Cashflow Quadrant: Rich Dad's Guide to Financial Freedom
Book by Robert Kiyosaki
Summary of Book:
Investment Rules:
- Money is something to be seen with mind not with eyes.
- ROI means not Return on Investment but it is Return on Information.
- We do not need money to create money.
- Divert funds from S and E quadrants to I and B quadrants.
----------S is for Self Employment / Small Business Ex: Free Lancer / Grocery Shop owner.
----------E is for Employee Ex: Govt / Private Employee own monthly Salary
----------B is for Big Business / Business Owner Ex: Running Business like Theater/Bunk leased out.
----------I is for Investments Ex: Rental Income / Appraisal of price of Real Estate property.
- Pay nicely to Agents. Review facts yourself and do not believe assumptions.Find the right brokers who understand our requirement and think like investor.
- While investment, focus on whether money flowing in (or) money flowing out of your pocket.
- Home Loan is Asset for Bank and Liability to the Asset Owner. Categorize your properties in either asset or liabilities types. Unless Flat / home which has loan associated with it, if cash flows to your pocket, it is asset else it is liability. First thing we need to do is reduce our liabilities and move them to asset column.
- Fixed Deposit is Asset to customer and Liability to the Bank. Home Loan / Personal Loan / Mortgage loan is Asset to Bank and Liability to Customer of Bank.
- When buying Real Estate property, check whether Annual Rents/lease income earned minus ( Yearly Maintenance Charges + Municipal Taxes + Annual Home Loan EMIs) should be positive or flow some cash to your pocket. Only then it is wise investment.
- More People owes you money, more wealthier you are. More people you owe money to, more poorer you are.
- With current inflation rate and tax rules, people who saving money in banks for long term retirement plans are equal to the people who are not investing.
- Buying bigger house than your need for Tax Breaks / Tax Benefit is trap, so that banks will survive with your EMIs and Government will earn in the form of Municipal taxes. Your bigger house become Asset to Banks and liability to yourself.
- Have a mentor / read books, but do not invest with zero knowledge in I quadrant.
- Location of property should be at Walkable distance(near to Home), so it would be easy to visit and maintain it. So Location comes first priority and property is second priority.
- Look for hundred of properties before committing to right deal.
- When market is going down, property costs getting cheaper then take debt/finance from bank and buyout good deals to sell it when market is up later.
- Invest in location where people are moving in, do not invest in place where people are moving out of location.
- 6 words anyone who want to improve financial IQ need to remember is Income, Expense, Asset, Liability, Cash , Flow
References:
How to withdraw PF Online:
https://cleartax.in/s/epf-withdrawal-online
https://www.bemoneyaware.com/blog/review-11-principles-to-achieve-financial-freedom/
Book by Robert Kiyosaki
Summary of Book:
Investment Rules:
- Money is something to be seen with mind not with eyes.
- ROI means not Return on Investment but it is Return on Information.
- We do not need money to create money.
- Divert funds from S and E quadrants to I and B quadrants.
----------S is for Self Employment / Small Business Ex: Free Lancer / Grocery Shop owner.
----------E is for Employee Ex: Govt / Private Employee own monthly Salary
----------B is for Big Business / Business Owner Ex: Running Business like Theater/Bunk leased out.
----------I is for Investments Ex: Rental Income / Appraisal of price of Real Estate property.
- Pay nicely to Agents. Review facts yourself and do not believe assumptions.Find the right brokers who understand our requirement and think like investor.
- While investment, focus on whether money flowing in (or) money flowing out of your pocket.
- Home Loan is Asset for Bank and Liability to the Asset Owner. Categorize your properties in either asset or liabilities types. Unless Flat / home which has loan associated with it, if cash flows to your pocket, it is asset else it is liability. First thing we need to do is reduce our liabilities and move them to asset column.
- Fixed Deposit is Asset to customer and Liability to the Bank. Home Loan / Personal Loan / Mortgage loan is Asset to Bank and Liability to Customer of Bank.
- When buying Real Estate property, check whether Annual Rents/lease income earned minus ( Yearly Maintenance Charges + Municipal Taxes + Annual Home Loan EMIs) should be positive or flow some cash to your pocket. Only then it is wise investment.
- More People owes you money, more wealthier you are. More people you owe money to, more poorer you are.
- With current inflation rate and tax rules, people who saving money in banks for long term retirement plans are equal to the people who are not investing.
- Buying bigger house than your need for Tax Breaks / Tax Benefit is trap, so that banks will survive with your EMIs and Government will earn in the form of Municipal taxes. Your bigger house become Asset to Banks and liability to yourself.
- Have a mentor / read books, but do not invest with zero knowledge in I quadrant.
- Location of property should be at Walkable distance(near to Home), so it would be easy to visit and maintain it. So Location comes first priority and property is second priority.
- Look for hundred of properties before committing to right deal.
- When market is going down, property costs getting cheaper then take debt/finance from bank and buyout good deals to sell it when market is up later.
- Invest in location where people are moving in, do not invest in place where people are moving out of location.
- 6 words anyone who want to improve financial IQ need to remember is Income, Expense, Asset, Liability, Cash , Flow
References:
How to withdraw PF Online:
https://cleartax.in/s/epf-withdrawal-online
https://www.bemoneyaware.com/blog/review-11-principles-to-achieve-financial-freedom/
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