The 7 Levels of Investors – Part 4

Level 3 – The Passive Investor

Level 3 Investors in The Cashflow Quadrant™ are referred to as “smart” investors by Robert Kiyosaki. I have reverted to the term used by John Burley in Money Secrets of the Rich (it was John who introduced Robert to this concept). My reason for preferring the term “passive” investor is that it is a concept I understand well from my years working as a financial planner.

The people at this level are aware of the need to invest. They are often very smart educated people however when it comes to investing they are generally financially illiterate. There are 3 typical categories of people in this group which are:
1. Robert Kiyosaki calls this level “I can’t be bothered group” and John Burley calls them “the gone into a shell group”. Whichever label I use the people are the same. They have beliefs like:
• I’m not good with numbers
• I’ll never understand how investing works
• I’m too busy
• It’s too complicated
• And so on………

These people are often very busy in their own profession and want someone else to do it all for them. They usually have a financial planner and an accountant. They often have very little idea where their money is invested. I have met many people from this category over my life.

2. The “it can’t be done – or the cynic” – as the names suggest these people will know all the reasons why an investment will not work. They usually are strong in their opinions and may sound like they know what they are talking about. They often look at a high return as impossible or illegal. When bad news does come they say “I knew it”.

If you are on the path of investing and educating yourself it is important to recognize the cynic or knocker and avoid them like the plague.

3. Robert Kiyosaki’s third category is the “gambler”. This group, unlike the cautious cynic, is not cautious enough. They jump into all sorts of investments where they believe they will make it big. They have no set trading rules or principles and believe they only need one “big break”. John Burley calls them the “victims” as they often fall prey to unscrupulous schemes. They actually thrive on risk.

In summary not everyone is going to be a full time investor. Not everyone wants to be a share trader or a real estate investor. Passive investments via managed or mutual funds are a good option for some people. Everyone does, however, need to have some education and know where their money is invested. It is not okay to leave it all to someone else. There are books and seminars today that provide good education on every sort of investment making it easier than ever to be informed.

I would love to hear your feedback.