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  • Rohit Musale, CFA

How to Quickly Get to Financial Freedom

Robert Kiyosaki wrote this book, 'Cashflow Quadrant', in which he says: there are four types of people in the world:


  • E - Employee

  • S - Self Employed

  • B - Business Owners

  • I - Investors


When I was working in Dubai in the banking sector, I belonged to the E quadrant.


I was working for a salary.


I was working for money.


I was selling my time for money.


That was active income.


I was trading my time for money.


It was a full time job in a bank.


People in the E quadrant have to work for money.


I was not happy with that.


I wanted to find a way to make money without working.


Hence, I decided to quit my job and change my quadrant.


Much before that, around 2008-09, I was working as a financial advisor.


I was giving investment advice to high net worth individuals in India.


When I was working there, I was in the S quadrant.


I was self-employed.


I had my own private practice.


I had my own clients.


I had realized, if I don't work, the money will not come.


If I stop consulting, then the money will stop coming in.


I had realized, I will have to trade my time for money.


I will have to work to make money.


I was not satisfied with that situation either.


Hence, I decided to shut down that business and move out of the S quadrant.


So, I have been in the E quadrant and the S quadrant.


And in both the cases, the problem was, 'if I stop working, the money stops coming in.'


Hence, I decided to move to the B quadrant.


I decided to start my own business and create products that would earn me money, even while I am sleeping.


I digitised or productised my knowledge and created video courses.


And now, people from more than 172 countries are enrolled into my video training programs.


Even while I am sleeping, people are buying my video courses.


The business does not require my physical presence.


I have figured out a way to earn money without working.


That was a great realisation for me, which has changed my life.


I am earning enough passive income on a monthly basis, which takes care of my monthly expense.


I don't need to go back to the E quadrant.


I chose to go into the B quadrant.


Robert Kiyosaki defines B quadrant as a business owner whose business has 500 or more employees.


My definition of B quadrant is slightly different.


As long as I have a business and the business earns money for me without requiring my physical presence, and it gives me enough capital or enough cash flow, which can take care of my monthly expense, I am happy being a business owner.


I am not planning to build a unicorn here.


I am happy with a small business which takes care of my expenses.


I am not answerable to anybody.


I have no boss.


I can take my own decisions.


I have the freedom of time, money, and location.


Let's look at the I quadrant.


I have a business.


I generate profits in the business.


I have to invest this money somewhere, right?


So that's where I become a professional investor.


I can choose to invest that money in my own business, or in someone else's business.


I currently own two private businesses.


And I have investments in public companies as well.


How do you make a decision, where to invest your profits, that you are earning from your business?


It's very simple.


Wherever I am getting a higher rate of return on my invested capital, I have to invest my money there.


Obviously, public companies or large companies, have employees and infrastructure.


Obviously, those businesses are likely to make more money on their invested capital than I would make, if I invest that capital in my own business, right?


Hence, I am better off, taking profits out of my business and putting those profits in a publicly listed company, which is actually generating lots of free cashflow, giving dividends to shareholders, and buying back its own shares, increasing shareholder value, and maybe acquiring more businesses for the future.


That is how I take a decision.


It is purely based on return on invested capital.


I have been in all four quadrants.


Currently, I am in the B quadrant, and the I quadrant.


This is a much better life.


I have the freedom of time, money, and location.


However, having said all this, it takes time to move from the E and the S quadrant to the B and the I quadrant.


The people who are in the B and the I quadrant, are not working for money.


I am not working for money.


I am creating products and these products, which are a part of my business, which are assets of my business, are generating income for me.


I do not work for money.


I work only to create assets in my business.


That is the way to get to financial freedom, fast.


If the business that you start does well and throws off enough cash flow, which you can invest in even higher return businesses, nothing like it.


That will help you achieve your financial freedom goal even faster.


Regards,


Rohit Musale, CFA


1 January 2023

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