Money Making Online

Based on Kiyosaki’s work

Every day in the world, billion dollars are looking for a home. They are money changing hands and, in most cases, they pass from the hands of people in the left side of the cashflow quadrant (employees and self-employees) to the hands of people in the right side (business owners and investors).

Somebody could say it is not always in this way, because somebody has to pay to the employees and self-employees. But what we can also say is that when an employee is paid, usually the owner of the business where this employee is working has already earned enough money to pay for this employee and besides he has a revenue for himself by using the other people’s time. Likewise, usually when a customer pays to a self-employee, he pay money for a benefit (product or service), and this benefit is produced by investing time and effort of the self-employee: it is only an interchange of people’s assets. There are exceptions, but those are rules of the capitalist world in where we live.

We can say this: In general terms, the money flows constantly from the left side to the right side through assets like profitable businesses and the investments. On the other hand, the employees and self-employees earn the money through another type of asset: their own time and their own knowledge.

This money movement from the left side to the right side in the cashflow quadrant is observed not only in the labor or commercial world. The money also changes hands by means of a mechanism which, although is “perverse” for many people, it really constitutes the way to win the money game: the debt.

Let me ask a question: who do you think is winning the money game? The person who must pay the debt or the other one who receives the payment of the debt? The common sense tells us that usually who receives the payment of the debt should be the winner in many cases.

That doesn’t mean good debts don’t exist. If you get in debt to acquire assets by a financial scheme where the cashflow covers the monthly payments and besides it produces a revenue, the money game has two winners then: you and your creditor. When finishing paying the debt, your creditor will be happy because he made money with the interests of the debt and you will also be happy because you bought an asset by using the money of other person: your creditor.

Only a few people think seriously about this and most people make financial errors by getting bad debt: a debt to buy liabilities or things that don’t produce incomes, only expenses. Day by day we see some people getting in debts to buy a car that lose an important part of its value at the same moment when it leaves the concessionaire. And unless the car be used to generate a monthly income higher than debt payments, these people will lose some money every month while they are working harder in order to pay for something that doesn’t give any financial recompense. (Of course, many people will say it gives them status and comfort, but actually in terms of financial freedom, the status and the comfort don’t say much about the success of somebody).

The same thing happens with the houses and mortgages. People fight to pay their houses during years and they think it is their more important asset, and for that reason they pay their mortgage gladly. Although to pay for a mortgage is more preferable than to pay rent every month without receiving some financial recompense, the wrong thing is to believe that our house is an asset. An asset is really what puts money in your pocket. On the other hand, your house, the same as a car, only generates some expenses unless you rent it with an appropriate price.

The bankers understand the money game very well. The business owners often also understand it. They know if more people owe them, then they will have more possibilities to become richer.

If you want to have financial freedom, you should acquire true assets. And when you get in debts, make sure that those debts pay for your assets that, in turn, can generate you a monthly cashflow higher than the payments you must cover.

Those are the good debts. In that way you can win the “perverse” money game without being owner of a bank or a moneylender.

Tags:
Robert Kiyosaki

Based on Kiyosaki’s work

In the world of the investments, many people act in a mistaken way by conceiving the investments as a random game or as a really risky and really complicated road for the money. For that reason, the fear and the financial instruments of low profitability are common for many people who lose daily opportunities to forge a quicker road toward the financial freedom. According to Robert Kiyosaki, there are 7 levels of investors we describe in the following paragraphs.

Level 0: Those that don’t have money to invest because they spend everything that they earn or even spend more than what they earn. Half of the adult population is in this level.

Level 1: The slaves of the debts. Their few investments are corroded by a lot of “bad debts” they accumulate along their lives. They live by borrowing to the banks, family and friends. Many times they use the loans to pay other debts, and then they stay in a vicious circle. If they earn more money, they get more debts and often they like to elevate its level of life with some luxurious things but at the end of the day they don’t get assets in order to generate monthly cashflow.

Level 2: The savers. They hate the uncertainty and prefer the security without risks and for that reason they put their money in a saving account or invest in some financial products with low profitability. Often they are very frugal with the cents but at the same time, by having money growing so slowly, they are not very frugal with one of their more important assets: the time. Saving is a good idea, but if your only investment is a saving account, likely you don’t have planned to retire in your early age, and rather you plan to work until the pension age. It is a slow race.

Level 3: In this level we have those who have some basic knowledge about finances and they prefer the investments that are packed for the masses: the 401(k) plans, the mutual funds designed for the public and the most popular stocks of the moment. Here also we found “the cynicals” who read many newspapers and financial magazines and get informed by mass media; however they never take a big risk because they think to know the reason why each risky investment will be a failure. Finally, here we found the stock market gamblers who think that people who become rich simply achieve it because they are lucky and therefore they see the stock market like a random game the same as to play poker in Las Vegas.

Level 4: Long-term investors. They know the important thing is to begin early to plan their financial future and they take the control with a carefully designed plan. Although some of these investors don’t have a strong knowledge about investments, they can find some expert advisers (brokers and good firms) to choose investments that guarantee long-term earnings. Although their investments are conservative and with low risk, those are also solid and later these investments will guarantee a financial future less difficult than the one that they would have if they are only saving for their retirement. If we don’t have a strong knowledge about investments yet, but we have some small or big money surplus we should begin to invest as a investor of this level and as we improve our financial education and our experience, we can go up in our level.

Level 5: The sophisticated investors. They are the investors who have the education and the appropriate experience and, besides of that, they have the available money surplus to invest; therefore they can take enough risk for a really good recompense and often they earn high yields giving them much more money to create more assets and more investments. These investors get financial wisdom by means of the experience during many years, therefore they can minimize the investment failures and they learn to intuit if an investment has good possibilities. They take the last decisions, not their brokers, although they are surrounded by a group of good advisors.

Level 6: Capitalists. The capitalists are the true masters of the investment. They have all the characteristics of the sophisticated investors, but besides of that they are able to create the investments, so people can buy those investments. For example, they create successful businesses and later they sell shares of these businesses to the public in the stock market, and often they become vastly rich.

What level are you in? Can you identify the level of your friends or known people?

Tags:
Robert Kiyosaki

Based on Kiyosaki’s work

According to Robert Kiyosaki, in the money world the 90/10 rule has prevailed most of the time: 10% of people are controlling 90% of the money. If so, we are talking about 600 million people that have 90% of the assets and the circulating money of the world. Many of those 600 million people are business owners or investors.

Just look around you and you will understand the 90/10 rule. Partly, that happens because a lot of people don’t have the appropriate education to look for financial freedom.

If you look for financial freedom but you are not rich now, it is clear that you need to be educated to get it. And unless you become a lucky star in the world of the investments, you need to create a bridge that allow you to pass from the economic dependence to the financial freedom: you need a SYSTEM.

The money-making systems are difficult to create and they require much hard work at the beginning. But once they start to generate revenues, if they have solid foundations, acceptable conditions in the market and some luck then you will be able to delegate its operations in other people so you can think about growing the system and making more money. This is what the true business owners do: they use or buy the time of other people to operate their systems.

There are three ways of having a money-making system to look for your financial freedom: by creating your own system, by buying a franchise or by joining yourself to a network marketing system. Let’s see the advantages and disadvantages of each one.

The creation of your own system is probably the most admirable of all the ways. If you build your own system and that is successful, you can end up becoming an extremely rich person beyond what you can imagine. The satisfaction is enormous when your own system is able to have a strong impact in the community where you live, or even in a global level. However, you need a strong dose of creativity and perseverance, a lot of perseverance. You should know that when somebody is building his own system, the failure is really probable at the first intents, but in turn each failure is an approach toward the success. To build a system from scratch will require a lot of effort from you in the initial stages: you must dedicate many hours in the bases construction and fight with many inconveniences that will come. However, keep in mind that when your own system achieves the financial success and you find appropriate people to manage it, many of your dreams will be true and you will achieve the financial freedom.

Another of the options is to buy a well established and proven system: a franchise. When you do this, you avoid the hard work and the inconveniences of the first stages of the system creation, because the franchise is given with the guides for the established operation, a well-known brand, prestige and with a proven business model that works. You will be able to focus yourself on finding the best people to run the business and being most competitive in order to generate every time bigger revenues. The obstacle with the franchise is that most of they require a strong investment of money and maybe you don’t have the money or the necessary credit. Many franchises of famous companies can cost more than $100,000.

Finally, if you don’t have the necessary money or the credit to create the business of your dreams from scratch or to buy a franchise and besides you think you need a training before becoming a true business owner, you could consider a network marketing system. This option is perfect for many people, because if the system is good, you will be trained for some important matters like the sales and the marketing and, besides of that, in order to join yourself to these systems you will probably need less than what an average person earn per week in a average job. Basically, to become a member in a network marketing system is like buying a personal franchise with an incredibly low price. The obstacles of the network marketing systems are the scams: systems deceiving many people. For that reason you must investigate all the options before joining yourself to a network marketing system. Here you have some tips about investigating a network marketing system.

And don’t forget this: Internet also allow us to build other systems based on revenues by advertising, whenever you can build a website with enough traffic. That can be very interesting but you need some skills like those that we constantly comment in this blog.

Tags:
Robert Kiyosaki

Based on Kiyosaki’s work

One of Robert Kiyosaki’s iterative topics is: to obtain financial success it is necessary to concentrate on the right side of the cashflow quadrant (see image): by being a business owner, a professional investor or both.

If it is this way, it is necessary to ask: Why then are most of people (near 90%) in the left side as employees, independent professionals or owners of small business that themselves operate? The primordial reason is that our obsolete educational system of the industrial era continue training to the children and young people for that.

When we are students, it is really little and sometimes null the knowledge imparted about the creation of a company or the investments. In fact, in the high school it is very little the knowledge imparted about finances in general. The school continue inculcating that the people be trained to be a successful professional, but that implicitly indicates that they are training themselves to look for an employment.

Perhaps in the past, this education way was adequate. Mainly when the industrial era continued in peak and great quantity of companies needed manpower and employees of all level for its production chains. But nowadays, with an economy every time more based on the services and the knowledge, this education way is dangerously obsolete by two main reasons.

The first one, is that the world is having some big economic changes that often force to the countries to disregard some social investments by focusing themselves in the market so the market hopefully can improve the quality of people’s life. This, in spite of being something controversial, it is not disheveled completely, because the business competition has achieved that some countries like India or China are walking quickly toward the progress. The problem is that, to the interior of its societies, the more benefitted people, almost always are the people with skills in the areas of the knowledge (as the computer science), the creation of companies and the good financial administration. The other people, although many are into what we denominate the middle class, continue clinging to the security of an employment, either to finish paying their growing debts (consumption debts in many cases) or to survive in the case of the poorest people.

The second reason, is that the technological changes have had negative effects for the industrial world as for the generation of employments refer and other very positive ones as for the opportunities that people have today to start a business, by being helped by the technologies because in this way the companies can even be created with very small costs.

For the first thing we can see the news about jobs cutting in the big companies motivated by fusions or simply in order to transfer production systems from a country to another so they can save costs of manpower. On the other hand, we have examples of virtual companies like YouTube being acquired by big companies or people making more money than many employees without leaving their houses by using systems of online advertisement as Google Adsense.

It is not easy to defeat this paradigm of the employment security . However, many employees and self-employees know that they are not safe completely. Nowadays, nobody can guarantee that our pensions will be sufficient in order to live well in our old-age and it is less certain that our boss can guarantee us that we will always have an employment. However, even with that fear, many people are clinging to their job and getting many crazy debts in order to buy things that they don’t need or simply by living from a check to other and spending a lot of time in offices or factories without a real financial objective in their lives.

And in spite of that, many people are not interested in learning the bases of the businesses or the investments.

What do you prefer? The freedom or the “security” in an employment? I prefer the freedom clearly. And in the financial field, it is not very probable that the freedom be acquired in an employment. Unless you are rich and have your financial life safe forever, it is necessary to take the great step by creating your own business and when the success arrive, you will do the investments so the money works for you in such way that you don’t have to work for the money and can really live the life. It is not easy. Don’t quit your job yet. You need education. But you also need to take a risk.

What if you begin to create your business in the nights instead of watching television? Remember, today we have a great ally: the technology.

Tags:
Robert Kiyosaki

Based on Kiyosaki’s work

There are 4 types of people as for making money refers: the employees, the self-employees, the business owners and the investors.

However you can extend that division a little to other aspects of the life because these 4 types of ways to make money embody 4 types of personalities, too.

The employees don’t like uncertainty. Many times, they prefer the security from an employment than the opportunity of earning a lot of money by a business that has certain level of risk. They like to have a written contract that assures to them that for one or two years they won’t have to worry about the money because they will have a stable income. For an employee, the security is more important than the freedom. In fact, sometimes it is more important the security than the salary, and sometimes they prefer stay in employments with low-wage instead of taking a risk by being a self-employed or even by going to another employment where they would have a better wage but where they could be only hired temporarily (for example while the business is starting up itself). For many employees the fact of having to work many extra hours, neglecting to the family and even by doing a task that they hate, is compensated with the fact of receiving a “safe” income and saving for their retirement. It is not really that they like to live to work (with some exceptions) but the fact of seeing themselves one day without knowing how they can get money to put food in the table terrifies them. However, many employees don’t think in this: nowadays the job market is so unstable that is really risky to think that our future will always be safe in the hands of the boss, the company or the government.

The self-employees care less the security and they prefer to do the things by themselves, without depending on other people (although everybody always depend somehow on the other ones). Generally, the self-employees think that they are very talented in their profession or business and usually, they are very talented. A self-employee like to work for himself. With a job where they don’t have autonomy, they will get bored and even will become rebellious. Many employees that confront their bosses and discuss the orders belong to this type of person and after their bosses fire them or they abandon their job, many of them go and create their own business where they are generally who do all the tasks: from porter to president of the small firm, because besides of the limitations of resources in order to create a big business, the self-employees usually distrust too much of the other ones and they don’t like to delegate in some employees’ hands their business or to associate themselves with friends in order to create a big company. The problem with those self-employees is that this distrust forces them to work harder than any other person. We can listen from them some sentences like this: “now I work 20 daily hours, but I am satisfied by working for myself and not for my boss”. If that makes them happy, the self-employees can be very prosperous, but many times if they don’t invest their money appropriately so they don’t need to work so much in the future, then they will be aged very soon and will neglect to their families because they must compete with other self-employees and even with big companies. In those circumstances, sometimes the only way to obtain contracts is by lowering the prices in a great percentage although the work is more intense, even.

The business owners love to take risks, whenever the recompense seems big, although it doesn’t mean they do the things in a scatterbrained way because nowadays a true business owner must have basics in topics like administration, accounting, computer science, finances and marketing. It doesn’t mean that they have to be expert in all those topics, but they must know at least its more useful basics. The business owners care less the security and they adore the freedom to create a company and the satisfaction given by the progress. The difference with the self-employees is that the business owners only like to do the most important work: the thinking. They delegate the operations of their company to skilled people in the respective matters. The business owners like to surround themselves with intelligent people and they trust in those. They want to work with the best people. The business owners are leaders. They know that nowadays 9 of each 10 businesses will fail, but even so to think about an employment is not in their possibilities unless they are in an extreme situation. They are always creating and when the difficulties come, they prefer to continue the battle instead of resigning themselves to simply to look for financial security. Many times, we can see a business owner who is not rich with some financial difficulties, with some debts and selling their car to pay the employees. In that point, the employees admire the courage of them but also feel some pity for them. Then, in next years, many times these business owners have a lot of money gotten with the help of the perseverance, creativity and intelligent collaborators. And the employees, on the other hand, will continue thinking that hopefully they always will have a job and be fighting in order to save some money for their retirement.

The good investors hate to cling to the financial security and they are risky by investing the money in order to earn a lot. A real investor is financially free because his revenue overcomes to his expenses and he has enough money and some good investments to live without working during a lot of time. However, they hate to cling to the financial security and for that reason they always are looking for opportunities where the money works harder for them and so they should never work for money. If you really want to become rich, you should be visualized in this level, and need a long-term plan to be here. To arrive at this level we need three things: education, experience and money surplus. The good investors know about finances and accounting, they know how to read financial reports, they know about the Stock market, they understand the terms of the economy, they are informed, they are not only giving their money to a broker, so he can diversify the investments portfolio and maintain the money in a safe state, they make decisions supported in their advisers in order to invest in businesses that have the possibility to generate some big recompenses. The good investors have experience because during years they have risked with their money by losing it many times and by earning a lot of in other cases; with the years they acquire financial wisdom that helps them when they need to identify good opportunities. The good investors have money surplus; they don’t use the money of their children and they don’t get a mortgage loan to invest; if an investment fails, they will have less money, but the normality of their lives is not affected too much.

I want to be rich and have financial freedom. Then, I want to become a good investor. But, I can not become a good investor if I don’t have money, because one of the conditions in order to have financial freedom is to have money surplus. Therefore, my road to arrive there, is by building businesses that can generate me enough amount of money to begin to invest, first by using low-risk investments and when I have enough money, I will take more risk, and simultaneously I will learn topics like the accounting, finances, stock market and economy.

It is not an easy task, but if I don’t win the lottery or I don’t get an inheritance, I don’t see another road.

The good news: with Internet there are many more ways of creating a business without having a lot of money and with the advantage of the exponential growth that it give us. What do you think?

Tags:
Robert Kiyosaki