The 7 Levels of Investors – Part 5

Level 4: Long-Term Investors

In his book The Cashflow Quadrant™ Robert Kiyosaki calls level 4 “Long Term Investors” and in Money Secrets of the Rich John Burley refers to level 4 as “Automatic Investors”.

These investors are clearly aware of the need to invest. Unlike level 3 they are involved in the investment process and they educate themselves. They seek advice from financial planners and have clearly laid out long term plans which will enable them to reach their financial objectives.

They are not sophisticated investors and choose to keep investments simple. They invest in shares and managed (mutual) funds that provide the opportunity for realistic returns over the long term.

The concept John Burley uses for this level is to use an AIP (Automatic Investment Plan) or a savings plan as an ongoing strategy. This means regularly investing an amount into your chosen vehicle. Using this method allows investors to take advantage of Compound Interest. Albert Einstein referred to compound interest as “the eighth natural wonder of the world”.

By keeping it simple and sticking to the rules this level of investor can accumulate a good retirement income if they give the plan long enough.

This level of investor also has other “money habits” handled, including;

•    they have their spending under control
•    their debt minimized
•    they live within their means
•    they automatically invest
•    know what their money is doing

For people who are happy working in their own profession or career, or who dos not like risk, and do not want to invest a lot of time studying the subject of investment then this level can provide a good solution. These people are the Mum and Dad’s that work hard all their life and manage their money well.

The main difference between a level 3 and a level 4 investor is education and the willingness to play an active part in the decision making process of what happens with their money. People that want more sophisticated investments at the next levels should master this level first.

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