Investors also benefit from the most tax breaks. Unlike business owners, investors don’t have to deal with employees, and unlike those on the left side of the quadrant, they don’t have to work to create income. Furthermore, they use cash flow from their current investments to buy even more income-producing assets, thus growing their wealth exponentially. Investors identify and acquire assets that have the potential to produce passive income, allowing them to spend their time and attention elsewhere. They can always hire more people who can complete more work and generate more income. Their money-making potential is not limited by time constraints. Business owners create products or systems, and then hire people to do the work instead of doing it themselves. People on the right side of the CASHFLOW Quadrant engage in activities that can produce unlimited income. As Robert Kiyosaki explains, employees have a job and the self-employed own a job. Similarly to employees, if they stop working, their income will dry up. Their income, however, is limited by the number of hours they can work. ![]() Self-employed individuals have a little more control over their income as they are their own bosses. Furthermore, even the highest paying jobs typically have a salary cap, putting a limit to the income an employee can earn. If they lose the job, or the company goes out of business, they no longer earn money. ![]() They like the security and predictability of a full time job, however, their income will always be dependent on their employer. Employees work for another individual or a corporation, and in exchange, receive a salary and other benefits. Individuals on the left side of the CASHFLOW Quadrant trade time for money. The “Rich Dad Poor Dad” author divides people into four categories – employees (E) and self-employed individuals (S) who are on the left side of the quadrant, and business owners (B) and investors (I) who are on the right side. One of Robert Kiyosaki’s fundamental concepts, the CASHFLOW Quadrant, does a great job of illustrating the different ways people think about and receive income.
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