In the book, he talks about 7 levels of investors. He bases the levels on the levels originally conceived by John Burley. The Burley version is here.
Kiyosaki's 7 levels are:
Level 0: Nothing to invest (or, not really investors)
Level 1: Borrowers ("underwater" and "over-leveraged")
Level 2: Savers (opposite of borrowers)
These are people who hoard cash because they are afraid to lose it. They favor low-risk, low interest, low return investments. They fear debt because they have never learned the difference between "good debt" (debt that builds assets) and "bad debt" (debt to consume, which will consume you if it gets out of balance).
Level 3: "Smart" investors (aka, investors who are too smart to really learn how to invest the right way.)
Level 3 is divided into 3 subcategories:
3a: The "I can't be bothered group." Closed minded people who are not interested in learning how to make money work for them. Only know how to work for money.
3b: The Cynic. Negative thinkers who will discourage everyone around them. They can sound intelligent, but their fear of risk keeps them from jumping on an opportunity at the right time.
3c: The gambler. Loves risk, but tends to rely more on luck than due diligence. They end up losing most of the time.
Level 4: Long Term Investors. These investors are the first level who can bee considered investors in the true sense of the word. They have a goal and a vision for what they want from to receive in the future from their investment of time and money today. They invest their energy to develop a long term plan and they are actively involved. They tend to be conservative investors. Living below their means and following a debt free lifestyle provides them with excess capital available for investing. Kiyosaki mentions the book The Millionaire Next Door, which offers a thorough analysis of level 4 investors. I recommend the book for anyone who wants to learn more, or for help to get started at level 4. Fans of Dave Ramsey are taught to invest at level 4.
Level 5: Sophisticated Investors. Investors who have a solid financial background. They know how to invest for high returns and they are not afraid of risk. They have learned how to evaluate risk. They are learning the rules of the game of money by making deals and growing their asset base.
Level 6: Capitalists. The top percentile. The most successful of all investors. They make money using other peoples money. They have created systems that bring them income without their direct involvement. They employ people to work for them (4 hour workweek). Money and deals are attracted to them because they have vast experience and a track record of high returns.
Level 4 is the starting point of all long term wealth creation. Which level are you?
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