:
A. Ownership or control of a system or process; and
B. The ability to lead others.
For self-employment group who want to be company,
they need to transform who they are
and what they know about how to operate a system.
Unfortunately, many people can’t do that,
or they’re too enamored with their own system.
Can I make a better meat breaker than McDonald’s?
Many people come to me for advice on how to start a company,
or how to fund a new product
or business idea.
Usually, I sit quietly and listen for about ten minutes,
and during that time,
I can sense their level of interest.
Are they interested in the product or the business system?
I often hear statements like this
(remember, nothing is more important than listening
to and examining your interlocutor’s roots from what they say to you):
“The product is better than the product that company makes.”
“I’ve searched many places,
but haven’t seen anyone selling that kind of product.”
“I will share with you the idea of this product,
but you have to give me 25 percent of the profits.”
“I have had years of experience with this product.”
Those are the sayings of a person rooted
in the left side of the quadrant, group L or T.
At those times,
I have to be extremely sensitive
because I am in dialogue with values.
The idea that he or she clings to for years,
even generations.
If I’m not tactful or impatient,
I can instantly shatter the person’s excitement
with a very sensitive business idea,
which is also precarious,
and most of all,
I can stifle a person’s will try to jump from one group to another.
People calculate too much and think too little. ― Charlie Munger
*********************
Meatloaf and Business
Since I need to be very careful,
when talking here,
I often use the example of McDonald’s burgers for analysis.
After listening to all their concerns,
I asked slowly.
“Can you make a better burger yourself than McDonald’s?”
So far, everyone I’ve met
when I’ve come up with an idea for a new product,
when asked that question,
has said “yes”.
They can all go down to the kitchen
and make a burger of a quality
that far exceeds that of a McDonald’s.
And then I asked them the next question,
“So can you build a better business
than McDonald’s on your own?”
Some people see the difference immediately,
others don’t.
And I can tell that difference
depends on the person’s position on the quartet
the left side of the quartet,
concerned only with the idea of a better loaf,
or the right side of the quartet,
there is a difference can put their full attention
on the business system.
I’ve tried everything
I can to explain how many entrepreneurs are out there providing quality goods
and services that go beyond the massive multinational corporations,
just as there are billions of people in the world
today can make a better burger than McDonald’s.
Yet only one McDonald’s has a system
that can serve billions of burgers to people around the world.
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Look at the other groups
When people could start to see the other groups
(i.e. company or investor groups),
I immediately suggested that they try going to McDonald’s,
buy a burger and eat while watching the system do out that loaf.
Take note of truckloads of live doughnuts,
cattle ranchers,
beef orderers,
and television commercials with Ronald McDonald.
Observe the training of teenagers hobbling in sales
to say hello to customers,
“Hello, welcome to McDonald’s.”
Notice the decor in McDonald’s stores,
the location of each store,
the toasters,
and the millions of pounds of fries around the world
that all taste exactly the same.
And let’s not forget the stockbrokers raising money
for McDonald’s on Wall Street.
Once they can understand the full picture
of how the McDonald’s system works,
they’ll have a much better chance of getting into the B and I quadrants.
The reality is that while there are countless new ideas,
billions of people providing goods and services,
and billions of different products,
very few people know how to build great business systems for themselves.
Microsoft’s Bill Gates didn’t make a great product,
he bought it from someone else
and built a great global system around it.
Investor group of investors
People who invest make money from money.
These people don’t need to work
because the money is already working for them.
Investor group is the playground of the rich.
Regardless of which group a person
is making money from,
if he wants to be rich,
he must reach the end of the investor group’s playing field.
It is in this investor group that money
is converted into wealth and wealth.
The diagram
| Employee (You have a job) |
Self-employment
(You work for yourself) |
| Company (You own system and others work for you) |
Investor Money works for you |
That is the Diamond Four.
The quartet simply shows the difference in income generation
for people in groups employee,
self-employment,
company,
or investor.
The difference can be summarized in the following figure.
Other people’s time and money
Most of us have heard about the secrets
of becoming a billionaire like these:
1st. Time
2nd. Other people’s money
These two things can be seen that the people working in company
and investor groups are the people whose time
and money is being used by the other group.
The main reason my wife and I took the time
to work on building a company-style business system rather
than a self-employment-type business system,
was because we realized the long-term benefits
of using “someone else’s time”.
One of the weaknesses of a person in the self-employment category
is that his or her success comes at the cost of hard work.
In other words, the more successful a person is,
the more hours he has to work,
the harder he works.
When designing a company-type business model,
the success proves the expansion and expansion of the system,
leading to hiring more and more workers.
In other words, you will work less,
still make more money and have more free time.
The rest of this book will delve into the skills
and mindset required of a person on the right side of the Quadrant.
My personal experience shows that to be successful in the right group,
a different mindset
and business tactics are required.
If you’re willing to change your mindset,
I’m sure you’ll find the road to financial freedom
and security fairly easy.
Of course, some of you will find that road thorny
and difficult to walk,
but that’s because you are too stuck in a group,
too conservative with your long-standing way of thinking.
At a minimum,
you will see why some people work very little,
yet earn more, pay less taxes,
and are more financially secure than others.
It’s just a matter of knowing which group to target
and when to make that journey for yourself
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The master of freedom
The Golden Quadrangle is not a set of rules or secrets.
It is only a guide for those who want to use it.
The Four Paths have guided me
and my wife through our journey
from struggling with money every day
to reaching financial security and finally complete freedom.
We don’t want to wake up every day
and work for money all our lives.
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Difference from the rich and other people
A few years ago I read an article that revealed that for most rich people,
70% of their income comes from investments (investor group)
and the rest is no more than 30% of income generated from salary (employee group).
If those people are employees,
they are also employees of their own corporation.
| Cash flow of rich | |
| employee 30% |
self-employment |
| Company | Investor 70% |
The source of such people’s income can be expressed
Meanwhile, for the majority of the poor and middle class,
at least 80 percent of their income comes from wages,
is in the employee and self-employment categories,
and less than 20 percent of their income comes from investments ,
belongs to investor group.
| Cash flow of poor | |
| employee 80% |
self-employment |
| Company | Investor 20% |
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The different from money and wealth
In chapter 1,
I wrote that my wife and I became millionaires in 1989,
but it wasn’t until 1994 that we reached full financial freedom.
There is a difference between having money and being rich.
Around 1989, our business brought us a lot of money.
We were earning more
and more without having to work more hours,
because the business system
just kept growing without much effort from us.
We have achieved what most people consider financial success.
We still need to put a lot of our business proceeds into tangible assets.
Our business was a huge success,
but it was at that moment
that we needed to focus on growing our assets
to the point where the return on those investments far outweighed
cost of daily activities
Our process of that effort can be summarized in the diagrams below.
By 1994, the passive income
from all of our properties had outstripped the cost of living.
Only then did we get really rich.
In fact, our business is also considered an asset
because it brings in income
without much effort on our part.
In our personal view of wealth,
we always make sure we have investment assets
such as real estate or stocks
that bring in income more than our cost of living,
and that’s it.
I can only call myself rich.
Once the income from the asset column became larger
than the income from the business,
we immediately transferred the business to a partner.
From then on, we were really rich.
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Definition of wealth
Wealth is defined as:
“The number of days you can live
without requiring your
(or your family’s) work while you are able
to maintain a normal standard of living”.
For example, if your monthly living expenses are $1,000,
and if you have a savings of $3,000,
your wealth is approximately the size of 3 months
or 90 days of living.
Wealth is measured by time,
not by money.
Around 1994, my husband
and I were immeasurable
(unless there were severe economic shocks)
because our incomes far outstripped our cost of living.
In the end,
it’s not how much money you make that matters,
it’s how much money you can keep
and how long it will keep you profitable.
Every day,
I meet a lot of people who make a lot of money
but almost all of their money flows out of the expense column.
How they spend their money can be summarized
in the diagram just above.
Every time they earn a little extra money,
they go shopping.
They often buy a bigger house or a new car,
which only makes them stay in debt longer and work harder,
leaving them with less money left to invest in their asset column.
They spend money to dizzy,
like suffering from financial laxative symptoms.
********************
Speed out of money
When it comes to cars,
we often hear about “running on full throttle”.
Of course,
at that “full throttle” speed,
you still have to make sure the car doesn’t smoke or catch fire.
For is money.
There are a lot of people, whether rich or poor,
who spend money at “out of gas”.
How much money they earn,
they all spend it directly.
The problem lies in the fact that
when a car runs at full speed,
the life of the engine will be greatly reduced.
It’s the same with spending money on gas.
Many of my friends who are doctors said
that the current social problem
is that more and more people are
under stress due to working a lot
and never having enough money.
A friend said that the biggest cause of health disorders
is the symptom of “money pocket cancer”.
Money makes money
Regardless of how much income you earn,
you should put some in the investor group.
The special investor group always acts on the principle
of money making money,
or the idea of making money work for you
so that you don’t have to work harder.
But the important thing is that
there are many different ways to invest.
Different from of investment
People often invest in their education.
The traditional education system is important
because the more educated you are,
the easier it will be for you to make money.
It may take you four years of college,
but your income can increase from $24,000 to $50,000 per year.
Assuming the average person can work hard for 40 years,
putting four years into college or graduate school is actually a great investment.
Hard work and loyalty is another investment,
as is the case with a longtime employee
in a company or a government.
But in return,
the person will receive a large retirement payment
according to the contract.
This form of investment was very popular
in the Industrial Age,
but completely obsolete in the Information Age.
Many others invest by having many children
and having a large family,
and in return they can rely on their children in their old age.
That way of investing was once very popular in previous centuries,
but due to increasingly difficult economic conditions in the new era,
many families have considered raising elderly parents
as a mandatory burden.
Government retirement plans
such as Social Insurance and Health Insurance
in many countries (including Vietnam),
which are paid by a cut in salary,
are also an investment but it is imposed by law.
However, due to large fluctuations
in demographics and the cost of living,
this form of investment is unlikely to guarantee
benefits enjoyed by the leader that the government has committed.
There are also other forms
of independent retirement investments,
such as individual retirement plans.
Normally, the government will provide special tax exemptions
for both employees and employers
if participating in these programs.
***********************
Income from investment
Although all of the above are considered investments,
the investor group usually focuses on investments
that provide a continuous income throughout their working life.
The standard to become a person in the investor group
is the same as all the other groups,
that is, whether you make money
from the investor group or not.
In other words,
does the money work
for you and generate income for you?
Consider a person buying a house as an investment by renting it out.
If the rent comes in more than it costs to maintain the house,
that income comes from investor group.
The same goes for people who earn income from savings,
or dividends, or bonds.
Thus, the standard of group
I is how much money you can make
from this group without having to work in that group.
*********************
Is my refund an investment?
Putting money into a regular retirement fund is an investment
and a pretty good thing to do.
Most of us hope to be investors
when we retire,
but for the purposes of this book,
it’s not the investor group who make money
on their investments in the very next few year
we were still working.
The reality is that not everyone saves
and puts money into their retirement.
Most people who put money into retirement
hope that once they retire,
the money in that fund will become more
than they have put in over the years.
There is a clear difference
between people who save money like that,
and those who, by investing,
actively manipulate their money
to work to generate additional income for themselves.
************************
World stock brokers are investors?
Many advisors in the investment world are
by definition not those who actually generate their income
from the investor group.
For example, the vast majority of stockbrokers,
real estate agents,
financial advisors,
bankers and accountants are,
by nature, only employee or self-employment people.
That is, the income of they earn from their professional work,
not from the properties they own.
I have many friends who make a living
by buying and selling stocks.
They buy stocks at low prices and hope
to sell them back at high prices.
Thus, they only really live by the profession
of “buying and selling”,
no different from
The owner of a retail store,
buys goods at wholesale and sells them at retail.
They still have to put in their own efforts to make money.
Therefore, those people belong
to self-employment group more than investor group.
So can everyone become an investor?
Of course it is possible,
but it is important to know
difference between someone who earns commissions,
or advises by the hour or pays,
or tries to buy low and sell high,
and someone who earns money
by finding or creating lucrative investment opportunities.
There is a way to find a good consultant.
That is, ask them what percentage
of their income comes from commissions,
consulting fees compared to passive income earned
from investments or businesses they own.
I was disclosed by many friends who are accountants
without violating the confidentiality of client information,
many professional investment advisors have almost
no income earned from investments.
In other words,
“they don’t practice what they show others”.
Advantages of income from investor group
So the main difference that distinguishes investor group
is that these people focus on controlling money
to create more money.
If they’re really good at it,
they can make money work for themselves
and their families for hundreds of years.
In addition to the most obvious advantage of knowing how
to handle money without having
to wake up every morning to go to work,
there are many other tax advantages that employees do not have.
One of the many reasons the rich get richer and richer is
because sometimes they can legally make millions
without paying a single penny in taxes.
That’s because they generate money from the “asset column,”
not the “income column.”
That is, they make money as an investor,
not an employee.
For people who work for money,
who are not only taxed at a higher rate,
It will never see the income the tax has taken from their wages.
Don’t criticize the rich.
When will the poor bring you jobs? — Laurence J. Peter
*************************
Why don’t more people become investors?
Investor group people are those who work little,
earn a lot, and pay little taxes.
Then why don’t more people become investors?
The reason for that question is similar to the reason
why not many people dare to start their own business.
It can only be summed up in one word: “risk”.
Many people don’t like the thought of giving away all
of their hard-earned savings
and never seeing it come back to them.
Many people are very afraid of losing money,
they would rather choose not to invest,
not take risks even if they can earn a lot of money.
A Hollywood movie actor once stated:
“I don’t care about the return on investment.
What I am most worried about is
whether I can get that investment back or not.”
It is the fear of losing money
that invisibly distinguishes four groups
of investors as follows:
1. Those who don’t take risks and do nothing,
just choose to play it safe and put money in the bank account.
2. People who leave their investments to someone else to manage,
such as a financial advisor or a mutual fund manager.
3. People who like red and black.
4. Real investors.
There is a difference between a red
and black person and a true investor.
For the red-and-black,
investing is a game of chance,
while for the investor,
it’s a mind game and requires many tricks.
As for the person who leaves the investment story
to someone else to manage,
investing is just a game they don’t like to learn at all.
For them,
it is mainly important to get a good financial advisor.
In the chapters that follow,
the book will present you with seven different levels of investment
that will help you better understand the subject matter.
Life is a game.
Money is how we score.— Ted Timer
*****************
Risk can be reduced to the minimum
The good news for investing is that the risk can be minimized,
even eliminated completely,
and you can earn a lot more than your capital
if you know the basics. rules of that game.
If you hear someone say this sentence,
you can immediately tell that person is a true investor:
“How long will it take for me to get my capital back,
and what will be my income in the future?
after I got my initial investment back?”
Real investors want to know how long
it will take them to get their initial investment back,
while those who invest in retirement funds have to wait years
to find out if they will get their money back.
That’s the biggest difference between being a professional investor
and someone saving money for retirement.
It is the fear of losing money that drives most people to seek security and stability.
However, investor group is not
as dangerous as many people think.
Investor group is like the other three groups,
but only in the skills and ways of thinking.
The skills of investor group can still be learned
if you take the time to learn them.
The difference from the private industrial age plan
and the information age retirement plan
When I was a kid, rich dad used to encourage me to take risks with money
and learn how to invest.
People often say,
“If you want to be rich, you need to learn to take risks.
Learn how to be a professional investor.”
Back home,
I told my educated dad what the other dad suggested learning
how to invest and manage risk.
My biological father replied,
“I don’t need to learn how to invest, son.
I’m on the government insurance scheme
and have an education union retirement plan
where those sources of social insurance are guaranteed.
So there’s no reason to risk playing with our money.”
My biological father was a big believer in
such industrial-age retirement plans,
like the government’s social insurance scheme for workers.
So when I joined the US Navy,
he was very happy.
Instead of worrying about his son dying in Vietnam,
he simply said,
“As long as you stay in the army for 20 years,
you will be guaranteed health benefits and a lifetime retirement.”
Although still in use,
such retirement plans have become outdated and outdated.
The notion that the company should be financially responsible
for your life after retirement
and that the government will take care of your retirement needs
through a social insurance scheme,
is an important is very old and no longer valid in this new age.
***********************
Everyone need to become investors
As we move from a Guaranteed Benefit retirement plan,
which I call an industrial age plan,
to a Guaranteed Contribution retirement plan,
which I call an Information Age plan,
it’s now up to you to take care of yourself.
Take care of yourself for your retirement.
Unfortunately, very few people notice the change.
***********************
Industrial age retirement plan
In the industrial age, a company-stipulated
Guaranteed Benefit retirement plan will guarantee you,
the employee,
a certain amount of money (usually paid monthly) as long as you live.
Everyone feels safe
because those plans guarantee you a steady source of income.
***********************
Retirement plan in the information age
Certain figures changed the law,
and companies are no longer responsible
for providing financial security for you when you reach retirement age.
Instead, companies adopt the form
of Guaranteed Contribution retirement.
“Secured contribution” is a term for the fact
that you can only get the money that you
and the company have contributed to your retirement fund
during your employment.
In other words, the source of income
when you retire will be determined mainly from
what has been contributed to the previous retirement fund.
If you and the company don’t contribute at all,
you won’t get any retirement benefits.
The good news is that in the Information Age,
human life expectancy has increased dramatically.
However, your life expectancy is likely
to be longer than your retirement income,
and if so, that is a cause for concern.
Furthermore, these pension funds are not safe
from financial market fluctuations and risks.
**************************
Investment types of non investors
Currently, the stock market is always at the top
of the story of the whole world.
This is because there are many factors
that have made the market famous,
one of which is the force of amateurs trying
to become investors in the market.
Their financial path can be plotted like this.
Most of these people,
who belong to the employee group
or self-employment group,
tend to have a tendency toward stability in nature.
That explains why they go looking for secure jobs,
stable careers,
or start small businesses they can control.
Due to fluctuations in retirement plans,
they are forced to move into the investor group,
where they hope to find “safety”
for their upcoming retirement years.
The unfortunate thing is that the
I group is not a group that aims for safety,
but a place to confront and accept risks.
With the phenomenon of “massive migration”
of people from the left side of the quadrant to safety,
in the stock market there are many types of investments
that you often hear like this.
********************
1. “Diversification”
Safe people often use this phrase.
Why reed? Because it is a type of investment strategy aimed at “not losing money”.
Since it’s not a win-win strategy,
the successful I group or the rich don’t diversify,
but focus on focusing with all their efforts.
Warren Buffet, one of the world’s foremost investors,
has this to say about this type of “diversification”:
“The strategy we adopt is not dogmatic diversification.
Many people criticize that strategy
as more risky than conventional strategies.
We disagree with that comment.
We believe that a selectively concentrated portfolio investment policy
is possible greatly reduce
the level of risk if such a policy can make investors take the matter
as seriously as it does with business,
while at the same time making investors feel secure
with the economic aspects of the business catalog
before he decides to buy it”.
In other words, Warren Buffet believes
that investing in a concentrated portfolio
is a better strategy than diversification.
In his opinion, instead of spreading,
focus will make you think and act in a wiser,
more careful way.
His article also mentions that the average investor prefers
to avoid volatility because they often equate volatility with risk.
Instead, Warren Buffet wrote,
“In fact, professional investors love volatility.”
For me and my wife, to get out of poverty
and achieve complete financial freedom,
we didn’t diversify but focused on a handful of our investments.
“Freedom is the only thing money gives you,
because you don’t have to worry about it anymore.”- Johnny Carson
********************
2. “Blue chip stocks”
– safe-haven investors often buy blue chip stocks.
Why so?
Because in their head they always think these stocks are safer.
While those companies are safe,
the stock market is not.
********************
3. “Mutual Funds”
– People with little investment knowledge often feel safer investing
their savings in mutual funds,
because they think the fund managers have better investment strategies than them.
For those who do not intend to become professional investors,
this is a very wise approach.
But the problem is that these mutual funds are not necessarily less risky.
In fact, if there were to be a stock market crash,
we could still see a major move that
I would predict is a “mutual fund market crisis,”
which affects
Its woes will be no less terrible than crises
for other financial markets that have occurred in history,
such as the tulip market crisis in 1620,
and the bond market in 1990.
Today, the market is filled with millions of people
who are intrinsically safe-seeking,
but under the pressure of economic upheavals
they have been forced from the left side of the Quadrant
to “cross over” fence” goes to the right,
which does not allow the existence of ideas of safety,
security.
That’s what worries me.
Many people still think the retirement plans
they are participating in are safe,
but the reality is that they are not.
Once there is a major crash or crisis,
those retirement plans will go up in smoke.
Their retirement plans are not as secure as those of previous generations.
*************************
Major change in the economy is coming soon
There are already signs that a major economic turning point is approaching.
That turning point often marks the end of an old age
and the opening of a new one.
At the end of each era,
there are always pioneering progressives,
but there are also many others who still cling to the ideas of the previous era.
I fear that those who still expect their financial security
from the responsibilities of a large corporation
or government will be disappointed in the years to come.
Those ideas belong to the industrial age,
not the information age.
No one can predict the future.
I subscribe to many investment news service companies.
Every company makes different estimates.
One company sees the near future as bright,
while another predicts an impending market crash and global recession.
In order to be objective,
I have to listen to both sides because
both opposing views have a strong and convincing rationale.
The problem to grasp is not the type of fortune-telling,
trying to guess what will happen in the future,
but I need to have timely information in
both company and investor groups and be mentally prepared to deal
with any situation what could happen.
A person who is fully prepared is still capable of doing well no matter
which direction the economy goes.
If history could be considered
as one of the analytical tools,
a 75-year-old would experience one recession and two recessions.
Of course, my parents had both been
through crises in their times,
but the generation of Americans during the Vietnam War had never experienced
such a major economic crisis.
And economists say
that there will be a great crisis every 60 years on average.
Today, we all need to be concerned
with issues other than job security.
I think what we should be concerned
with is our own long-term financial security,
and not entrusting that responsibility to companies or governments.
Times have really changed
when companies simultaneously declare they will no longer be responsible
for your life when you retire.
Once companies switched to guaranteed contribution retirement plans,
they sent the message that from now on
you have to take care of your own retirement.
Today, we all need to become wiser investors,
and more careful with the dizzying ups
and downs of financial markets.
I honestly suggest to you
that we would rather spend our time learning
how to invest than handing over our money
to someone else to invest for you.
If you only give your money to a mutual fund or an advisor,
you may have to wait until age 65 to find out
if they’re doing a good job.
If they fail,
you will have to work again for the rest of your life.
Millions of people will fall into that situation
because it is too late for them to invest on their own
or learn how to invest.
Don’t wait to buy real estate.
Buy real estate and wait. — Will Rogers
****************************
Learn risk management
There is always a way to invest with low risk
but still high return.
All you need to do is learn how it can be done.
That is not difficult.
In fact, that way of learning is no different from learning to ride a bicycle.
At first, you may stumble and fall,
but over time you won’t fall,
and investing becomes a second nature like riding a bicycle.
The biggest problem for people on the left side of the Quadrant
is the ability to take risks.
The reason most people become employee or self-employment is
because in those groups they think money risks can be avoided.
Instead of avoiding risk,
I suggest that you learn to control financial risk.
Some people look for a beautiful place.
Others make a place beautiful. — Hazrat Inayat Khan
****************************
Let’s accept risks
Risk-takers are often world-changers.
Rarely does anyone become rich without taking risks.
Too many people still rely on the government to avoid financial risks in life.
As we all know,
when the Information Age begins,
it will also end the existence of cumbersome government machines,
simply because the bigger the government,
the more the state budget will cost that much.
Unfortunately, millions of people around the world
who still rely on ideas about welfare
or social security will fall behind in terms of money.
The message of the Information Age is
that we all have to be self-reliant
and mature in our personal money matters.
The concept of “study hard
and find a stable job” is a concept born in the Industrial Age.
We no longer live in that era.
Times are changing.
But the problem is that people’s opinions don’t change.
They still think they are entitled to something.
They still give out investor group that has nothing to do with them.
They think the government,
corporations, labor unions,
mutual funds or their families will take care of them
once they are no longer able to work.
I very much hope that their thinking will be correct.
And such people do not need to continue reading this book.
It is my interest in people who recognize it need
to be investors that prompted me to write this book.
The book is written for those who want to “cross the fence”
from the left side to the right side of the Golden Quadrangle
but don’t know how to start.
Anyone can go all the way through that “fence-breaking” journey
with the right skills and a decisive will.
If you have found your own path to freedom
I sincerely congratulate you,
and ask that you share your experiences with others,
and guide them if they need help.
Guide those people,
but let them find a path for themselves
because there are many paths to freedom and financial freedom.
Whatever you decide,
please remember this one thing.
Financial freedom can be achieved for a fee,
but it doesn’t come cheap.
For me, the price
I paid was completely worth the freedom I achieved.
One big secret is this:
It doesn’t take money
or a high level of education
to achieve financial freedom.
And the road to that freedom isn’t necessarily fraught with risks.
Instead, the price of money freedom is measured by dreams,
burning desire,
and an ability to overcome the disappointments
that will come our way along the way.
Are you willing to pay that price?
One of my fathers dared to accept that price,
while the other didn’t dare at all
but paid a completely different price.
If you’re not going to put money in real estate, where else? — Tamir Sapir
