Cashflow Quadrant Explained
Cashflow quadrant explained: Have you heard about the book Rich Dad Poor Dad by Robert Kiyosaki? See, in this book, he introduces the Cashflow Quadrants.
What is it and how do you use it?
That’s what we’re going to talk about today.
Have you read the book Rich Dad Poor Dad? If you have, type in a ‘yes’ in the comments, and if not, just say ‘not yet.’ I highly recommend that you read it if you haven’t already.
So, what is it about this cash flow quadrant that is in the book?
Robert Kiyosaki says that we all fall into one of these four quadrants:
This is where we are employed, meaning that we exchange time for money, which by the way, is the worst thing that you can do, right?
Being employed means that you’re making somebody else rich. Don’t get me wrong, it’s a good way to get started. This is how I got started.
I used to work for IBM, and it’s a good way to make some money to move into one of the other quadrants.
S means that you are self-employed, and this means that you don’t have a job.
Actually, it kind of means that now you are no longer making somebody else rich,now that you’re working for yourself.
But let’s be honest, for those of you who are self-employed, how many of you can really take a six-week vacation and your business is running without you?
Often being self-employed just means that you’re working the same hours as being employed, or even longer hours, right, and you are your business.
When you don’t work, you don’t make any money. This is where Robert Kiyosaki says on this side, it is all about active income. You don’t work, you don’t make any money.
The idea here is to move to the other side of the quadrant.
B means that you own a big business, have employees and a team and you have systems that are working hard for you.
And it’s always the dream of those in the S quadrant to move into the B quadrant.
But as we all know, it is not that easy, and most business owner get stuck in the S quadrant where they still produce active income.
On this side here, we are talking about passive income, and building a business that actually produces money for you is one way to do this.
The last quadrant is I, and it means you’re an investor.
Investor means that you have money working hard for you. And this is what really attracted me.
When I still worked at IBM and I was an employee, I realized that if I am not rich, I am making somebody else rich.
I wanted to move as quickly as possible from the E quadrant into the I quadrant, where money works hard for you.
What does it mean being in the I quadrant?
It simply means that now you find a way to invest money that produces a return for you.
There’s only two ways you can do this.
One of them is obviously trading. Trading stocks and options. And the other way, for me, is investing in real estate.
Now, I’m doing both and trading is my favorite way to generate an income, and have money working hard for me, and here’s why.
When trading, you don’t have to deal with tenants or blown water heaters and AC’s.
If you’re new to this whole game of generating an income with money, when trading you can get started with only $10,000.
These days, if you want to invest in real estate, you need to put 20% down. So if you want to buy one home for $200,000, it means that you have to bring $40,000 to the table.
Now, I own two apartment complexes that I bought for 2.8 and 2.3 million dollars so combined 5.1 million dollars. Right now, I am selling them.
They are on the market for 9 million dollars, so this is where money is working hard for me, where money produces money for me.
The thing is, I’ve been trying to sell these apartment complexes since probably November last year.
Which of the two makes the most sense?
I mean, this morning I sold BOOT. It was one of the stocks that I wanted to sell, and it was really easy.
This is why even though I am making millions investing in real estate, I prefer trading stocks.
It’s much more flexible, and for me personally, it gives me more control and less dependency on others.
The idea here is if you don’t find a way to make money while you sleep, you will work until you die.
So, this is why I highly recommend that you find a way to go from where ever you are in this quadrant, especially if you are on the left side, to the other side.
If you’re still employed, find a way to have money working hard for you.
I believe the best way to get started is trading stocks and options.
There’s only 3 things you need to know when trading stocks and options.
- What to trade
- When to enter
- When to exit
I have a software that makes it easy for me to know exactly what stock I should trade. It’s called the PowerX Optimizer.
If you’re interested in this, and would like to learn more, please go to www.mytradingroutine.com
That is where I explain in detail how I find the best stocks to trade, when to enter and when to exit – with a profit or with a loss.
These are the only three things you need to know when trading, and compared to investing in real estate, sounds much easier to me.
It’s much more doable, especially if you’re new to trading, and if you’re a beginner.
Find a way to get started.
If you don’t find a way to make money while you sleep, you’ll work until you die.
I believe Robert Kiyosaki’s Cashflow Quadrant is a great illustration on how to do this. And there you have it: Cashflow Quadrant explained!
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