Congratulations…You have made your decision to get rich. You have probably set a financial goal for yourself…
Before you start building your financial wealth, its time to re-examine your mindset on why you want to get rich. Is your current mindset constructive to helping you achieve your goal? What is the correct mindset? What is the definition of wealth? How should you achieve it?
In “Rich Dad Poor Dad”, Robert T. Kiyosaki gives a very good definition of what determine a wealthy person (its in my own words, so if you want the whole story, PM me to borrow the book from me, or purchase your copy from the link):-
“A person’s wealth is not defined by his current net worth or his salary but by his ability to make his money work for him”
In his game “Cashflow”, he shows the player why this is so, and also proves that a low salary worker could attain financial freedom as quickly as a high salary worker. Interested in finding out more? Gather a group of friends and arrange a weekend with me to play the game. It will give you alot of fun and give you an idea of what can be done with your money.
Now, let me put things into perspective. There are many ways to be financially independent. Even though I am planning to go into business, I have since realized that you can become financially independent by staying with your job. However, the story does not end here. Even if you stay with your job, you still have to invest in your own financial education. To me, this is the real millionaire mindset, to never stop learning and improving on his own financial education. How can you be financially independent then? Read up “The fundamentals” and see how three years back, as a fresh graduate with ZERO financial knowledge and only investing in a risk adverse way, I went from zero, to $350k in net worth.
Knowledge is something which you have to gather over the years, and frankly the more I learn, the more I realize I don’t know. This is true for alot of thing, but especially true for my financial education, for which I am really grateful. Every book I read, every decision I make on investment pushes me along the path to financial freedom, of which the one which has helped me the most is “Rich Dad Poor Dad”, which gave me the basic mindset of buying and selling properties. Its also because of this mindset which is the one I am drawn to that created the strategy I have taken to move myself along the path to financial freedom. Are there many paths? Oh you bet!!! However, I have broken them to a few broad categories:-
1. Cash Flow
2. Capital Appreciation
Short Term
Long Term
3. Cash Flow AND Capital Appreciation
Cash flow investors generally invests for cash flow, be it rental, dividends, mature businesses, fixed deposits, bonds and securities. The exact definition is seen in the following topics, but these people are interested in generating constant income to sustain their expenses or investments.
Capital appreciation investors generally invests for increase in prices, be it stocks, commodities, properties or unit trusts. The difference between the short term and long term investors is their investment philosophy, and their willingness to take risks.
People who invest for both are generally more risk adverse, and willing to wait for longer time to get good returns, especially if the investments generate good short term returns as well. I happen to fall into this category, and hence creates new strategies for various vehicles to actually meet my expectations.
I’ll update this section as I move along my route to financial freedom, and will share my learning with you, so drop by here for updates.