Last week, I read a free
downloadable book from Richdad website called “ 6 basic rules of investment”
written by Robert Kiyosake, the author of the “Rich dad, Poor Dad” book. The
concept in this book is really basic and important for the start-up investors
take into consideration. The way of writing is really simple and easy to
understand.
According Robert Kiyosake, there
are 3 types of income sources: normal income, portfolio income, and passive
income. Normal income source refers to the paycheck you get for performing your
job. Portfolio income source refers to the income you get from investing in
mutual fund, stock, and other paper assets. Finally, passive income refers to
the source of income that generates you money without costing your time. Robert
suggests to invest in the 3rd one. In order to succeed in
investment, we need to have experience and education.
The 6 basic rules are 1. Knowing
the types of income sources. As explained about, we need to know where we can
generate income and how we can use this income to invest in another source of
income.
Rule # 2 is education. We need to
get education on investment by joining seminar or workshop and find the success
investors to be our mentor.
Rule #3: is Cash Flow. We need to
know where is our main cash flow come from and how we can use some of it for
investment. However, we need to have education on it clearly before deciding to
do investment.
Rule #4 is risk management. an
easy example is that before we decide to buy a phone, we have done a lot
research, checked the price, and compared the brand. Likewise, we need to do
research to find out the risk level and how to mitigate it. After investment,
we need to do regular post evaluation on the invested properties.
Rule #5 is raise capital. The big
problem for the beginning investor is how to get capital to invest. As Robert
said, it is not the big problem. The rich people prefer to put their money with
those who have clear pictures of the properties to invest and what is the
return. You can raise the money if you are not yet know what to invest and what
benefit you get.
Finally, the rule #6 is
evaluation. This rule is easy as that we need to evaluate which properties give
us more profit. We need also analyze the financial position of a company or
stock if we want to invest in their company.
At the end, I suggest that if you
keen to learn more about investment, find what area of investment you prefer
and get education about it. High risk, high return; however, if we don’t have
any idea of such investment, we may end up losing the money. If you want to
read the full article, please click here to download or visit richdad website: http://www.richdad.com/.
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