Albert Einstein put it best when he gave his definition of insanity. He said, "Insanity is doing the same thing over and over and expecting different results". Yet although many people are struggling financially or are living comfortably but find their financial situation to be stagnant, having such a rough time getting out of the rat race and onto the fast track towards financial freedom? The answer is simple but most people don't want to hear it. You cant solve tomorrows challenges with yesterdays methods. Robert Kiyosaki breaks our economic classes into four quadrants. On the left side you have employees and the self employed. On the right, Big business and Investors. This is where the 90/10 rule comes into play. On the left side of the quadrant (the employees and self employed ) is where 90% of the people are. Yet this group of people only makes 10% of the money. On the right side of the quadrant (big business and investors) is where the remaining 10% of the people are. Yet they make 90% of the money. Which side would you rather be on? Most people would agree that financial freedom is achieved on the right side of the quadrant. If that's the case, why aren't more people on that side? Because people are following the same old school ideas that their great grandparents used when it comes to personal finance. They are taught to go to school, get good grades so they can get a high paying job and climb the corporate ladder. Then save their income, maybe invest in some high yielding mutual funds or stocks and flip a few houses. I can tell you exactly why these ancient strategies have almost become obsolete in today's economy.
Why savers are losers... Simply put, when you put your hard earned money in a savings account, you are rewarded with a small amount of interest for keeping your money deposited. This way the bank has more money available to lend out to other "customers". However, this interest rate is rarely even close to half of what the national rate of inflation. So while you may be making a few extra bucks here and there for keeping your money deposited, the overall VALUE of that money continues to decline.
The not so mutual funds.... Ever since the US decided to go to a defined contribution plan (which is another discussion entirely) employees have been getting double and sometimes triple taxed on their own money. They simply hand a portion of their earnings over to another company to invest in various stocks and commodities. Then, they are taxed on that same money when they withdrawal it. I don't even have to mention how volatile the stock market is. Just look at its performance over the past five years.
leave the flipping to the gymnasts... Another interesting observation over the past few years is how many people talk about the housing market. Most people don't understand the difference between cash flow investing vs capital gains investing. When you flip a house (buy a fixer upper and put some "sweat equity" into it and sell it for more than you paid) you have to pay a capital gains tax. If you flip a good number of houses during the year, you can tack on a few more taxes due to the IRS claiming your flipping as a business. Worst of all, if the housing market does go down, try selling that house for a large enough profit margin to make it worthwhile). Now if you were to fix that house up and rent it out for at least $200 more than your mortgage payment, that is smart cash flow real estate investing.
A Solution Backed by Experts.
As I mentioned earlier, It would be in every ones best interest to move to the right side of the quadrant. What if I told you that there is the perfect vehicle to get you there. All you would have to do is get in and drive. A vehicle backed by financial geniuses like Donald Trump, Warren Buffet, and Robert Kiyosaki? Such a vehicle exists. Its called Network Marketing.
No comments:
Post a Comment