The Cash Flow Investment: Print your own money, legally.
Robert T. Kiyosake made infamous the term “Cash Flow Investment” in his book “Rich Dad, Poor Dad”.
In simple terms the definition of Cash Flow is this: Cash to you minus expenses on an investment, it is a flow of cash after expenses, you do not need to sell it to receive the flow of cash.
As a comparison to Cash Flow type investments let’s look at what a Capital Gain is by definition: Any profits made from buying and selling something.
Both of these are considered assets, but cash flow is a stream of income while capital gain is profits from a transaction, it actually might be costing you money to hold the capital gain investment until it is sold off, I will coin a term here and call that a “cash hole”, if you have a mortgage and you do not have renters paying more than your mortgage payment on the house, you have yourself a “cash hole” that you are hoping to make a capital gain on.
Obviously the Cash Flow Investment is the one to invest in, the other requires a whole other level of financial intelligence. Robert Kiyosake ONLY invests in cach flow investments. “The lowest return I will consider is 28% [per year]. On many of my investments, even a 100% or 250% return is not enough. I want an infinite return.” (From Roberts book “Unfair Advantage”)
What Robert is saying is that he wants not-only his money back on the investment but he wants to be able to keep the asset and receive a cash flow income for the rest of his life–Tax free. (Read it for yourself on page 204 of “Unfair Advantage)
To me Robert has just perfectly described a managed account as a cash flow investment.
The reason I defined cash flow and capital gain above is to further divulge to you what the trader (manager of the account) is actually doing, he is a Capital Gains Investor. He is speculating that the price is low and and he can get out higher. When he makes a profit it is a Capital Gain.
While the investor in a managed account is actually investing in a Cash Flow investment. He is investing in the intelligence and skill of the trader / trading system. He makes a stream of passive income.
In 1903 the Rockefeller foundation created the “General Education Board” they conveniently dropped out financial education, it worked, most people are so financially illiterate I cannot converse with them. They seek “job security” and “employee benefits instead of passive income streams -CASH FLOW, is REAL financial security.
A friend of mine just bought a 2011 f-150 with the new Raptor engine in it. The truck is costing him 900 per month and he told me it was an asset…, I nearly cried, if he had taken that loan and put it in here: (Yes, that is 800%)
He would have had his 40 grand (in profits) to buy the truck outright in less than 3 months, 3 months after that he could have payed the loan back and had an infinite return -cash flow.
He could have retired.
But he has Zero financial education.
I cannot communicate with him.
I want to leave you with these Q & A’s as a little bit of an instant financial eduction.
Q. Are managed accounts risky?
A. “A mutual fund investor puts up 100% of the money, takes 100% of the risk, and earns only 20% of the gains–if there are gains. The Mutual fund companies take 80% of the profits through fees”. *John Bogle, Founder of Vangaurd Group*
Mutual funds take on massive positions (usually in an index so it can claim it is diversified) and is slow to enter and exit it’s trades, it is subject to massive market turbulence as it just sits there and rides it. They do not need to make any profits, as the profits they make are from fees, and those are regardless of any gains for you.
A Forex Managed Account does not usually have fees above 50% of the profits, and is as low as 10%. The fee IS ONLY TAKEN ON NEW MONEY MADE, the manager must perform to get paid, he is only in the trade he wants to be in, he is not subject to the overall eb and flow of the markets.
The uneducated point to the mutual fund as the least risky vehicle they can think of. My Mom lost 30% of her “Ethical Fund” account in her first year she invested in a mutual fund. But you decide, which is riskier?
Q. Forex Managed Accounts are not a traditional Investment, why would I want to invest in them?
A. “Today, Traditional assets do not make you rich or financially secure. You can lose money on businesses, real estate, stocks, bonds, commodities, and even gold. Knowledge makes you rich and lack of knowledge makes you poor. In this new world it is knowledge that is the new money.” *Robert Kiyosake, New Rule of Money #1: Money is knowledge*
Piggy back someone who thrives in this world where knowledge is money, the Successful Forex trader.
Q. “If it sounds too good to be true, it usually is.” Is it?
A. “People who sell investments [401k, mutual funds, interest only accounts] feel they have to downplay or discourage investments claiming to do better than the investments they sell, labeling them as, “Risky”. And it is too good to be true for most people–people without financial education.” Robert Kiyosake, Unfair Advantage*
Yes, Forex Managed Accounts are new, but traders have been trading forex in the retail markets for over ten years, they are on the pulse of the worlds markets, they find many opportunities for capital gains through their financial education, they allow us to have a new cash flow investment, one that relies on knowledge, they could not have come along at a better time, they are needed.
Funds Forex Managed .Com is in the business of recruiting these geniuses and putting them in a managed account, so you and I can invest in Cash Flow and print our own money :)
