This explains the 4 quadrants of “E” Employee, “B” Business Owner, “S” Self-Employed and “I” Investor. 

It helps you to identify which quadrant you are in and if it is the best one for you?

The book CashFlow Quadrant will help you chart a course from Left side of the quadrant to the right side of the quadrant.

This book is a continuation of the book Rich Dad Poor Dad which should be the first book you really read in Robert Kiyosaki’s series.

It is important to remember that each of us resides in one or more of the four quadrants.

The book CashFlow Quadrant is divided into 3 parts:

• Part One: Explains the core difference between people in the four quadrants.
• Part Two: Talks about personal change, about who you have to be, not what you have to do.
• Part Three: Defines the seven steps you can take to get to the right side of the quadrant.

Part Three is where it really gets exciting as  you cover the:

The Seven Steps to Finding Your Financial Fast Track.

1. It’s Time To Mind Your Own Business.
2. Take Control Of Your Cash Flow.
3. Know The Difference Between Risk and Risky.
4. Decide What Kind Of Investory You Want to Be.
5. Seek Mentors.
6. Make Disappointment Your Strength.
7. The Power Of Faith.

Each one of these Seven Steps, really re-inforces what we do in network marketing.

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In Accountancy an asset is defined as ‘‘a resource controlled by the entity as a result of past events and from which future economic benefits are expected to flow to the entity.’’

A liability also defined as “present obligation of the entity arising from past events, the settlement of which is expected to result in an outflow from the entity of resources embodying economic benefits’’.

These are the classroom definitions and technical for those in the Accountancy field and these definitions are mostly related to assets owned and liabilities owed by corporate entities.

Human beings, as we are, we also have personal assets and liabilities and we can define them in our personal ways that would give us better understanding. This would help us take proper personal financial decisions.

Now let’s look the definitions given by one renown American Entrepreneur, Writer and Teacher, Robert Kiyosaki. Roberts defines an asset ‘‘as anything that puts money into your pocket and a liability as anything that takes away money from your pocket’’.

Robert’s definitions are great and relate to our daily lives, because as human beings we make, spend or waste money every day and we need to know the differences between assets and liabilities are. When we spend money, we should spend it more greatly on assets and very less on liabilities.

Whether it is personal or corporate expenditure, the quest should be to spend more on buying assets rather than wasting the little funds on liabilities that drain us and our organizations financially.

Some assets to buy are:

• Hotels, hostels, hospitals, guest houses, office complexes, schools, colleges, churches, universities that bring money home
• Pieces of land to sell later for more cash
• Building houses and rent them out or sell them for more cash
• Pharmaceutical shops for sale of drugs, shopping malls, sheds, stores, warehouses, that bring money home
• Taxes, buses, trailers, articulated trucks, aero planes, ships, trains, that bring money home
• Build companies in any industry that will bring more money home
• Treasury bills, fixed deposits, call accounts, mutual funds, unit trusts, real estate investment trusts (REIT) these can bring more money home
• Specific assets that will defer tax payment for your organization
• Diamond, gold, and other available minerals whose value will appreciate depending on the world market price to bring more money home
• Farming-cocoa, cotton, coffee, onions, carrots, cabbage, lettuce, spinach, cassava, plantain, banana yam, potatoes, millet, sorghum, beans, maize, wheat, mangoes, guava, oranges, peas and avocadoes, pawpaw, watermelon, palm nut, coconut, shea-butter nut, all edible berries to sell for cash
• Constructions of dams, boreholes, wells, canals, lakes, swimming pools and others to rent out or even sell them for more cash.

Liabilities by Robert’s definition: they don’t put money into your pocket

• Personal effects, TV set, home theatre, personal car that does not get maintenance and fuel allowance from the work side.
• All the things that would take away money from your pocket are liabilities.Any time, you have some money to spend, ask yourself whether you are going to spend on buying an asset or acquire a liability.

To be financially free now and in the future, we should buy more assets than liabilities.

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• Real estate in your retirement portfolio (money.cnn.com)

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Robert Kiyosaki, John E. Lang and others explain how to create and keep your wealth.
Learn how to change your thinking and make money in this troubling economy.
This private event was avaliable to a select few.

Watch video part 1 of 3

Watch video part 2 of 3

Watch video part 2 of 3

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A lot of Americans aren’t going to have enough money to retire on. That is just a un happy reality of these times. Instead of bemoaning that reality (and the unfairness of it all) the best thing someone who hopes to have a healthy retirement can do is simply make sure they aren’t the typical American. We must take actions to assure they will have enough income to enjoy their life and pay their bills, as well as those increasing medical bills.

The best way to avoid becoming one of these Americans who end up working at some remedial job through their so-called Golden Years, according to Robert Kiyosoki, author of the “Rich Dad Poor Dad” book series, is to buy investment property.

Investing in real estate is a wonderful way for people to prepare for retirement because it supplies a great benefit called “passive income”. After someone has laid the ground work, passive income keeps coming in without a lot of effort. A laborer gets compensated only for the hours he puts in. A real estate investor, after setting up his system, gets paid for keeping it running. And keeping it running, if he been wise about it, will involve paying his team to do the job of inspecting them every now and then.

A great thing about passive income (such as from investments) is, the more time the real estate investor holds them, the more ROI they should make for her, with less and less work on the investor’s part. It’s the closest thing to the “Holy Grail” of the world of money.

It sounds attractive, but we shouldn’t just take the plunge. And even though it is completely learnable, there’s quite a bit to learn when one is thinking about buying investment property – things like comprehending P&L statements and real estate law. The biggest concept to learn, however, is one’s own limitations. The individual who understands where to find the knowledge he wants is far better off than the individual who remembers tons of facts and formulas around in her memory.

In the book “Cash Flow Quadrant,” Robert Kiyosaki advises potential investors to increase their cashflow in addition to their knowledge. He writes of developing a business system that can be set up and left alone, freeing the investor to move to the next step instead of investing all her time working in her business. The next step involves continuing the real estate education and start to look around for specialists to employ and investment properties to buy.

Robert Kiyosaki also talks about this change as transitioning from one part of the cash-flow-quadrant to the next. He emphasizes that, the 1st step someone needs to take toward transforming her life is altering the thinking process. If someone adjusts the way he/she processes the thought of money, then he/she will wind up in a better position to change his relationship with it.

The way someone thinks determines the actions they take throughout the day, and those actions determine their success. The primary benefit of reading books like Robert Kiyosaki’s “Rich Dad, Poor Dad” series – brings you closer to new ways of thinking about stuff. When investors see how easy it is to develop new skills and acquire better knowledge, they are virtually unstoppable.

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Investment In Property Can Help You Retire

I remember a lot of comments from readers and also from people I meet in person who tell me that they are just looking for a place to live and are not really looking for a real estate investment.

My default answer is “Why not treat your first home as an investment?”

In reality, once you buy a property, you become a real estate investor. Buying a home is often considered to be the biggest investment one can make so it’s best to treat it as a real investment — one which will give you reasonable returns if you do decide to turn it into a rental property or if you sell it further down the road.

What are reasonable returns?

Normally, when a person buys a house which he intends to live in, he does not consider how much rent he would earn if he decides to rent the property out, and whether the possible rental income would be more than his monthly amortization. It is not uncommon for a homeowner who moves up the corporate ladder or improves his situation to move to a better home but keep his first home for sentimental reasons.

Thus, if in the future, the homeowner decides to move to another house and converts his first house into a rental property, the rentals are often not enough to cover the monthly amortizations, thereby producing a negative cashflow situation.

Had the homeowner considered his first house as a real investment, he could have dedicated more time to finding a property that would fetch better rental rates which could cover the monthly amortizations, thus giving the owner a nice positive cashflow.

More often than not, factors that may affect market values and appreciation are not given too much attention by a home buyer as the primary goal is just to have a place to live in. When the time comes to sell the property, it is very likely that there is little or no room for significant profits.

At times, the homeowner may even have to sell at a loss. This situation could have been avoided had the home owner considered buying a property that was way below market value*.

*-”Market Value” is the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently, and without compulsion.

Buying a property below market value would be in alignment with what Robert Kiyosaki often says, which is “You should make money when you buy, not when you sell”.

 Money is made in the form of equity* at the time the property is bought and the profit is realized when the property is sold. Robert Kiyosaki is the bestselling author of Rich Dad Poor Dad.

*- Equity is the difference between a property’s current appraised value or market value and the loan principal balance

The opportunity is there so don’t waste it

Everyone at one point or another will really have to buy his or her own home so why not make the most out of the opportunity? If done well, one could gain passive income in the form of positive cashflow, or a significant profit, or both. At the very least, the education one can gain from treating his first home as a real estate investment is priceless.

It is virtually risk-free

Since initially the goal of the home buyer is to have a place to live in, he would not really be concerned with holding costs associated with properties that take time to lease or sell. He/she lives in the place anyway so this makes it virtually risk-free in my opinion.

In fact, I apply the same strategy to all of the deals that I have done this year as my last fallback would be to live in the property just in case I am unable to sell or rent it quickly.

The challenge in deciding to live in one’s investment property

If one decides to live in his/her own investment property, chances are one will have the tendency to  fall in love with the property and over-improve it. I guess that’s the only risk that one should manage. Falling in love with a property can cloud one’s judgment and introduce costly improvements that one might no longer be able to recover.

If your first home is good investment, it can lead to more investment properties

If one buys his first home as an investment and not just as a place of residence, it can help ensure that more real estate investments would follow or at least it won’t prevent the homebuyer from buying more investment properties. Believe me when I say that buying a home that costs too much and is considered to be a liability can really hinder one’s ability to build enough capital to buy the next investment property. This is based on first-hand experience.

Ready to buy your first home? I wish you successful investing!

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Treat your first home as a real estate investment?

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