Kiyosaki's Cashflow Quadrant - Which Quadrant are you?

[Lou300]

Robert Kiyosaki describes cashflow as coming from one of four quadrants:

Active:
1) Employment
2) Small business

Passive:
3) Business (large)
4) Investments (Property & shares)

He argues that we should be aiming to create high levels of cashflow from the Business quadrant and move it into Investment quadrants.

In my case, I get my cashflow through Employment, a small amount in a small business, and I move it into five investment properties in the investment quadrant. Slowly, my investment quadrant is growing, though Im guessing Kiyosaki wouldnt class my IPs as true investments, since at the moment they are CF neg.

My husband and I currently have an opportunity to get involved in the Business quadrant too.

Im curious to know where other people sit on the quadrant? You can give more than one answer to this poll.

Lou.

 

[jaycee]

I'm an employee

 

[Deltaberry]

Same unfortunately.

3+4 the way to go.

 

[quoll]

Happy to disagree with RK's model, base principles are fine, you need to be able to walk away and have money continue to be generated. But you need to work out what is right for you.

Investing in growth assets is good.

But if I can gnerate $75k working 6-9mths I'm happy and being happy is a lot more important that chasing more cashflow.

Cheers
Graeme

 

[Ace in the Hole]

After reading his books, I've followed the formula in order.
Over 10 or so years, went from employee to self employed to business owner and currently building assets for investing.
This progression has worked very well for us, I don't see any other way it can be replicated so sucessfully.

 

[kathryn d]

rental income

 

[redwing]

Dunno...have found it hard to read his books unless his partnered with someone such as Dolf De Roo's etc

Says more about me than him though!

 

[BayView]

We are still in the 1) an 2) "active" section, with our employment coming from our business and PAYE.

But we also are "passive" in 4) - small amount of shares and some properties.

 

[wobbycarly]

We currently earn more in rent that in wages, BUT the interest and costs are still higher than the rent!

 

[lizzie]

unfortunately still in the wages section.

If I'd listened more, and played the game differently 10 years ago we would've been in the passive investment segment by now.

 

[Rolf Latham]

S

for

Sychotic

ta
rolf

 

[daniellee]

Hi,

An employee myself.

Regards,

Daniel Lee

 

[Zeddy]

I'm not sure if I'm understanding this correctly:

1) Employed - Yes
2) Small business - Yes, I work in the family business. 7 employees total.

3) Large business - None.
4) Investment - 100% property at this stage

Edit: Ah wait, I understand. 1 & 2, working on 4. And hopefully #2 will become #3.

 

[Ace in the Hole]

What's the difference between small and large business?
Is it more determined by the structure and being able to operate without you?

 

[Aaron_C]

What's the difference between small and large business?
Is it more determined by the structure and being able to operate without you?

Under the Corporations Act its defined as having more than $25m in revenue, having more than 51 employees or having more than $12.5m in assets. Although the layman definition would be a bit different as even companies that are 'large' would probably be considered medium at best.

 

[Rolf Latham]

RKs view is that a big biz is one u can walk from for 12 mths or more and it still provides an income AND grows with nil input from u

ta
rolf

 

[Thann]

1, with a little bit of 4

 

[pennyk]

I've said this before, but I think the biggest challenge with this approach is that most businesses suck up cashflow rather than releasing it.

But alot of people read books like RDPD and go into a self employed/business situation without any idea of the true cost and workload, and with flawed plans to make huge profits while doing minimal work. Instead they find they are working long hours and seeing their money go into a black hole.

Most businesses fail, which means most people are better off sticking to being "employed" and using that money to fund investments.

But of course, some people will make obscene amounts of money from a business....... but you dont know except with hindsight which will be the successful ones and which will be a flop.

 

[Ace in the Hole]

Most businesses fail, which means most people are better off sticking to being "employed" and using that money to fund investments.

But of course, some people will make obscene amounts of money from a business....... but you dont know except with hindsight which will be the successful ones and which will be a flop.

Just gotta keep trying until you hit the right one.
All failed experiences are great lessons.
Many businesses can be started part time with little outlay required.

I think with experience, you actually will know right away which business types have the best chance of sucess, especially if you have gained practical skills and learned valuable lessons from your past failures.

 

[Rolf Latham]

but you dont know except with hindsight which will be the successful ones and which will be a flop.

Certainly easier to pick the ones that arent going to go super well. There is a distinct formula there I believe relating to the business type, the structure and the proposed operator.

Often but not always, when prospective people get into a biz they do lots and lots of dd on the biz, but not on themselves................

ta
rolf