How to Train Your Brain to Become an Investor?

So what is the first step in training your brain to become an investor? The answer is easy. It is financial literacy. It begins with the ability to understand the words and the number systems of capitalism. Understanding the words or the numbers depends to where you are in Kiyosaki’s quadrant. Each quadrant represents distinct language and mindset. They are all different especially in terms of money making. The ability to make money with money begins with understanding the words and the numbers. Being financially literate you can assess yourself not so much how much money you can make but how much money you can keep, and how much money you can invest.

Robert T. Kiyosaki often said that there are four personalities in the business world which explains in his Cashflow Quadrant®. The Cashflow Quadrant® simply makes distinctions on E (Employer), S (Self-employed), B (Business owner) and I (Investor). The I make money with money. They do not have to work because their money is working for them.

Investor is closely linked to gamblers, because somehow investors are gamblers, they take the risk. The gamblers will never be investors unless they act as investor. So let us not confuse with the two. The gambler is not investor. The difference between a gambler and an investor is simple. For a gambler, investing is a game of chance. For an investor, investing is a game of skill. It is a skill because it needs gathering of facts before deciding to invest. The gambler decides based from opinions and guts. The gambler are not financially literate and do not know the game of money, they often take the opinion and advice of people they tend to trust. The investor learns every time he makes mistakes while the gambler acts to his investments with no informed decision.

Kiyosaki said one way to get a chance to become investor is to engage in financial market like Foreign Currency Exchange. Investopedia defines Foreign Currency Exchange as a process of changing currency into another currency usually for commerce. Foreign Exchange Trading a.k.a. Forex is the best example to this, where you learn the skills in currency trading. Forex is not paluwagan like the pay-in-pay-out­ schemes you know. The pay-in-pay-out­ scheme is a Ponzi scheme. Ponzi scheme is an investment scheme where investors are paid off with new investors’ money. The scheme works well as long as there are new investors adding new money to pay off the old investors. The scheme works as long as new money flows into the scheme. If new money stops flowing in, the scheme collapses.

Foreign Exchange Trading or Forex is a financial market trading where you can monitor the flow of foreign currency exchange rate even on your cellphone. It is a trading of currencies wherein the trader exercises buying, selling and exchanging currencies at determined prices. It is a virtual money mining activity that mines percentage of income and loss depends on the amount the trader deposit in any market condition.

To start your financial education I recommend spending time to read Kiyosaki’s books before investing your hard earned money to anything. Read his Rich Dad Poor Dad and his following books such as the Cashflow Quadrant®, Retire Young Retire Rich and among others. It will help you decide where you want to spot or create a good investment. His book is about strengthening your thoughts so that you can take the action that will enable you to find your passion and become financially literate. Shaping your proper mindset must conditioned first before deciding to take a leap in investing.