The cashflow quadrant pdf download

At that point, we were wealthy. Our business is considered an asset because it generated income and operated without much physical input. For our own personal sense of wealth, we wanted to make sure we also had tangible assets, such as real estate and stocks, that were throwing of more passive income than our expenses before we claimed to be wealthy.

Once the income coming from tangible assets in our asset column was greater than the money coming in from the business, we sold the business to our partner.

We were now wealthy. Wealth is measured in time, not dollars. By , Kim and I were wealthy indeinitely barring great economic changes because the income from our investments was greater than our monthly expenses. Every day I meet many people who make a lot of money, but all of their money goes out the expense column.

Every time they make a little more money, they go shopping. Nothing is left to go into the asset column. Many people, rich and poor, operate constantly at the inancial red line of their personal inances. No matter how much money they make, they spend it as fast as it comes in. Several of my doctor friends say that one of the main problems they see today is stress caused by working hard and never having enough money.

Although the I quadrant is important to your inancial health, there are other forms of investing worth noting. Other Forms of Investing People invest in their education. Traditional education is important.

Given that the average person spends 40 years or more actively working, college or some type of higher education may be a good investment. Giving your loyalty and best eforts to an employer is another form of investment.

In return, via contract, the employee is rewarded with a pension for life. Government retirement programs such as Social Security and Medicare, which are often paid for through payroll deductions, are another form of investment mandated by law.

Due to massive changes in demographics and costs, this form of investment will probably not be able to keep many of the promises it has made. And there are independent investment vehicles for retirement that are called individual retirement plans. Often, the federal government will ofer tax incentives to both the employer and employee to participate in such plans. In America, one popular plan is the k retirement plan.

In countries such as Australia, they are called superannuation plans. Income Received from Investments Although the above are all forms of investing, the I quadrant focuses on investments that generate income on an ongoing basis during your working years. So to qualify as a person who operates as an I, use the same criteria used in all the other quadrants.

Do you receive current income from the I quadrant? In other words, is your money working for you and generating current income for you? If the rent collected is greater than the expenses to operate the property, that income is coming from the I quadrant. So the qualiier for the I quadrant is how much income you generate from the quadrant without working in it. Regularly putting money into a retirement account is the form of investing people in the E quadrant are most encouraged to take.

Instead, most are saving money in their retirement account, hoping that when they retire, there will be more money coming out than they put in. Are Stockbrokers Investors? Many inancial advisors in the investment world are, by deinition, not really people who generate their income from the I quadrant. In other words, their income comes from their professional work, not necessarily from assets they own.

I have friends who are stock traders. In reality, their profession is trading, much like a person who owns a retail shop and buys items at wholesale and sells them at retail. Can all of these people be investors? I have several CPA friends who tell me, without violating client conidentiality, that many professional investment advisors have little in the way of income from investments. One of the reasons the rich get richer is because they can make millions and pay, legally, little or no tax on that money.

Moreover, people who work for money are often taxed at higher rates than investors, and their taxes are withheld from their wages. It can be summed up in one word: risk. Many people are so afraid of losing that they choose not to invest, no matter how much money they could make in return.

People who are risk-averse and do nothing but play it safe, keeping their money in the bank 2. People who turn the job of investing over to someone else, such as a inancial advisor or a mutual-fund manager 3. Gamblers 4. Investors he diference between a gambler and an investor is simple. For a gambler, investing is a game of chance.

For an investor, investing is a game of skill. Risk Can Be Virtually Eliminated he good news about investing is that risk can be greatly minimized or even eliminated, and you can still receive high yields on your money, if you know the game.

A true investor wants to recoup his or her money quickly. Yet the I quadrant is not as treacherous as many people think. It has its own skills and mindset. For some reason, it seems that every years in modern history, great cataclysmic changes occur. When I was a boy, my rich dad encouraged me to take risks with my money and learn to invest. Learn to be an investor.

I have a government pension plan, a pension from the teachers union, and guaranteed Social Security beneits. Why take risks with my money? He was happy when I signed up for the U.

Marine Corps. Amazingly, few people have noticed the change and understand its ramiications. Industrial-Age Pension Plans In the Industrial Age, a deined-beneit pension plan meant that the company guaranteed you, the worker, a deined amount of money usually paid monthly for as long as you lived.

People felt secure because these plans assured a steady income. Suddenly, companies were no longer guaranteeing inancial security at the end of your working days. Instead, employers began ofering deined-contribution retirement plans. In other words, your pension is deined solely by what has been contributed.

If you and your company put no money in, then you get no money out. In other words, one day you could have a million dollars in the account. But, if there were a stock-market crash, which every market occasionally has, your million dollars could be cut in half or even wiped out. With deined- contribution plans, the guarantee of lifelong income is gone. Well, in the United States, Social Security is expected to be bankrupt by the year , with Medicare bankrupt by Many politicians seem to think that Social Security is income that can be spent, rather than an asset that should be held in trust.

A case in point is how we prepare inancially for our retirement years. Today, everyone needs to go to school to prepare for a job or career, but we also need to know how to invest—and investing is not a subject taught in school. One of the problems created by the Industrial Age is that too many people are dependent upon the government to solve their individual problems. Unfortunately, there were too many promises made for too many years. Now the bill is coming due. If our government begins to raise taxes even higher to pay for those promises, those who can escape will escape to countries that have lower taxes.

Ofshore could mean cyberspace. Investing without Being Investors he change from deined-beneit to deined-contribution pension plans is forcing millions of people throughout the world to become investors, with little investor education. Many people who have spent their lives avoiding inancial risks are now being forced to take them. Most will ind out when it comes time to retire whether they were wise investors, or careless gamblers. Today, the stock market is fueled by many things, one of which is non-investors trying to become investors.

Unfortunately, the I quadrant is not known for its security. Many pundits would therefore say the strategy must be riskier than that employed by more conventional investors. We disagree. We believe that a policy of portfolio concentration may well decrease risk if it raises, as it should, both the intensity with which an investor thinks about a business and the comfort level he must feel with its economic characteristics before buying into it.

In his mind, concentration rather than diversiication requires you to become smarter and more intense in your thoughts and actions. His article goes on to say that average investors avoid volatility because they think volatility is risky. We concentrated our investments. Blue chip stocks Security-minded investors usually buy blue-chip companies. While the company might be safer, the stock market is not. Mutual funds People who know little about investing feel more secure turning their money over to a fund manager who they hope will do a better job than they can.

Today, the market is illed with millions of people who, by nature, are security-minded. Great Economic Upheavals Coming he stage is set for a great economic upheaval. Such upheavals have always marked the end of an old era and the birth of a new one. At the end of every age, there are people who move forward, and other people who cling to ideas of the past.

No one has a crystal ball. I subscribe to many investment news services and each one says something diferent. Some say the near future is bright.

To remain objective, I listen to both sides, because both have points worth listening to. I do not play fortune-teller, trying to predict the future. Instead, I work at staying educated in both the B and I quadrants and being prepared for whatever happens. A person who is prepared will prosper no matter which direction the economy goes, whenever it goes.

If history is any indicator, a person who lives to the age of 75 should anticipate going through one depression and two major recessions during his or her lifetime. My parents went through their depression, but the baby boomers have not—yet.

Today we all need to be concerned with more than just job security. I think we must also focus on our own long-term inancial security and not leave that responsibility to a company or the government. Once they switched to the deined-contribution retirement plan, the message was that you were now responsible for investing in your own retirement. Today, we all need to become wiser investors, always aware of the ups and downs of the inancial markets.

I recommend learning to be an investor rather than giving your money to somebody else to invest for you. If they did a lousy job, you may have to work for the rest of your life. Millions of people will have to do just that because it will be too late for them to invest or learn about investing. Learn to Manage Risk It is possible to invest for high returns with low risk.

It is not hard. In the early stages, you may fall down, but after a while, the falling stops and investing becomes second nature, just as riding a bicycle is for most of us.

Instead of avoiding risk, I recommend learning how to manage inancial risk. Few people ever get rich without taking risks. Too many people have come to depend on government to eliminate the risks of life. But rather than becoming savvy, educated investors, millions of people around the world have bought into the archaic idea of entitlements and pensions for life.

Many still think that the I quadrant is not their responsibility. Anyone can make the move with the right skills and determination. Teach them, but let them ind their own path, for there are many paths to inancial freedom.

Are you willing to pay the price? But he paid a diferent kind of price. Both of my dads recommended that I go to college and get a degree. But it was after receiving the degree that their advice took diferent paths. As adults, millions of people still continue to follow that advice. Many of us are conditioned from our earliest days to think about job security, rather than inancial security or inancial freedom.

After leaving school, they often end up with lots of expenses and may fall into debt. If their parents paid the bill, then the parents are strapped inancially for years. Most Americans today will receive a credit card while still in school and will be in debt for the rest of their lives. Following the Script If we track the life of an average educated person, the inancial script often goes like this: he child goes to school, graduates, inds a job, and soon has some money to spend.

Soon the bills begin to come in. One day, the adult meets someone special and sparks ly. For a while, life is blissful because two can live as cheaply as one. With only one rent to pay, they can aford to set a few dollars aside to buy the dream of all young couples—their own home. Now they have a mortgage. Easy monthly payments. After dropping the child of at nursery school, this average couple must now put their nose to the grindstone and go to work.

I have bills to pay. As he grew more successful, he had more free time and money. He simply had his president expand the system and hire more people to do the work. If his investments did well, he reinvested the money and made more money. Instead of working, he spent hours with his son and me explaining to us everything he was doing in business and investing.

I was learning more from him than I was learning at school. My highly educated dad worked hard too, but he worked hard on the left side. By working hard, getting promoted, and taking on more responsibility, he had less and less free time to spend with his kids. He would leave for work at 7 a. Success brings you less and less time, even if it does bring more money.

Success on the right side requires inancial intelligence. My rich dad was good with money and with people at work. He had to be. He was responsible for creating money, managing as few people as possible, keeping costs low, and keeping proits high. It was my rich dad who stressed that your home is not an asset, but a liability. He could prove it simply by looking at the numbers. As the state superintendent of education, he was a government oicial with a multimillion dollar budget and thousands of employees.

But it was not money he created. As a young boy observing both fathers, I began to take mental notes of what kind of life I wanted to lead. My educated dad was a voracious reader of books, so he was word-literate, but he was not inancially literate. Because of this inancial advice, not only did my highly educated dad work harder, he also got further into debt. Every time he received a promotion for his hard work, he also got a pay raise, and with each pay raise he went into a higher tax bracket.

Because he was in a high tax bracket, and taxes for high-income workers in the s and s were extremely high, his accountant and banker would tell him to buy a bigger house so he could write of the interest payments. He made more money, but all that happened was that his taxes increased and his debt increased. Soon, all the children were gone, and he was still working hard just to keep up with the bills.

He always thought that the next promotion and pay raise would solve his problem. But the more money he made, the more the same things happened. He got deeper into debt and paid more in taxes.

To top it all of, the government often ofers you tax breaks to get you deeper into debt. Unfortunately, inancial security and inancial freedom are seldom found in the E or the S quadrant. True security and freedom are only found on the right side. Many people spend their life in search of security or freedom, but wind up instead going from job to job.

For example, I have a friend from high school who I hear from about every ive years. He is always excited because he has found the perfect job and the company of his dreams.

He loves the company. He loves his work, he has an important title, the pay is great, the people are great, the beneits are great, and his chances for promotion are great. And the cycle starts anew. His life path looks something like a dog chasing its tail. It looks like this: His life pattern is going from job to job. But the years are catching up with him, and younger people are now getting the jobs he used to get. His youngest child, 8, lives with his ex-wife, and his oldest child, 14, lives with him.

I have time. In my opinion, he needs to make a serious efort to begin moving to either the B or the I quadrant quickly. A new attitude and a new educational process need to begin.

During periods of massive downsizing and unemployment, some people get the message. Instead of looking for another job, they decide to start their own businesses. Many people make the decision to start their own business, do their own thing, and be their own boss. In my opinion, being an S can be extremely rewarding—and the most risky. I think the S quadrant is the hardest quadrant there is.

I wish them well, yet I feel great concern for them. After three or so years of struggle and hard work, the business folds and, instead of life savings, they have debt to pay of. Nationally, nine out of 10 of these types of businesses fail in ive years.

Of the one that is remaining, nine out of 10 of them fail in the next ive years. In other words, 99 out of small businesses ultimately disappear in 10 years. I think the reason most fail in the irst ive years is due to lack of experience and lack of capital. I have a friend whose parents have spent the last 45 years working long hours in their liquor store.

As crime increased in their neighborhood, they had to put steel bars up on the doors and all the windows. Today, money is passed through a slot, much like in a bank. I go by occasionally to see them. For people who earn their income from the E quadrant, there are virtually no tax breaks left. When you consider that the government ofers you tax breaks for going further into debt, the path to inancial freedom is virtually impossible for most people in the E and S quadrants. I often hear accountants tell clients who begin earning more income from the E quadrant to buy a bigger house so they can receive a bigger tax break.

Who Pays the Most Taxes? America was founded out of tax protest. Have they forgotten the famous Boston Tea Party of ? He was angry about taxes and refused to bow to the tax collector.

And then there was Lady Godiva. She pleaded with her husband, the Earl of Mercia, to lower taxes in her town. Her husband said he would lower the taxes if she would ride naked through the town. She took him up on his ofer. Tax Advantages Taxes may be a necessity of modern civilization, but problems arise when taxes become abusive and mismanaged. As millions of baby boomers begin to retire, they will shift from the role of taxpayers to retirees and Social Security recipients.

America and other great nations will decline inancially. Individuals with money will leave in search of countries that welcome their money, instead of penalizing them for having it. I sold three pieces of real estate and put them through a Section exchange under the U. Internal Revenue Code. I never touched the money.

I just reinvested it into a much larger property. As I said, not all income is equal. Some income is much less taxed than others. I earned my million in this quadrant. Get Rich Quickly For Kim and me to go from homeless to inancially free quickly meant earning our money in the B and I quadrants. In these quadrants, you can get rich quickly because you can avoid paying taxes legally. And by being able to keep more money and have that money work for us, we found freedom quickly.

You need to go beyond job security and know the diference between inancial security and inancial freedom. As you know, my highly educated dad was ixated on job security, as are most people of his generation.

My rich dad never talked about job security. He talked instead about inancial freedom. Many spent years in school and years on the job gaining experience. Knowledge is power, and when an opportunity presents itself, they will be prepared to act with conidence. If we had only one leg, we would always feel wobbly and insecure.

By having knowledge in two quadrants, one on the left and one on the right, we tend to feel more secure. People who know about their job or their profession only have one leg. Every time the economic winds blow, they tend to wobble more than people with two legs. Just as we study at school to learn a job, I suggest you study to become a professional investor.

Legally avoiding the taxes is easy. A second path to inancial security could be: And this is what inancial security looks like for an S: he average American millionaire is self-employed, lives frugally, and invests for the long term. Two Are Better han One Back in chapter two, I discussed how the average rich person earns 70 percent of their income from the right side and less than 30 percent from the left side.

Both are ireighters who work for the city government. Not bad for a government employee with four kids. Again, not bad for a government employee with two kids. Both friends have enough passive income from their 20 years of investing to have retired by age 40, but they both enjoy their work and want to retire with full beneits.

Money Alone Does Not Bring Security I have met many people who have millions in their retirement accounts and still feel insecure. If that money disappears and their working days are over, what do they do then?

In times of great economic change, there are always great transfers of wealth. And that means getting educated now. It is the path to inancial freedom. You are free to work or not to work. Your knowledge in these two quadrants has brought you complete physical freedom from work. Kiyosaki Submitted by: Jane Kivik. Read Online Download. Kiyosaki by Robert T. Rich by Ben R. Kiyosaki, autor de Padre Rico, Padre Pobre , el libro 1 de finanzas personales.

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