The Five Levels of investors

Being Financially uneducated is riskier rather invest.

Learning investment is more essential than any other profession. Because other professions teach us to work for money and investment teaches us how money works for us.

We have to learn financial knowledge by ourselves because if you go for the insurance salesman and ask that insurance is essential or not then he sells you his product. If we want to learn about investment then go with the advisor who is investing their fund, not to them who just sell advice. Also, we need to keep in mind that there is not a single assets class that is responsible to create wealth.

Success or failure, wealth or poverty, depends solely on how smart the investor is. A smart investor will make millions in the stock market. An amateur will lose millions.

Different levels of investors

  • The Zero-Financial-Intelligence Level

These are people who do not have any financial intelligence, they spend more than they earn. They believe in looks like rich rather be rich. Though they are earning well, they will reach zero due to their zero financial intelligence. If we do not have any savings, have liabilities, no income generation from the assets column then we need to first focus on repayment of liabilities. These will help us to come out from these levels.

  • The Savers-Are-Losers Level

These people know that savings are essential for future unforeseen events. But they keep saving money either into a saving account or into the government bond / FD. These all instruments are considered safer but when we compared them with inflation, these instruments do not provide us with protection against inflation. Due to its nature of not protecting against inflation, it even becomes riskier. In general, savers are losers.

  • The I’m-Too-Busy Level

These people are busy with their careers, family, other interests, and vacation. And due to such a busy schedule, they do not have time to become financially intelligent. So that they deliver their money to the expert to manage on behalf of them. They consider experts have expertise. When the market is into the bull phase, everyone is an expert but we can come to know about the real expert during the bear phase of the market. They invest in many of the avenues but if the market phase changes to the bear then they will also lose everything.

  • The I’m-a-Professional Level

This is the do-it-yourself investor. This investor may buy and sell a few stocks, often from a discount broker. They think that why should pay a broker when they can do investment by themselves. These people spend their lives in a small area of assets class but we have to understand that investment is a huge subject and we should keep learning about the wider area of it. Those who understand this concept and invest time in learning about investment can able to move to level five. Level-4 investors take control of their lives, knowing that their mistakes are their opportunities to learn and to grow. The fear of investing does not frighten them. It challenges them.

  • The Capitalist Level

These can be rich people, businessmen, or moves from level 4 to level 5.

These people know that they have to give more to receive more. They focus on raising more money which requires them to focus on their skills, business systems, and people.

We have seen in the first article of the series that the author did not have money and from zero, he has created wealth. So we also can create wealth from zero. Thus, we stop giving the excuse of not having money.

We have to perform a self-analysis about where we stand today? What is our level?

The “I” quadrant is the most important quadrant for our future. If we do not focus on it then we cannot have a good financial future.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for the development of the Lucky Idiot website.


When we have to choose the B quadrant then we have to create a system and people will work for that system.

In the B quadrant, we need to know both system and people. It can be possible that our initial business might not work but we just have to focus on improving ourselves, our knowledge of the system, and people. Improvement in our knowledge only brings success in front of us. And it’s essential to get failure in initial business because if not then we will end up with big blunders later on. So, success is a poor teacher and failure teaches us a good lesson. Welcome failure, not run away from it. Learn from it and grow well.

If both the people and the system are leaky, the chances of failure are great. Sometimes it’s hard to know whether the problem is the person or the system that is failing.

There are few ways by which we can get support for starting a business

  • Find a mentor

A mentor who has operated his own business, not an advisor who has not operated any business. We need to learn from a mentor. Mr Sanjeev Bhikhchandani (Founder of Naukri) has supported Zomato.

We have to become a leader, not a manager. A manager sees subordinates as inferior but the leader appreciates smarts and brings them with him.

  • Buy a franchise

Franchises are a proven system. So here we are directly buying a system, not building our own. Now, we have to work as an E and follow what they told us to do. Because they have done it rightly, we should follow it right to get succeed. Investors or bank would lend money to a system rather than to a product.

  • Get involved in network marketing

Here also buy the existing system at a reasonable value and build own business. We get infrastructural benefits from a network marketing company. It’s a kind of buying a personal franchise.

For becoming a successful B, we require to have a few things to keep in mind

  • Don’t be fearful

People feel fear of what others say to them. Feel fear of getting a rejection.

  • Have to work with different kinds of people. For becoming successful, we need to learn to work with different kinds of people, lead them.

The system is only going to help us to drive successfully towards the B quadrant from the E or S quadrant. Building a system and working with people is lifelong learning for becoming successful in the B quadrant.

Read for more detail: Rich Dad’s Cashflow Quadrant: Guide to Financial Freedom

I am grateful to Mr.Meihol Jhaveri (Founder of Gatisofttech) for development of Lucky Idiot website.

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