MAKING MONEY ONLINE-SELFCHANGE IL

For the next few week’s I want to

share w
ith you Teachings of the World Renowned Financial Education Coach – Robert Kiyosaki

I hope you will benefit from his teachings. Please read & implement as you read, that’s the only way you can benefit.

Please do leave your Comments and feel free to share

Read on





Change Your Mind, Change Your Life
A New Age
In a broader sense, it’s important to know where you are in history and in the world at large. Christopher Columbus’s voyage of 1492 eventually led to the start of the Industrial Age, a momentous historical shift. At the height of the Industrial Age it was people like Henry Ford and Thomas Edison who became millionaires. I believe that the fall of the Berlin Wall in 1989, some 500 years after Columbus set sail, marked the end of that great age and the beginning of another equally dynamic one: the Information Age. Generations from now, people will look back and remark what a thrilling, tumultuous era this must have been. Computer-industry figures such as Bill Gates, Steve Jobs, Mark Zuckerberg, and Michael Dell are the magnates who typify this new age. It took Henry Ford twenty-three years to become a billionaire during the Industrial Age; it only took Michael Dell three years to become a billionaire during the Information Age—and he started his business part-time.
These are heady times, and frightening for some. The economy’s speedy adaptation to the demands of the Information Age has threatened the financial security of millions of people whose jobs have become obsolete or moved elsewhere. Take a look at the difference, for example, between an Industrial-Age pension plan and an Information-Age retirement plan. In the Industrial Age, companies would employ people for life and give them pensions once their working days were over. Today, companies aren’t giving out pension plans the way they used to. And people are retiring earlier and living longer lives. The rules have changed. Retirees need more financial security and thus more sophisticated ways of building assets than were offered by the pension plans of the Industrial Age. Unfortunately, most people, those who can least afford to keep their heads stuck in the sand, are acting as if the rules haven’t changed.
Take Note
Today, retirees need more financial resources at retirement and more sophisticated ways of building assets than were offered by the pension plans of the Industrial Age.
The 90/10 Rule
Throughout history, 90 percent of the money has been made by 10 percent of the people. For instance, 10 percent of the athletes make 90 percent of the money made by all athletes. This is one of the rules of money that rich dad taught me. One reason the 90/10 rule has applied is that 90 percent of the people choose comfort and security over being rich. Most of these people do not realize they could choose to be rich.
While the 90/10 rule still holds, it’s being challenged by the changing circumstances that the Information Age introduced. Thanks to the electronic revolution, it is now possible for more and more people to gain access to the world of wealth, for wealth now resides in information that flies over the airwaves and computer networks. Information is not restricted to the few, as land and resources were in past ages.
The Internet epitomizes this new avenue toward wealth, for it enables the masses to gather information and interact with one another in almost complete freedom. Today it’s possible for people to take their ideas and build products or services around them. Network marketing, the selling of consumer goods, investing, publishing are only a handful of the thousands of online activities that have been launched by aspiring entrepreneurs and savvy investors.
The pressure of the information age is going to shatter the old 90/10 rule. It has never been easier to choose to be rich.
Take Note
The times are rapidly changing, and if you want to be rich, your approach to money and investing has to change too.

FINANACIAL LITERACY

 Financial Literacy

The most frequently financial advice that is being told is to work hard, save money, get out of debt, live below your means, and invest in a well-diversified portfolio of mutual funds. Do our school prepare us to be financially literate ? Our schools do well at teaching reading, writing and arithmetic, but they are horrible at preparing people to work with money. Nearly every person who graduates from school is financially illiterate. Basically, Financial literacy is the ability to understand how money works in the world

Every rich people who are financially free have high level of financial literacy. The good news for you is you don’t need to be super talented to be financially free. To be financially literacy It will take hard work, a lot of study, and trial and error, but the return will be worth it. The key to becoming financially literate is to understand the four foundational principles of financial literacy.

#1 - The Difference Between an Asset and a Liability

Many people misunderstood the definition of an asset. For example, you probably think your house is an asset, but it’s not. The truth is that just as there are two definitions of an asset.

Accountants use definition of asset as economic of resourse that requires lots of financial knowledge to make people and companies feel richer than they really are whether the asset have cash flow value. 

The rich use the definition of asset grounded in simplicity and reality. An asset is anything that puts money in your pocket and a liability is anything that takes money out of your pocket.

Your house is not an asset because it takes money out of your pocket each month. Even if you own your house outright, you still have to pay for the taxes, maintenance and more out of your own pocket.

But if you own a rental property, that can be an asset, because it puts money in your pocket each month in the form of cash flow. When your tenant pays rent, they cover your mortgage, maintenance, taxes, and more.

#2 - Using debt and taxes to get richer

Your financial adviser or accountant will tell you that debt is bad and taxes are inevitable. People who are financial literate will understand that both debt and taxes can be used to create immense wealth. There are two kinds debt, bad and good. When your financial adviser tells you to stay out of debt, she means stay out of bad debt. That is good advise but they never tell you what is good debt. 

Bad debt comes in the form of borrowing money for liabilities such as using credit cards to buy smart phone or luxury items, which cause your money flowing out of your pocket to pay debt.

What is good debt? Good debt is debt used to purchase assets like rental property. For example, When you use the bank’s money to purchase real estate, you will use less of your own money to pay down payment to secure an asset instead of full price, and your tenant’s rent pays off your debt while you own the asset and pocket the profit for cash flow.

People with high financial literacy understand when it come to taxes that governments give exempted tax codes to encourage specific types of investment. If governments want you to build affordable housing, they give you a tax cut. If they want to encourage oil exploration, they give you a tax cut. If they want to see higher employment, they give you a tax cut. The secret is that most tax benefits are made to help entrepreneurs and investors. With the right financial education, you too can utilise the tax code to not only get richer, but also pay nothing in taxes.

#3 - Cash Flow Versus Capital Gains

Most people invest for capital gains but the rich invest for cash flow. Investing for capital gains is like gambling, you invest your money and hope the price goes up. For instance, many people buy a house hoping they’ll be able to sell it for more money later. In the meantime, they have to pay their mortgage and home expenses. Money goes out of their pocket. It becomes a liability.

The rich invest for cash flow, that it's money flowing into your pocket on a continual basis whether you're working or not. It is your money working for you. And generally, cash-flow investing is based on fundamentals that aren't as susceptible to market swings like capital-gains investments, which means that even in bad times, money still flows into your pockets.

Additionally, cash flow is what is known as passive income, which is the lowest taxed type of income. This is not always the case with capital gains taxes, which vary depending on the type of asset you've invested in and how long you've owned that asset. In some cases, the taxes can be very high. Different investments produce different results. The question is, what results do you want?

#4 - Making your own financial decisions

If you are not financially literate and confident about your knowledge about money, you let others make your financial decisions for you.

You let your financial advisor to decide how and where your money should be invested. They will advise you based on which investment pay them the higher commission. You let your bank to tell you what interest rate is your money worth and you follow whatever investment trend is popular in the news without financial education.

The rich don’t follow the crowds. They set the trends and are gone by the time the trends become popular in the mainstream. What’s their secret? They think for themselves about money and make their own financial decisions because they have a high financial intelligence.

Having great knowledge to act on and great wisdom to know which course of action is the best is the key in building great wealth. By applying yourself to financial education only you can gain this kind of knowledge and wisdom to a high financial intelligence.

The question for you is, are you ready to increase your confidence about money by increasing your financial education? Are you ready to start making your own financial decision?

Extracts taken from Enpowering mind