The only way to easily become wealthy is to become investors. Anybody who makes money and does not know how to invest is likely to become poor sooner than later. The reason investors rule the world is because they do what the average consumer is not prepared to do with money.
Recently, I listened to a video by Robert Kiyosaki where he talked about the seven levels of investors and the characteristics of each of the persons involved. After listening to this great resourceful video, I felt I should share with us what I learnt from the teaching.
Who is Robert Kiyosaki?
I know a lot of you must have heard about this man; but for the benefit of those who haven’t heard about him, I am going to briefly introduce him before going into the main topic of discussion. Robert Kiyosaki is an American investor, businessman, self-help author, motivational speaker, financial literacy activist, and financial commentator.
Robert Kiyosaki is the founder “Rich Dad” company and “Cashflow Technologies Inc.” He is also the author of “Rich Dad Poor Dad” series of books; he’s a financial columnist on Yahoo Finance, and former host of Rich Dad TV on PBS. His Net worth is over $80M. He has written over 15 books and sold over 30 million copies.
Must Read: Top Five Most Successful Executives Under 30
The seven levels of investors
Having understood who Robert Kiyosaki is, it’s time for us to go ahead to know the seven levels of investors out there. According to kiyosaki, these are the different types of investors:
The people who occupy this level have no money to invest. Why don’t they have money to invest? This is because they spend everything they make without reserving any for investments (no savings). So many rich people here spend more than they earn and then become poor in the long run. About 50% of the populace makes up this group.
What I have to say
1.Don’t spend every money that comes into your pocket
2.Always remember to set out a fraction of your income (at least 10%) for investment
3.It is not how much you get that makes you rich, but how much you invest. So if you have the opportunity, invest more.
4.Don’t eat up your future, invest wisely. Inconvenience yourself today to get a secured tomorrow
Level 1 (Borrowers):
My word of advice
1.Stop borrowing because borrowing makes you a slave to your lender
2.Only buy things that are really needed. Save the rest money for investment
3.Financial miracle does not happen; plan your own financial future
4.Stop every borrowing; borrowing prevents you from saving
5.Starve yourself of today’s pleasures and invest to get the best of cars, houses, etc in the future
Level 2 (Savers):
They save to consume rather than to invest. They save money to buy luxury goods like cars, TV, phones, deep freezers, etc. They are always afraid to owe debt, so they save for months to spend on frivolities. They forget that money loses value over the years. These people have deep insecurity running in their lives, but they pretend to save for their children. They invest in low-yield investments. So they are really not good investors. They take life insurance because they love security.
My word of advice
1.Save more money; but don’t consume it. Instead, spend it on new investments
2.Look for real investment opportunities instead of fishing in shallow waters
Level 3 (Smart investors):
These levels of investors invest in stocks, bonds, etc. They are middle class investors but lack financial literacy even though they are academically intelligent people like doctors, lawyers, accountants, engineers, etc. This group consists of three types of investors:
These types of investors convince themselves they are not good investors and cannot make money. These people think making money is too risky and complicated.
Cynics always think that investments will not work. They are intelligent but financial cowards. They believe people would always swindle you. They follow like sheep and take advice from news papers, and only take action when it is already too late (when others have already invested). They buy high and sell low, they come in when greed has over powered their fears. These people infect people around them; they tell you why things can’t work.
These levels of investors are not cautious enough; they have no trading rules or principles. They are always looking for new and exciting ways to invest. They use sophisticated methods of investments. They are the worst investors, losing money 90% of times and never talk about them. They just cast their dice and pray. They are simply lazy at investing money. They want to invest in Oil and gas, penny stock, IPOs, commodity markets, etc. They jump into the game without knowing who the players are or the set rules.
What do I say to you?
1.Stop looking for reasons why investments would not work; look for reasons why they should work instead
2.Stop being over cautious; invest when you see the slightest opportunity to make money
3.Don’t wait till the market is saturated. Entering late means you may never have much to gain
4.Always look for opportunity to invest when prices are low and the possibility to make more gains is high. Stop buying when prices are at the summit, you may never make any gains.
5.Know the players and the rules of the game before investing your money
Level 4 (Long Term Investors):
Long term investors get some financial or investment education before investing. They seek advice from company financial planners. They plan, limit their spending, set goals about retirement, etc. They make use of mutual funds, insurance vehicles, etc. These levels of investors start with small deals and learn to go to a bigger game. Most millionaires come from this level. They are patient and use the advantage of time, saving small amount over a long period of time in order to invest.
Here’s what I have to say
1.Never start with too much money if you have not yet understood the rules of investment
2.Saving small amount regularly is better than not saving at all
Level 5 (Sophisticated Investors):
Sophisticated investors are focused; they have money to invest. They buy investments wholesales. They have sound financial base and they make more income than expenses. These people lose less than 20% of their investments because they have good money habits. They are actually not afraid to lose; they have a team of professional advisers. One of their habits is that they enter the investment market while others are leaving; they take risk. They have plans, attend seminars and understand money. Sophisticated investors teach their children and pass on their knowledge and fortune to the next generations within the family. They are simply known as “Stewards of money”. They control legal entities that own their wealth/assets and still control their wealth even after death.
Here’s what I have to say
1.Act like the sophisticated investor and remain focused
2.See opportunities in the investment market and take them. Don’t ever follow the crowd
3.Invest based on knowledge and not just by instinct. Be a good planner
Level 6 (Capitalists):
Only few people in the world reach this level (just 1 in 100 people). Capitalists create business and investment opportunities simultaneously. They make more money by synergistically orchestrating other people’s talents, time and money. They provide the money that creates investments. Capitalists create jobs and make other people rich. They know how to manage risk and create money; they love the game of money by using money to make money. They do well in good economic times and even do better in bad economic times.
And my final words!
1.Think to become a capitalist someday
2.Don’t struggle to be an employee, but think of how to employ others
3.Never hate money; love money because it answers all things
Poverty does not come from lack of opportunities, instead it comes from failure to recognize and take opportunities. Stop thinking about impossibilities; see a reason why every investment should work.
Success requires financial literacy and ability to take risk. Therefore educate yourself financially and take risk where you know that those risks could bring out something good and worthwhile. Stop waiting for financial miracles to happen; instead plan your financial life and invest when others find it difficult to do so. At the right time, there shall be abundance of harvest.
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