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Cash Flow Quadrants

Cash Flow Quadrants. Financial Freedom?. B usiness Owner. E mployee. You own a system and people work for you. You have a job. CEBI. S elf- Employed. I nvestor. Your money works for you. You own a job. E mployee. I nvestor. Cash Flow Quadrants. B usiness Owner. S elf- Employed.

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Cash Flow Quadrants

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  1. Cash Flow Quadrants Financial Freedom? Business Owner Employee You own a system and people work for you You have a job CEBI Self- Employed Investor Your money works for you You own a job

  2. Employee Investor Cash Flow Quadrants Business Owner Self- Employed

  3. Business Owner Self-Employed How Can We Build Wealth inThree Quadrants? Business Owner Self- Employed Investor Investor Your money works for you

  4. What is Money, Anyway? • A medium of exchange that is socially and legally accepted in payment for goods and services and in settlement of debts • A standard of value for measuring the relative worth of different goods and services • A “factor of production”

  5. Machinery Materials Output Manpower Profit Money Investors Lenders The Dynamics of Money The purpose of a business is to create wealth for its shareholders Production Operation (products or services)

  6. Machinery Materials Output Manpower Dividends & Increased Value Money Interest Lender Bank The Dynamics of Money Employee Version Production Operation (products or services) You get a job You buy Stock Investor You buy a CDor deposit $ You buy a Bond

  7. Machinery Materials Output Manpower Dividends & Increased Value Money Interest Investor Lender The Dynamics of Money Investor Version Production Operation (products or services) Someone Else’s

  8. Machinery Materials Output Manpower Dividends & Increased Value Salary Money Interest Investor Lender The Dynamics of Money Business Owner Version Production Operation (products or services)

  9. Expect of Your Business: • Salary commensurate with your “opportunity cost” – what you could earn working elsewhere doing something similar • Dividends/distributions @ reasonable Return on Invested Capital rates • Interest income @ reasonable lending rates • Adjust for risk

  10. Invest the Money • In other businesses (stocks) • In Income-producing Real Estate • In Interest-bearing Bonds (of other businesses) • With a Fee-Only Investment Advisor • No Products • No Commissions

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