Cashflow Quadrant

Published in 1998, Cashflow Quadrant discusses the need, importance and strategy to achieve financial security. It gives useful insights into levels of investors and their investment habits. This book serves as a practical guide on how to reach the goal of total financial security without breaking into sweat for every penny earned! Following is a crisp summary of the book.

1. Man is born free, but every where he is in chain. One thinks himself as master of others, and still remains a greater slave than they.

2.   You can never have true freedom without financial freedom.

3.  WEALTH: The number of days you can survive,without physically working (or any one else in your household physically working) and still your standard of living. When passive income of all assets is greater than expenses.

4.  Instead of job security aim for financial security & then financial freedom.

5.  Seven levels of investors-

  • Level 0: Those with nothing to invest
  • Level 1: Borrowers
  • Level 2: Savers
  • Level 3: Smart Investors—aware of need to invest—MF, Bonds, Retirement plans etc.
  • Level 4: Long term investors—Mutual funds, Shares, money generates money—most of American Millionaires
  • Level 5: Sophisticated investors- Aggressive, focused, 20% in speculative & risky
  • Level 6: Capitalists: Synergistically orchestrating others money, time, talent-does not require own money to generate money

6.    Train your brain to see money

7.    Asset: Puts money into pocket

8.    Liability: Takes money out ofpocket

9.    The more people you are indebted to the poorer you are.

10. Minimize your debts and liabilities

11. If you take on debt & risk you should be paid

12. Opinions are not facts

13. If you are going to play the game, boy you have got to play it right.—Kenny Rogers

14. Find your passion

15. I am always ready to learn, but I do not always like being taught.  – Winston Churchill

16. There is too much education in American schools—Albert Einstein

17. Don’t go to find the right person, be the right person.

18. Don’t work on the other person; work on your thoughts about that other person.

19. Working hard to buy things doesn’t make one rich, it only makes one tired.

20.  Emotions are 24 times stronger than the rational mind.

21. Being adult means is knowing what you have to do and doing it, even though you may not feel like doing it.

22. Giants often trip & fall, but worms don’t because all they do is dig & crawl.

23. If the fear of losing stops them then they have already lost.

24. Losers cut their winners and ride their losers.

25. Winners cut their losers and ride their Winners

26. Transfer of wealth takes place at the time of market crash.

27. It is not what happens in one’s life, that matters…..but it is the meaning one puts on what happens that matters.


29. Action beats inaction.

30. Qualities of rich people—

  • Have a long term vision & plan
  • Believe in delayed gratification
  • Use the power of compounding in their favour31. Qualities of poor people--

          31. Qualities of poor people--

  • Short term vision
  • A desire for instantaneous gratification
  • Abuse the power of compounding

         32. If you want to be rich you’ve got to change your rules.

         33. The 7 steps to find your financial fast track

  •   Step 1 Mind your own Business: Write financial Statement & set    financial goals
  •   Step 2 Take control of your cash flow
  •   Step 3 Know the difference between risk & risky
  •   Step 4 Decide what kind of investor you want to be
  •   Step 5 Seek mentors
  •   Step 6 Make disappointment your strength
  •   Step 7 The power of faith: Look in the mirror and listen to the words.

       34. Thoughts are reflections

        35. Money does not stay with people who do not trust themselves.

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