Tag: Improving Your Financial Information

Categories
Bonds Books Business Investing Money Mindset Stocks

Increase Your Financial IQ Book Review – Part 5: Improving Your Financial Information

Today, you will learn Financial IQ #5 – Improving Your Financial Information.  This article is the last part of Rich Money Habits’ review on Robert Kiyosaki’s book Increase Your Financial IQ: Get Smarter With Your Money.

To read parts 1 to 4 of the book review, you can checkout the following links.

Increase Your Financial IQ Book Review – Part 5: Improving Your Financial Information

Information is the most important asset you can have.  For soldiers in the midst of war, using the information they have against their enemies determines whether they will live or die. 

Information is the key to Manny Pacquiao’s victory against the likes of Oscar De La Hoya, Ricky Hatton and Miguel Cotto.  Freddie Roach, his coach, is without a doubt a master strategist.  He is great at identifying the smallest weaknesses of Pacquaio’s opponents and skillfully using those to draw up a game plan for Pacquaio to win each of his fights. 

Today, leveraging the power of information can make you very rich.  Young twenty-year olds have proven that.  Armed with only their dreams and technology, they have built up Facebook, You Tube and My Space and became billionaires. 

The Four Ages of Humanity

  1. Hunter-Gatherer Age
    • Nature provided the wealth. 
    • There’s only one group – everyone is poor.
  2. Agrarian Age
    • Land became wealth. 
    • There are now 2 groups of people:
      • The rich kings and queens who own the lands, and
      • The poor peasants.
  3. Industrial Age
    • People who own the biggest factories, skyscrapers and industries are the new rich. 
    • There are now 3 groups of people:
      • The rich owners of industrial companies
      • The middle class who work for those companies
      • The poor who are still caught up in the Agrarian & Hunter Gatherer age.
  4. Information Age
    • The new super rich are 20 something kids who leverage information to become billionaires
    • There are now 4 groups of people:
      • The super rich – young billionaires leveraging information.
      • The rich who are still struggling to bring their industrial companies to the new information age.
      • The middle class who are now working as employees to more and more companies of the rich and the super rich.
      • The poor who are clueless how they can use technology to become rich.

According to Robert Kiyosaki, a lot of people are struggling today because they are clinging to the Hunter-Gatherer, Agrarian and Industrial Age ideas.  They are “perishing because of obsolete or inadequate information.” They still think having a safe secure job with great benefits is a good idea.  The good news for you is that you don’t have to be like them. You can become rich just by having the “right information.”

Tips on Classifying Information to Become Richer

  1. Facts vs Opinions
    • Know the difference between facts and opinions. 
    • Many people think investing is risky because they don’t know if they are basing their investment decisions on opinions or facts
  2. Insane Solutions
    • Acting on insane solutions is risky.
    • If your investment decision is based on an opinion, it can lead to your financial ruin.
  3. Risky Actions
    • A person who invests for capital gains is investing on an opinion.
    • A person who invests for cash flow is investing on a fact.
    • A smart investor uses both opinions and facts to invest for both capital gains and cash flow.
  4. Control Over the Asset
    • Most people investing in paper assets have very little control over their investments.
    • These investors are hoping their opinions turn into facts – which is very risky.
  5. What are the Rules?
    • Know the rules of money.  Knowing the rules gives you valuable information on how to play the money game.
    • Without rules, there is chaos, and your assets would decline in value.
  6. Trends
    • A small investor with superior information and intelligence about local and global markets can beat the giants who rely only on international information
    • Know and invest with the trend.  The trend is your friend.
    • Robert Kiyosaki says “Financial intelligence is the ability to take information and make it meaningful.”

Rich Money Habits Review Notes:

Today, more than ever, you need the right information.  Information can make you rich or poor.  With the right information, anyone can become rich. The only problem is that in a rapidly changing world, the old ideas of yesterday may no longer work today.  That’s why it is very important to continue to learn and be discerning of the information you receive, always making sure if your decision is based on facts or opinions.