One of Robert Kiyosaki’s most loved books is called The Cashflow Quadrant.
In this book, he explains that there are four different ways to earn income: being an employee, being self employed, being a business owner and being an investor.
Not all of these income methods are equal. Some have a bigger earning potential than others, and one of them has by far the biggest earning potential of all.
In this video, I explain the four income methods and I reveal which one is the highest level of wealth.
Most of the population chooses to earn their income as an employee. They choose to earn their income by trading their time for money.
The pros of this method are you have a good degree of certainty and you get paid fast. When you work for one hour, you know exactly how much you’re getting paid for it, and you don’t have to wait very long to get paid.
The main problem with this method of earning income is you only have so many hours in a day. Even if you get paid a high hourly rate, you probably can’t work more than 10 or 12 hours a day and it’s impossible to work more than 24.
From an income perspective, being self employed is slightly better than being an employee.
Someone who’s self employed still spends their hours working. The difference is they get paid based on results, rather than based on how many hours they worked.
For example, a real estate agent will get a big commission if they bring in a big sale. They might go one week or two weeks without getting paid, but they know that their income is not constrained by the number of hours they work.
The downside is if they stop working, they stop getting paid. Their source of income is still dependent on them doing the work.
The business owner is the next level up from an income perspective.
A well-structured business is a system, and systems don’t need to sleep or take holidays. They can keep producing 24 hours a day.
When you’re a business owner, you can still get paid even when you stop working, because you have the system do the work. However, it’s still your responsibility to build and oversee the system.
The final stage you should try to get to is being an investor. This is the highest level of wealth.
Investors don’t trade their time for money, or even manage employees. They just allocate capital to companies.
For example, Warren Buffett invests in companies including Coca-Cola, Dairy Queen, American Express and Heinz. But he doesn’t work in the factories or manage the staff. He just puts his money into the companies.
Your end goal should be to eventually take yourself out of the business and become a full time investor.
The MOBE Platinum Mastermind is where the most experienced mentors in investing and asset protection share their investment methods with fellow members. To learn more about the Platinum Mastermind, click HERE.