The cash flow game was invented by Robert Kiyosaki, the author of Rich Dad Poor Dad, and aims to simulate a real life of wealth from the game. The essence of the game is to make your own "passive income" in the shortest possible time ("passive income" refers to the cash flow that can be obtained regularly without working - such as rent, interest, dividends, royalties, etc.; the game mainly relies on investing in houses to collect rent and investing in shares. Enterprises can achieve financial freedom by obtaining dividends, purchasing certificates of deposit/bonds and collecting interest) exceeding their total expenses.

Many events simulated in the game: unemployment, unexpected large expenses, increased expenses of having children, and passing investment opportunities are actually in our lives; the only difference is that in the game The experience of struggling and failing is much less costly than the reality of it. Based on my own experience of playing games, I summarized it into "Seven Lessons on Wealth" to share with you.

(1) Lesson 1: Trading opportunities need to circulate

The first game of the game was played for more than two hours, and no one achieved financial freedom. The most direct reason is that everyone only sticks to the investment opportunity cards they have drawn, and their thinking is very narrow. For example, there is often an opportunity with a high investment rate of return. The winning player gives up because he has insufficient funds, and other players also let it go because it is not an investment opportunity for them. In fact, if two people form a partnership and apply for a loan from a bank or private sector, they can seize this opportunity. Another example is: Player A draws an opportunity to buy a very cost-effective stock, but the rules say that only A (the person who draws the investment opportunity card) can buy it, and other players immediately let it go. It wasn't until after the game was over that the reviewer (the "banker" in the game) spoke, and everyone suddenly realized: "The rules say that only A can buy, can't other players entrust A to buy? The situation of equity holding is not yet Common? ”

The above example is given to illustrate: By working with others and understanding financing, you can turn things that were not investment opportunities into opportunities, turn other people’s opportunities into your own opportunities, and turn yourself into opportunities. opportunities become opportunities for everyone. In short, no matter how you operate, it is much more efficient than just guarding your own limited opportunities.

(2) Lesson 2: Distinguish between good and bad assets

If you use only one sentence, you can describe the game as the process of "purchasing assets with cash to obtain cash flow". A very direct question is, what is a high-quality asset? To give a fictitious example, if I have 1 million yuan, how should I judge the following investment opportunities? Opportunity one: Invest in property A, with a down payment of 1 million yuan and a loan of 4 million yuan, which can be rented out. The monthly cash flow (that is, the rental income after deducting housing loan interest and other expenses) is 20,000 yuan, and the house has little room for appreciation; opportunity two: Investment property B, with a down payment of 600,000 yuan and a loan of 2.4 million yuan, is used for renting out. The monthly cash flow is 15,000 yuan, and the house has medium appreciation potential. Opportunity 3: Investment property C, with a down payment of 800,000 yuan and a loan of 3.2 million yuan, is used for renting out. , the monthly cash flow is negative 5,000 yuan, but the house has great room for appreciation and may be purchased by the market at a price of about 4.4 million yuan in the near future. How to choose between three opportunities? There may not be an absolute answer, but the following factors need to be considered:

(1) Funds: Consider the proportion of your total funds occupied by this investment. The greater the proportion, the more concentrated the investment portfolio will be, with poor flexibility and risk resistance. Weak (such as Opportunity 1); and the funds consumed by any investment are the opportunity costs of other investment opportunities.

(2) Income: Consider the investment rate of return (calculation formula: annual cash flow/down payment amount). Theoretically, the higher the better, but other factors must also be analyzed, such as the occupancy just mentioned Fund ratio (such as the comparison between Opportunity 1 and Opportunity 2) and the issues of value-added space and liquidity mentioned below (such as the comparison between Opportunity 1 and Opportunity 3);

(3) Value-added space: consider value-added Space, value-added possibility, value-added speed (for example, the net cash flow of Opportunity Three is negative, but its value-added space may become an investment point);

(4) Liquidity: consider the speed of realization (for example, Opportunity Three If the real estate cannot increase in value and be realized in the near future, money will be taken out of our pockets every month). Only by analyzing investment opportunities based on your own actual situation and combining the above factors can you find high-quality assets that suit you.

(3) Lesson 3: Allocate your own wealth

In wealth allocation, there are three key words: "cash flow", "capital amount", and guarantee fund. In this sense, the importance of the three words shows a progressive relationship, because cash flow is important, but without a certain amount of capital accumulation, many investment opportunities cannot be participated at all; more importantly, investment is not a guarantee that will never fail. Games, and setting up protection funds (can be through cash deposits or buying insurance, etc.) can prevent the worst financial situation.

Generally speaking, cash flow is achieved through the purchase of cash flow assets ("in this article"). "Cash flow assets" refer to assets that "can regularly generate cash inflows", not assets in the general accounting sense); the total amount of funds comes from the cash inflows brought by assets on the one hand, and the more important source is actually work income. And other methods that can quickly increase the total amount of funds (such as the realization of real estate appreciation, realization of stock appreciation and other methods to generate capital gains) - as the amount of funds increases, the opportunities to purchase cash flow assets will also increase. Therefore, how much money should be allocated. Purchasing cash flow assets, how much to pursue capital gains, how much to use as security, and how much time and energy to allocate to earn a salary have become questions we must think about.

(4) Lesson 4: Experience Unemployment

You will be unemployed in the game. The consequences of unemployment are to stop for two rounds in the game and pay a fee (this is a design to simulate real unemployment, because stopping for two rounds in the game almost means losing an opportunity to receive money. Spending an expense means that the expenses will still exist when you are unemployed). It can be intuitively felt that the people who are most afraid of unemployment are those who have no cash flow assets and no security funds, but have high daily expenses. The reason is that they have sufficient cash flow assets. People don't have to worry even if they lose their jobs, because cash will continue to flow in; people who have insurance funds are in an acceptable situation, and they can use the insurance funds to meet emergencies, at least they don't have to borrow money or sell assets at low prices to meet living expenses; even if they have insurance funds, they don't have to worry. The situation is not too bad if the daily expenses are low. After all, it can last for a period of time. People who have no cash flow assets and no security funds, but have high daily expenses, are extremely vulnerable to unemployment. What is surprising is that in real life, many middle-class people who have good incomes but lack investment awareness and over-consume are exactly in this most dangerous zone.

Another great advantage of unemployment is that it gives people a profound feeling. Reflection: Is my previous time and financial arrangement very wrong? My personal experience is that working for money may lead people into several misunderstandings: (1) Unconscious reliance on salary income (rather than through "passive (Income "increases wealth); (2) Being accustomed to working for others; (3) Work takes up too much time and life is unbalanced; (4) Focusing on the matters at hand in the near future makes people become short-sighted. Once unemployed, they will I have the opportunity to deeply reflect on the above misunderstandings, and at the same time re-imagine the life I really want to live.

(5) Lesson 5: Be wary of spending

Everyone in the game has become very disgusted. Extra expenses, especially those that require regular expenditures (such as getting to the point where you're going to have a baby or getting the card to buy a luxury yacht with a high monthly payment), for obvious reasons: They detract from your investable capital.

The fewer funds you have, the fewer opportunities you have to purchase cash-flow assets, and the farther away you are from financial freedom. Interestingly, in life, we often unknowingly add extra expenses while complaining that we have no money to invest to increase the value of our assets. In fact, when additional expenses are added, investment opportunities that could have been used to generate money are also consumed. Of course, it needs to be pointed out that the expenses here refer to additional and less necessary expenses, and expenses used to maintain life balance and expand one's abilities and structure are not included.

(6) Lesson 6: Internal friction is the killer of overall interests

There are several investment cards in the game for buying high-quality stocks at low prices. These stocks often increase in value in the later stages of the game. times, so it is an excellent investment opportunity, but the restriction is that only the person who drew the card can buy it himself. Later, people began to entrust people who drew the cards to buy stocks on their behalf, and the people who drew the cards also wanted to take advantage of the opportunity and collect commissions from the process of buying stocks for others. Negotiations often occur when agreeing on a commission amount: What is the amount? Is it a fixed amount or a proportion of revenue? Collect beforehand or afterward? To name a few. But later it was discovered that these clever ways of playing were actually very inefficient. The fastest way may be for everyone to reach a consensus at the beginning: Anyone who gets the opportunity to buy stocks at a low price agrees to buy them for others for free. In return, others will also help for free when they get similar opportunities. This person buys on behalf of you. Such an arrangement is fast, has low internal consumption, and is extremely efficient in accumulating overall benefits. Charlie Munger famously said, "When you get a seamless web of deserved trust, you get enormous efficiencies." The trading pattern just mentioned is evidence of this.

(7) Lesson 7: Human time is limited

The cash flow game has a time limit. You must achieve financial freedom and realize your life dreams within two or three hours (Game 1) At the beginning, everyone has to choose a dream, but after becoming financially free, you can spend a lot of money to realize this dream). After playing a few games last weekend, no one could achieve financial freedom within three hours of game time. At the end of the game, everyone counts the money in their hands, reflects on the investment opportunities they caught or missed, and experiences all the good and bad luck in this game. Suddenly a friend said: "Does this game look like our life? At the end of your life, look at what is left in your hands, think about what you have experienced and the time wasted, will you? Do you think life is not worth living? If time is so limited, is it unnecessary to do things that took a lot of time but had little meaning in the previous game (such as repeatedly negotiating the commission level when buying stocks on behalf of others)? ”

If a person starts playing the cash flow game in his twenties and plays it until he is thirty, forty or even older, and plays thousands of games, and sees each game as a miniature life, he will surely be able to understand life better. Time is fleeting, time is precious, and freedom is rare. After understanding this level, I think the greatest value of this game has been harvested.