Forexholic - Rich Dad will advise
you to focus on building a cash flow/cash flow if you want to be rich.
But when Dennis Ng was still alive, he would say that's not true. He became
wealthy with capital gains. He became a millionaire by investing $ 250 k in
stocks.
So who is right?
I'd
say both are true. In fact, you need both to be wealthy and there is no other
way unless you win the lottery. If you and I know that we do not have the fate
to win big from the lottery, we'll have to work my way through cash flow and
capital gains. Let me give You a perspective on this post and I think it will
help framing your thoughts in a way that is useful.
To
be rich, you must have a significant capital gain. In order to get a large
capital gain, you must have a large enough capital to invest. Let's say you
invested $ 100 k after the stock market crash in 2008 and you sell your stock
in 2013 and make $ 100 k. Although the percentage increase in your 100% is
impressive, you're still far away from becoming a millionaire. How many times
you need to double the money of $ 1 million? You will need another 2 crash the
market may just be in 10 to 20 years. But if you have $ 500 k invested in the
same period, you'll be a millionaire in 1 cycle market. This way faster to get
rich through capital gains if you know how to invest.
The Role Of Capital Gains (Capital
Income)
This
is the reason why the rich are getting richer. They have a large enough capital
to invest and develop their money much faster than the average person.
Remember, growing wealth is non-linear with respect to the effects of
compounding. I think it is easy to understand. But the question is, if you
don't have it then how do you get a big enough capital? The answer is not a
Capital Gain but rather Cash Flow.
This
is the reason why the rich are getting richer. They have a large enough capital
to invest and develop their money much faster than the average person.
Remember, growing wealth is non-linear with respect to the effects of
compounding. I think it is easy to understand. But the question is, if you
don't have it then how do you get a big enough capital? The answer is not a
Capital Gain but rather Cash Flow.
The Role Of Cash Flow (Cash Flow)
Although
Dennis became wealthy because capital gains, possibly still plays the role of
cash flow in the process of building his fortune. When he left his bank job,
its revenues slumped for several years until he set up a mortgage brokerage
company. The company is making money and Dennis has more than enough money for
her expenses. ' excess ' money would be savings or capital investment. He's got
the money to invest for cash flow = positive.
In
other words, you need a positive cash flow to build your capital. Source of
cash flow can be a salary. You need to ensure that expenditures are lower than
your salary so they can have ' excess ' money to establish a capital. If you
don't have enough savings, you need to reduce spending or increase income.
There is no other way. Do not make use of your capital is excessive investing
because you may not have the financial strength to survive a period of
investment is bad, it can bring yourself towards financial disaster.
Think
that cash flow as a process that requires money to meet your everyday needs.
You may not be able to wait for capital gains of up to 5 years because you
can't ber hungry myself for so long. Although cash flow is so important, you
can't afford not to count on it solely because you would need a long time to be
rich, therefore, the investment for capital gains is still required.
Trading And Investing
Most
people trade and invest without knowing what they want to achieve. If they want
their income or want to develop their money? For me, it is cash flow and
investment is capital gains. I know some people are investing for dividends or
cash flow but I think it's not the best way to develop your wealth. When I
invest in stocks, I prefer not to sell the shares for several years. I usually
buy when no one wants, and sell when everyone else is interested in buying.
Investments, if done in such a way gradually the more steady and fairly easy to
make money. Sometimes, you can benefit from the capital several times. In my
opinion, this is the best way to become rich, especially if you have a large
enough capital.
Trading
on the other hand, is good for earnings. Because of the shorter time frame, you
can often get cash flow. That number may not be much but it could be enough for
you to live and have some extra money for capital investment. Although this
often you earn revenue, but if the result is small it will be hard to make you
rich. Many people make the mistake of trading where as a way to get rich quick
and I hope now you understand that that's not true. If you have a paid job and
you are satisfied with it, fokuslah did a good job and save a portion of your
salary to invest. You don't have to trade, because trade is actually intended
for the people who make a living in the money market.
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