![]() ![]() Level 5: You have a solid financial foundation, so now you pursue bigger, more aggressive investments. You have minimal debt and admire Warren Buffet.Īccording to The Millionaire Next Door by Thomas Stanley and William Danko, most self-made millionaires are Level 4 investors: they own a business, drive a used car and invest in tax-advantaged ways for the long-term. You invest in tax-advantaged ways and take advantage of dollar-cost averaging. Level 4: You have a long-term plan or idea. But deep down, they’re following the crowd. They name-drop - “my brother at Merrill Lynch says …” – so they can feel like a bigger player. Some Level 3 investors read the Wall Street Journal, buy a stock based on a “hot tip”, and think that they’re a player in the game. But you also say things like “I don’t have time to learn about investing,” or “I’ll leave it to a professional.” Level 3: You participate in the company 401(k) plan and you might even have a non-retirement mutual fund or two. saving for a vacation or a house) rather than saving to invest. You save for the sake of later consumption (i.e. You put money into “safe” vehicles like savings accounts, CDs and money-market accounts. ![]() Many outwardly-rich people fall into this category. If you invest, you do it with borrowed money. Level 1: You borrow money to afford your lifestyle. Level 0: You have nothing to invest, because you spend everything you earn. Since many people benefit from self-exploration, Kiyosaki outlines the “7 levels of investors.” Which one are you? Your goal, therefore, is to create a lifetime of self-sustaining wealth. ![]() If your expenses are $2,000 per month, and you have savings of $10,000, your wealth amounts to 5 months. “Wealth is measured in time, not dollars,” he says. In this book, Kiyosaki defines “wealth” as “the number of days you can survive without working … and still maintain your standard of living.” ![]() Instead, they’re conceptual guides on the psychology of ownership, freedom and wealth. That’s why none of Kiyosaki’s books contain how-to information. What kind of mentality do you have: an employee mindset or an entrepreneur mindset? Your mindset matters more than the current source of your income. Most of my income comes from my self-employment, but I play the role of an investor as I foray into real estate. Loads of people – myself included – operate in multiple roles. The investor says: “My team will study the valuation of that company.” The business owner says: “I need to hire a President who will run my company.” The self-employed says: “My rate is $35 an hour” or “I charge a 6 percent commission.” The employee says: “I’m looking for a job with good pay and excellent benefits.” Listen to a person’s words, he says, and you’ll have a window into which mindset they hold: Kiyosaki classifies people into four groups: employees, the self-employed, business owners and investors. It’s an old-school book – at several points, the author advises people to “listen to cassette tapes” – but if you can overlook the obvious 1990’s references, the wisdom in this book is classic. This idea has been kicking around in my head for a few months, but it gelled this week after I read Cashflow Quadrant by Robert Kiyosaki, the bestselling author of the Rich Dad, Poor Dad series. Yet we share a common shortcoming: We aren’t the owners. I write for magazines and websites I don’t own those magazines or websites.įreelancers enjoy freedom people with traditional jobs enjoy security and benefits. Sure, I work for myself. But I still trade my time for money. I watch commuters battle the busy streets while I wear pajamas at my desk. When I started freelancing, I thought I’d reached the pinnacle of worker freedom.Įvery morning I pour a cup of coffee, pull on a warm fuzzy pair of slippers, and plod into my home office. ![]()
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