Quick Reference Guide to Wealth
How People Think
GROUP 1 2 3 4 5 6 7 Who: Education Major financial goal Main Focus Cash Flow Management (CFM) Definition of an Asset Home THE BROKE MASSES Employees High School or College Graduate Survive until next payday Salary of hourly wage “How much do I have in my wallet right now?” A 6-pack in the fridge Would like to own one Government pensions and lotteries Government SUCCESSFUL MIDDLE CLASSINVESTOR Employees & self-employed Values education, often college graduate. Attends courses & seminars on investing The build-up of significant net worth by age 55-65 Net worth Understands the value of CFM Anything that has market value One of their most important “assets” Mutual Funds; Blue Chip Stocks; Real Estate, condos, houses & duplexes Invests in financial products created by someone else Dollar Cost Averaging (DCA) and low down payment real estate system 12% - 30% Willing to accept moderate amounts of risk Learn what works (by trial & error) then keep doing it no matter what. Long Term Buy & Hold, waiting for assets to go up in value Investments Work for money of which 10-20% is directed into investment program(s) Financial Planners & Accountants (CPAs) “The Millionaire Next Door” and “The Wealthy Barber” $1 million in net worth Asks questions & seeks the right answer(s) “You can and should delegate what you do not know” TRULY WEALTHY (RICH) Business Owners & Investors Values mainly “street smart” education, mostly acquired from successful peers and/or other self-educated people TIME Freedom Cash flow Understands that CFM is the foundation to ALL wealth Anything that produces positive cash flow Your own home is a LIABILITY, not an asset 1) 2) 3) Stocks: IPOs as investor and/or key shareholder only Real estate – larger projects Businesses
8
Investment Vehicles
9
Investment Sources
Create products & services to sell to the middle class & the masses Create their own and/or modify others. Often learn from other rich & successful investors who are their peers 50% - 500% or more Most investments are low to very low risk (low LTV’s with high collarteral) Continue to LEARN and innovate, innovate, innovate! Continual improvement. Tailored to each individual goal or investment “You make your money when you buy, not when you sell” Time Their MONEY works so they do not have to Themselves, each other, coaches & carefully selected professionals “Rich Dad, Poor Dad”, “The Cashflow Quadrant”, “The Cashflow Game”, Robert Kiyosaki audio tapes Passive Income greatly exceeds expenses Knows there are always MANY answers “If you do not know the fundamentals, you are going to get slaughtered”
10
Investment Systems Expected Rate of Return Risk What Works Time Horizon Real Estate Most Valuable Resource Why Work? Advisors Information Resources Key “success” indicator event Questions & Answers Delegation
High Hopes
11 12 13 14 15 16 17 18 19 20 21 22
Get Rich Quick Has no idea how to evaluate If it doesn’t work, keep doing it. (definition of insanity) Next payday Would like to own some someday Paycheck Work & live for the “Weekend” Broke friends & Family TV Savings account with at least $100 in it. Does not understand the distinction “If you want it done right, you must do it yourself”