{"id":33468,"date":"2018-05-30T09:20:01","date_gmt":"2018-05-30T13:20:01","guid":{"rendered":"https:\/\/sciencebusiness.technewslit.com\/?p=33468"},"modified":"2018-05-30T09:20:01","modified_gmt":"2018-05-30T13:20:01","slug":"investing-the-path-to-true-wealth","status":"publish","type":"post","link":"https:\/\/technewslit.com\/sciencebusiness\/?p=33468","title":{"rendered":"Investing – The Path To True Wealth"},"content":{"rendered":"

– Contributed content –<\/em><\/p>\n

\"Digital<\/a>
(Ahmad Ardity, Pixabay)<\/figcaption><\/figure>\n

30 May 2018. Whether you read the book \u201cRich Dad Poor Dad<\/a>\u201d by Robert Kiyosaki or The Millionaire Fastlane<\/a> by MJ DeMarco, you\u2019ll notice there is a common theme in the sense that both books talk about the difference between how the wealthy use their time and resources.<\/p>\n

See, the rich invest their time building assets and then leverage these assets time and time again rather than trade time for money like traditional employees.<\/p>\n

Robert Kiyosaki, especially, talks about the difference between how the wealthy use their time and resources versus the less wealthy, and of particular interest, is the concept Kiyosaki came up with known as the Cashflow Quadrant.<\/p>\n

Here he posits there to be four categories that everyone falls into, in terms of how they make money – employees, small business owners, big business owners and investors. \u00a0While each have pros and cons in terms of social value, if the aim to get rich then it\u2019s important to note there are intrinsic limits on how much money one can make as an employee or small business owner\u2026 because they are stuck on a treadmill of swapping their time for money.<\/p>\n

Kiyosaki suggests the fundamental difference between small business owners and employees vs. investors and big business owners is that the small business owner and employee are both trading time for money in a very linear and transactional way; for instance the factory worker and the lawyer are both directly swapping their time for money. \u00a0Admittedly, in different amounts, but the principle remains true.<\/p>\n

The same can be said for small business owners, as just because someone has a business, doesn\u2019t guarantee they will become rich or financially free. \u00a0Indeed, a small business can be the worst of both worlds where people trade a reliable income in a secure job, that they can leave in the office, for an insecure income where they are working all hours and can never switch off — yet they are still stuck in the financial trap of trading time for money. \u00a0For instance, a consultant charging $300 per hour is still \u201cstuck\u201d in the sense of wealth creation because they only get paid when they are trading their most valuable commodity; time. If the high paid consultant can\u2019t find any gigs, or gets sick, of goes on holiday – their income stops.<\/p>\n

Whereas, on the other side of the cash flow quadrant where the big business owners and investors reside, they are focused on building assets and creating income generating networks that can be leveraged time and time again.<\/p>\n

Employees are, of course, the most common demographic, yet they are usually the most taxed and the lowest paid. \u00a0It could be surmised that employees appreciate the certainty of a steady paycheck and the convenience that employment brings. \u00a0Being an employee, therefore does have a number of benefits and one of the greatest benefits when compared with being a small business owner is the ability to switch off at the end of the day, or week\u2026 however, being employed or self-employed is not usually the path to wealth as employees tend to have salaries that are dictated to them by management\u2026 and even the self-employed are trading their man-hours for cash meaning there\u2019s an intrinsic limit to how much they can earn as there are only so many hours in a week.<\/p>\n

We\u2019ve already discussed the limit associated with small business owners, in that they are limited in how much they can viably make as they are still stuck in the trap of swapping their time for money. \u00a0The core difference is that they own their job. This is particularly true of solo practitioners such as personal trainers, accountants, hairdressers, graphic designers and even high paid lawyers. See, you could be the best lawyer in town, bringing in a fair amount of income – and you\u2019ll certainly have a lot of cash\u2026 but wealth goes beyond the amount you are trading your time for.<\/p>\n

True wealth offers a balance of having both the time and money to do whatever it is you want, when you want, with who you want\u2026 and if you\u2019re stuck on the treadmill of trading time for money<\/a> – this isn\u2019t allowing you the freedom that is associated with true wealth.<\/p>\n

The big business owner, in comparison, has leverage – and it\u2019s this leverage that leads to true wealth\u2026 see, when you build an asset, let\u2019s take a book for example, it takes a lot of initial effort but once it is created you can leverage that asset multiple times to generate income that you aren\u2019t having to trade your time for. \u00a0This is known as passive income, and if an author gets paid a $2 royalty on each book that is sold and sells 100,000 copies each year, that\u2019s a passive income of $200,000 – meaning they are being rewarded multiple times on their initial effort.<\/p>\n

See, a \u201cbig business\u201d in this context doesn\u2019t refer to someone with a huge enterprise, it could be someone that has a few ice cream trucks and teenage employees that go out on the weekend to sell ice creams. \u00a0The point is, the big business owner has leverage – in that they have stopped directly trading their time for money in the sense of being paid X per hour, as they now have an asset and a system they can leverage.<\/p>\n

This it the path to true wealth; because they are now managing assets rather than trading their time for money – meaning they have the time freedom to enjoy life.<\/p>\n

Similarly, investors leverage their financial resources in order to make money – they might spend some time monitoring the temperamental wobbles of cryptocurrency<\/a> or researching new trends such as IHTcoin.com<\/a> in order to invest their resources wisely<\/a> – but what they aren\u2019t doing is directly trading their time for money in the same way as most people do.<\/p>\n

The investor is leveraging<\/a> his or her assets; meaning that rather than working for his or her money they have their resource of money working for them. \u00a0To grasp the magnitude of this, just think about how much you would be worth today, if a few years ago, you invested a few thousand dollars into bitcoin! \u00a0This is the power of leveraging assets.<\/p>\n

In summary, investing be that in a business context, a real estate context or a pure financial context is the only path to true wealth because true wealth isn\u2019t just about being paid a high salary and therefore having a bulging bank balance. \u00a0It\u2019s about having the time and freedom to enjoy life on your terms.<\/i><\/p>\n

Editor’s note: the opinions expressed in this post are those of the contributor and not those of Science & Enterprise.<\/p>\n

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The fundamental difference between small business owners and employees vs. investors and big business owners is that the small business owner and employee are both trading time for money in a very linear and transactional way.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[10,3],"tags":[132,24],"class_list":["post-33468","post","type-post","status-publish","format-standard","hentry","category-business","category-finance","tag-contributed","tag-investment"],"_links":{"self":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts\/33468","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33468"}],"version-history":[{"count":2,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts\/33468\/revisions"}],"predecessor-version":[{"id":33471,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=\/wp\/v2\/posts\/33468\/revisions\/33471"}],"wp:attachment":[{"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33468"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33468"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/technewslit.com\/sciencebusiness\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33468"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}