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Monday, September 27, 2010

where did you put your money?




about ten years ago, on my flight to jakarta after being lay-off during world economic crisis, upon my first assignment as a freelance engineer, i was reading a book recommended by a good friend, rich dad poor dad by robert t kiyosaki.. overwhelmed by the idea behind it, ever since that i've been changing myself targeted to be positioned in the right quadrant.

inspite of changing my mindset and fulfilling the path, i went through a vast of business books, certification, training, seminar, courses and a bundle of enterprenuer experimental, i also preached about the idea to almost everybody i met. i was so into the idea that everybody should be a businessman..

it is not totally right and also not totally wrong.. everybody is a businessman, in fact everybody is a salesman.. we do sales all our life.. and to be rich is only just by doing what a businessman did.. and somehow, despite i don't agree with some of kiyosaki definition, the cashflow quadrant does make sense..

few years ago, a friend of mine asked few questions to me.. how true is it that we can't be rich just being an employee? do we need to move between quadrant in order to be in I-quadrant? as i went through searching for the answer i realized that we don't have to be just in one quadrant at one moment.. however, i still agree that the real wealth is in the I-quadrant..

so what is the I-quadrant? kiyosaki's most popular quote define it as where the 'money works for you'.. this chapter where he described 'financial freedom' and 'passive income' which made the previously popularity of 'retirement planning' looks bad.. its a same concept though..

regardless you are employees (E-quadrant), self-employed (S-quadrant) or businessman (B-quadrant), all this quadrant are simply to define how fast and effective you can accumulate things for the I-quadrant.. regardless if you still employee or self-employed or running your own business, you can still get rich by focusing on I-quadrant.. how efficient your I-quadrant will makes the different.. not only how many cash but also how you use your time for the I-quadrant.. your real financial portfolio..

every each quadrant have its own risk, even the I-quadrant is not just a quadrant, or may i say that the I-quadrant itself got a few quadrant that need to be understand.. all this while i have been pushing all my energy to move between E-S-B while i found out that i should have move inside the I-quadrant itself..


let use the cashflow quadrant again as a reference..

E-quadrant - employee, low risk, lower income
S-quadrant - self-employed, moderate risk, moderate income
B-quadrant - businessman, high risk, higher income
I-quadrant - investor, controlled risk, passive income

and at least i may breakdown the I-quadrant to:

short-term investor - high risk, higher income
mid-term investor - moderate risk, moderate income
long-term investor - low risk, lower income

and as per the E-S-B has its own consequence, those money of yours in I-quadrant may also end-up as a bad investment, and you're losing without you really know it..

the simple truth is to look at where did we put our money? we might save our money in some account, but do we look at it as investment? saving in the bank means we did an investment, and which part of investment is it?

remember the most popular 10% concept, 'pay ourself first'? this is the fundamental of I-quadrant, in lay man term its called 'savings'. and savings is not just put some money somewhere so that we can get it back whenever we want, but we need to preserved the value at least against the inflation rate, in other way, we need to invest our 'savings'.

saving money in normal bank account most of the time doesn't preserved the value.. its only protecting your money by 0.001% against the inflation rate, which mean depreciating the value. so if you have money equivalent to your monthly income, its not wise to just leave it in your personal bank account. you are not really do savings, you just merely put your money in a bad long-term investment.

for now, the only question you need to answer to yourself is whether you already in the I-quadrant. check again your financial portfolio: where did you put your money?


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