Financial Education: Cash Flow Quadrant summary

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Cash Flow Quadrant summary

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Recomended : Read Rich Dad, Poor Dad before read this CashFlow
Quadrant
In Robert Kiyosaki's, The Cashflow Quadrant, the author states that
there are four kind of workers: Employees, Self-Employed workers,
Business Owners, and Investors. Kiyosaki also states that there are
seven different kind of investors. Furthermore, Kiyosaki finally states
the seven steps to financial prosperity. There are four kind of workers:

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Financial Education: Cash Flow Quadrant summary

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Employees, Self-Employed workers, Business Owners, and Investors.

Employees believe that "uncertainty does not make them happy."
(Kiyosaki, Cashflow Quadrant pg. 21) As a result, employees have a
huge trade off for their job security by "losing" their chance to become
rich quickly. Employees are paid the least and taxed the most. A man
working as a cashier at Vons, is an employee. He wakes up every
morning and work long hours each day. The cashier is a hard worker.
However, he is only making the owner rich. Self-Employed workers
are people who have their own business. "Self-employed people are
often hard-core 'perfectionists.'"(Kiyosaki, Cashflow Quadrant pg. 22)
They are people who own small hair salons and hobby shops. It is
true that self-employed workers are their own boss. The only problem
is that they have to manage their business, manage their taxes, work,
and fight off building inspectors. As a result, most self-employed
workers will quit in five years. Business owners are different from selfemployed workers. While a self-employed business owner must be
present, a business owner "likes to delegate"(Kiyosaki, Cashflow
Quadrant pg. 23) In other words, the owner does not show up for
work. Instead, he hires a manager to handle his business for him.
When we go to Mc. Donald's, we hardly see the owner. When we
have a complaint we only get to resolve a dispute with the manager.
"Investors make money with money."(Kiyosaki, Cashflow Quadrant
pg. 29) I have a friend who had withdrawn $20000 from his credit
card. Instead of buying a new car, he have re-invested the same
$20000 in high interest off-shore Certificate of Deposits. In one year,
he payed back all his debts and currently earns $6000-$20000 in
passive income every month. In other words, he never works for
money. My friend's money works for money, even though he plays golf
and plays pool for hours. Kiyosaki suggests that everybody be
satisfied with their own quadrants. He also suggests that employees
and self employed workers are the worst position to be in. On the
other hand, Kiyosaki suggests that business owners and investors are
bound to have both the freedom of time and money. There are seven
levels of investors:
Level 0: Those With Nothing To Invest-They are people who make
money and blow it all out on fancy cars and toys.

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Level 1: The Borrowers-These people always say, "just charge it."

They love to take "0 down/Easy monthly payment" offers. In Las
Vegas, the borrowers are wealthy man with no money. As a result,
they borrow, borrow, borrow. Soon, they find themselves homeless.

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Level 2: Savers-While savers are better off than borrowers, they are
not aware that their money is being depreciated by inflation. Inflation
usually averages at 4% per year. Unfortunately, most savings account
only pay at 2% interest per year. The solution? Invest in CDs, stocks,
http://first-asset.blogspot.com/2008/07/recomended-read-rich-dad-poor-dad.html

Blue Ocean Strategy (1)

Book (4)
Cash Flow Quadrant (1)
Napoleon Hill (1)

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Financial Education: Cash Flow Quadrant summary

bonds, or mutual funds.

Level 3: "Smart" Investors-They are the middle class with 401(k),
SEP, Superannuation, IRAs, and pension plans. When they retire, the
"smart" investors believe that the government will pay for their
retirement. Today, it is not possible. As their expenses go down,
health care costs for the elderly skyrockets. It is a good idea to have
CDs, stocks, bonds, and mutual funds to back pension plans.
Level 4: Long-Term Investors-These people have a plan to follow.
They have laid some cash for CDs, stocks, bonds, mutual funds, and
real estates. Level 4 is a turning point for most people. At this point,
people realize the difference of working for money and the difference
of having money working for money. Reading books and listening to
audio tapes on investing, is a major step of being a long-term investor.

21/10/2016, 12(36 PM

Renee Mauborgne and W. Chan Kim (1)

Rich Dad Poor Dad (1)
Robert Kiyosaki (2)
Think and Grow Rich (1)

Blog Archive
2008 (4)
July (4)
Cash Flow Quadrant summary
Think And Grow Rich Overview
Blue Ocean Strategy Overview
Poor Dad Rich Dad

Level 5: Sophisticated Investors-These investors are in the "fast

track." They are savvy and bold to take on bigger risks. Sophisticated
investors buy ancres of lands, houses, and apartments at "whole sale"
prices. They then fix up the property and resell the same property at
"retail" prices. Most real estate investors fit the criteria of a
sophisticated investor.
Level 6: Capitalists-These people are masters of being an investor
and being a business owner. "These are the Fords, Rockefellers, Paul
Gettys, Ross Perots, and the Kennedys."(Kiyosaki, Cashflow
Quadrant pg. 93) They are talented and strive to change the world by
creating jobs and donating huge sums of money to charity. *This
concept have been simplified from pg. 83 of Cashflow Quadrant If you
want to be rich, ask yourself, "why am I poor?" Chances are that you
will have to fight your urge to live in "first class" and educate yourself
by reading more books on finance and investments. By starting small,
you will decide if it is safe to invest more later on a particular CD,
stock, or a mutual fund. Remember that education comes first before
you invest. The seven steps to financial prosperity are:
1. Mind Your Own Business-Ignore people who say, "You can't do
that!" "It is impossible!" or "You will fail!" The only way to fail is for you
to accept and admit that you have failed. Only you know more about
yourself than anyone in the world. The world is full of "limits." In truth,
limits and failures are nothing but states of human emotion.
2. Take Control Of Your Cashflow-Take the time to sit down and write
down how much you pay in mortgage, car payments, credit cards, and
other expenses. Your job is to see where you are today. You are
starting from point A, to get to point B.

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Financial Education: Cash Flow Quadrant summary

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3. Know What Is Safe And What Is Risky-I thought that stocks were
initially risky. However, I played Kiyosaki's Cashflow 101 game and
realized that stocks were actually profitable. WHen you see risk, you
have two options: Reduce risks by educating yourself about the risk or
stepping out.
4. Know Where You Want To Invest-Do you want to invest in stocks?
CDs? Real Estates? Choose your investment wisely. If you do not
know anything about electronics, do not buy electronic stocks. It's that
simple.
5. Seek Mentors-You become who you hang with. Friends have the
power to make you feel good or feel bad. Pick mentors with a proven
track record of who he is. A lawyer is not a doctor and a real estate
investor can not be your CPA.
6. Make Disappointment Your Strength-Always look for the good in
every problems. Turn failures into success. Whenever you have a
problem, don't say, "I can't." Say, "how can I solve this problem?" For
every problem comes every answers. Never give up!
7. The Power Of Faith-If you think you can, you can do it! If a problem
is gargantuan(huge), do everything in your power to solve it! For me I
feel comfortable to have God as my partner. Whenever I feel
hopeless, I always put my problems on the hands of God's. I have
faith in God to give me the strength while my duty is to execute my
plan. *This concept have been simplified from pg. 199 from Cashflow
Quadrant Know where you are today and imagine where you want to
be. Prove others that you have the power to make your dreams, a
reality. Never give up and have faith on God and yourself. Continue to
educate yourself on finance. Have the right mentor to encourage you
to push yourself over the limits. Kiyosaki's Cashflow Quadrant is more
in depth than his first book Rich Dad, Poor Dad. Employees and selfemployed worker are taxed the most and earn the least. Business
owners and investor are taxed the least and earn the most. Learn to
invest before you begin to invest. Follow your dreams and let your
actions speak louder than words.

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21/10/2016, 12(36 PM

Posted by Riku at 10:44 PM

Labels: Book, Cash Flow Quadrant, Robert Kiyosaki

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