Wealth Fundamentals: Passive Income

Why the wealthy get richer and the poor are getting poorer?

Master Investor
April 02, 2024

Summary:

When we master the new rules of money then we will be equipped to prosper. The financial landscape has evolved since our parents' time, and their guidance is no longer applicable.
To prosper in the modern society, one must comprehend the new laws and rules governing money.
The various ways to make money and players of the game of money are broken down in the CASH FLOW Circle; the right side is where wealth is created, known as the fast track.

The rules surrounding money have changed in today's environment. Consider all of the world's transformations within the past forty years. How could someone believe that following in their parents' footsteps is still the best way to succeed in life today?

In the 10 new rules of money, MASTER INVESTOR wrote on the new rules of money. The 10 new rules listed below are what everyone must understand in order to thrive in the modern world with total freedom:

Rule #1: Work to build and acquire assets

Rule#2: Today money is fiat, a currency, debt, paper money, monopoly money, fake, and an idea backed up by confidence. Money is no longer real money.

Rule #3: Control Cash-Flow and Debt.

Rule #4: Prepare for any type of market.

Rule #5: The need for speed through the formula of velocity of cash-flow.

Rule #6: Master the language of money.

Rule #7: Investing is a team action.

Rule #8: Print money legally for free with fake money (debt)

Rule #9: Money is created with debt that is why debt is tax-free.

Rule #10: Use debt (OPM - “other people’s money”) and leverage systems to invest for real assets that produce passive income and capital gains income.

We will find it much easier to navigate a very different world if you understand these new money laws. Though we have a strong chance of becoming a successful entrepreneur, we can’t do it the old way. The guidelines and counsel of our parents are not reliable.

Two types of individuals

We must realize that there are two types of individuals in the world: those who view the world from the left side of Master Investor’s CASH FLOW Circle and those who view it from the right side in order to fully comprehend the new financial regulations.

The four categories of people in the CASH FLOW Circle correspond to the distinct income streams.

Employee, Self-employed, businesses owner, and inside investor.

Every individual who makes a living is a resident of at least one of the four players, and our location is dictated by the source of our income.

In the left side of the CASH FLOW Circle

Many people depend on their wages as employees. Others may work for themselves. People who work for themselves or are employed live on the left side of the CASH FLOW Circle. Those who get our money from investments or companies we own or control are thriving on the right side of the Cash Flow Circle.

The price of passing of freedom in favor of security

Recall that wealthy entrepreneurs aren't at ease.

Comfort, the reality is, is not always permanent. Issues, modifications, and unanticipated events are frequent and might occur at the most inconvenient moments. Genuine entrepreneurs would never, ever choose to forgo following their own aspirations to create something in favor of a comfortable, well-paying, and "secure" employment. Actually, the objective of a WEALTHY entrepreneur is to create a business that can eventually make money without us because it has systems and others working in the business to fulfill the mission of the business.

The line that separates the two sides of the CASH FLOW Circle represents the difference between individuals who are financially successful and those who struggle with the game of money. Some people work hard for money their entire lives, and others master the ability to make money work hard and multiply through sound investing.

The wages of the middle class and the poor have, as we may have seen, either decreased or remained unchanged during the past few decades. However, those on the left side of the cash flow circle still perceive themselves as secure, while perceiving those who invest and own business as risk-takers.

The unfortunate truth is that those operating on the left side of the cash flow circle incur higher interest rates on their debt for liabilities and pay higher taxes as their income increases. What we at Master Investor refer to as the Rat Race is a terrible cycle that keeps people feeling poor and trapped.

We must comprehend the disparity in financial intelligence between Es and Ss in order to comprehend why they don't become wealthy.

What actually brings wealth to us

We do not become wealthy based solely on our income. Instead, our wealth is determined by how much money we keep and multiply through sound investing.

The people on the right side of the CASH FLOW Circle

We have the lowest tax brackets, understand how to leverage debt for financial advantage, and use our assets as a hedge against inflation. We undoubtedly keep more money than self-employed people and employees in addition to making more money overall and have total freedom (control of our time).

The people in the left side of the cash flow circle are employed for what is referred to as earned income. This income has the highest tax rate. They have very few tax havens. The people on the right side work for the least taxed type of income, passive income.

The tax code offers us a number of tax benefits that we can take advantage of and anyone can when operating under an entity.

The mentality we develop versus the mindset we are taught

We discussed on another article how every child has a genius inside of them—the one thing that brightens their life, inspires them, nourishes their ambitions, and pushes them. Regretfully, our children's genius is frequently overlooked by the school system. Furthermore, a child's brilliance could be crushed by education.

This is a result of the left side of the CASH FLOW Circle teachings being the only method of thinking and doing things in our educational system.

We advise our children to attend school and find fulfilling employment.

Naturally, the issue here is that when our children hear this, they don't know what they truly want to do or are called to do yet, so they follow career choices that are recommended for them, such as becoming doctors, lawyers, teachers, and more—jobs in the E or S quadrant of the CASH FLOW circle.

They get caught in the rat race as they get older. They must seek a high paying career since they attend college and incur debt. They will soon purchase a home, but they will still need to labor to pay off their debt. Then, additional costs for children, medical care, and other things push them into a corner.

Before we realize it, our youthful dreams have vanished and are replaced with what some find to be a depressing existence at work that does not fulfill their souls.

The educational system does not assist us in realizing our talent. And we frequently lose our talent in the process of pursuing other people's aspirations for our lives.

Master Investor also wrote The CASH FLOW Circle, a book in which he discusses the significance of forging our own route and altering our perspectives on life and finances. It's not simple. In the process, we frequently run the risk of being lost, and getting back is not always easy. However, a happy existence requires us to discover our path—releasing our inner brilliance and our children's genius.

What type of income are we working for today? How are things progressing on our path? Do we often find ourselves saying things like this?

"I love what I do, but I wish I could make more money."
"I can't wait for the weekend."
"I want to do my own thing."
"Is it quitting time yet?"

If so, it might be time to discover a new direction and alter your perspective. to learn the meaning of our lives, the reason we were given this gift of life, and the gift we should return to the world.

Transitioning from the left to the right cash flow circle

Here are some tips for shifting your perspective if we wish to go from the left side of Master Investor's CASH FLOW Circle to the right.

A study that was done in the past revealed the mentality of those who went from poverty to wealth. Three factors were thought to be decisive:

They stuck to their long-term goals and strategy.
They have a delayed gratification philosophy.
They took advantage of compounding's power of the asset column for their benefit.

The study also looked at those who had riches at one point but fell into poverty. The three variables that were involved were as follows:

Their vision was short-term.
They wanted to feel satisfied right away.
They misused the compounding effect.

Simply put, rather of living paycheck to paycheck, the road to the right side of the quadrant begins with thinking about amassing assets that provide passive income. Begin modest, exercise patience, and observe as our wealth accumulates over time.

Focus on learning how to work on the B and I side of the CASH FLOW Circle if we are willing to spend the time and money studying something new. We cannot learn how to be a good investor from any degree program. However, we can educate ourselves by reading the wealth eBooks by Master Investor and participating in our digital courses. Although we will need to commit time and money, the return on our investment will be far higher than it would be with a regular school teaching to be an employee instead of a wealthy entrepreneurs and inside investor.