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1. The meaning of work is to stabilize cash flow

In addition to the rich second generation, most of the wealthy people who started from scratch started with a normal job, but we often overlook the meaning of the job.

When it comes to work, what do you think of first?

Whether you are the bottom-level employee who just entered the workplace, or the manager who has a monthly income of 100,000, the work has one thing in common: when the monthly fixed period, there will be more money on the bank card.

Using a concept of finance, this process is called “stable cash inflow.”

Cash flow refers to the amount of cash (including bank deposits) that actually grows or decreases in a business.

Cash flow is the blood of the company. Many small businesses will be profitable until they close down. However, because the upstream payment is in arrears, the advance payment to the downstream will result in no payment, and often even the salary will not be paid. When I came out, the boss finally rolled up a payment and ran away.

The counter-example is a retail enterprise such as Jingdong and Amazon. It has been losing money since its establishment, but the company has become bigger and bigger, because this type of retail enterprise is doing cash flow business, expanding the scale to occupy the supplier’s Payment. They can be profitable in minutes, but they are not profitable. Cash flow is so good, why should it be profitable?

Cash flow is equally important to personal wealth. For many people who just work, life will be problematic if they don’t get paid for three months.

So the meaning of the job lies in an expectation – no matter what your grades are, you can get a sum of money every month.

This expectation is too important, because with this expectation, you dare to rent a house; the bank will send you a credit card to let you consume in advance; small loans do not have any mortgage guarantee, as long as you have a job…, your All consumption habits, marriage, family, and pension plans are based on the expectation of “stable cash flow”.

In fact, work (including stable part-time or freelance)It’s a lifetime The only place where it can generate a steady stream of cash – this is the biggest meaning of work.

Someone may disagree. The real rich are doing business or investing. Isn’t this income?

In fact, these two businesses have not been able to generate stable cash flow for many years to come.

Look at the investment first. If you do industrial investment, you may accidentally cast a future Tencent Ali, but the cash flow is definitely not available, only a share that is not easy to cash.

If it is a financial investment, on the surface, the stock is sold as cash, but you will not sell it. If you lose it, you will not sell it. If you sell it, your loss will increase. If you earn, you will Sell, but won’t come out, know that you can make money, you will only expand your investment.

Professional investors in real life, both to increase the value of the principal, but also to provide a stable cash flow for family life, the annualized rate of return of capital must at least cover two years of family living expenses – if your family The annual expenditure is 300,000, the annualized income is 12%, and your investable capital is at least 5 million.

So, before this capital accumulation is reached, investment cannot be a substitute for work.

So what about doing business?

Starting a business can not only generate cash inflows, but also cash out the first time – use your family’s savings. Even if your company is doing well, the cash flow you can get is actually wage income.

So what is the dividend return as a shareholder? Unless you want to be a small business owner, you should not turn your company’s profits into household income, orThe company occupies the cash flow of the company. And small business owners have limited ability to resist risks. Can you give yourself a few years of salary?

Most of the people who choose to start a business are based on an important premise that the marginal utility of cash flow is diminishing.

What do you mean? For example, the first year of your work, the annual salary of 50,000, the individual can invest 50,000 assets; but in the second year of work, the family annual income is 500,000, and the family can invest 5 million.

In other words, as your age increases, the effect of income cash flow on you will also decrease, and investment and entrepreneurship are rational choices.

If you take these two paths too early, your life’s demand for cash flow will be seriously conflicted with your business and business’s swallowing of cash flow.

Of course, young people’s entrepreneurship is not impossible. There is also a relatively difficult way to generate cash flow. This is – debt.

2. Leverage can make you rich, and it can make you “negative”

Ma Huateng’s personal wealth is 260 billion yuan (Hurun list), Tencent’s market capitalization is 3 trillion Hong Kong dollars, the former is his wealth The latter is his wealth of “control”.

The rich do not necessarily refer to those who can “own” a lot of money, but those who can “control” a lot of wealth through the form of “limited liability company”.

The so-called “limited liability” means that the company has an accident, and the shareholders only lose part of the capital contribution without affecting the personal property; but the company is developed, and you can “control” the entire company’s capital only by funding.Production – “Control” is quoted, not real control, and its strength depends on individual ability.

Taking Lao Lai’s Jia Yueting as an example, the reason why he has a huge debt can’t go back to the country, is that LeTV’s debt is counted on his head, but he’s guaranteed for LeTV’s loan, so he Can apply for personal bankruptcy. Once the individual is bankrupt, he can… No, his company can get a new creditor and continue his personal “making a car dream.”

This is the first level of leverage – both to amplify your personal wealth and protect yourself.

A lot of people know that if they want to get rich quickly, they need to be “levied”, but they don’t know that those rich people should first wear “safety belts” instead of “like them”. Borrow money to stocks, so that you are completely exposed to risk.

Of course, just this level of leverage does not make you a rich person.

Every company has a “balance sheet”. The assets that the company “owns” are not all earned, but also include assets brought by some liabilities, including buying equipment with bank loans. “White Bar” purchases goods from downstream suppliers and pre-charges consumers’ money in the form of annual cards…

“Asset ratio” is the ratio of liabilities among all assets of the company. The higher the number, the better the company is better at “making money with someone else’s money.” For example, according to regulations, commercial banks have a debt-to-asset ratio of up to 92%, so banks themselves have no money and are borrowed. In order to cover up the nature of the lack of money, banks must work in the most expensive office buildings.

This is the second layer of “leverage” and the debt we usually understand.

You may have to say, I also have leverage. I bought a house that owes millions of mortgages to the bank. But how can I become a “house slave” with thousands of assets squeezing the subway every day?

The answer is in the previous section. Even if you are sitting in a million real estate, your cash flow is only wages, the house will not only generate cash flow, but the huge mortgage will also send a part of your income as cash, so you It became a “house slave”, not a rich man.

The way in which entrepreneurs generate cash flow – through the tens of times of leverage that can be “controlled” by two layers of leverage, and then from the cash flow generated by corporate assets, part of it becomes a personal one by legal means. cash flow.

This is the two sides of leverage. If you can bring positive cash flow, leveraged assets will make you richer; if you bring in negative cash flow, leveraged assets will make you “negative”.

So “Upper leverage” has two key points:

First, companies must generate positive cash flow as soon as possible, and the asset size and cash flow should match, and they should not always invest. They are always developing products and producing products instead of selling products.

The problem with Laojia is that LeTV stepped too much in the past, and the growth of cash flow did not keep up with the growth of assets, leading to being leveraged.

The second point is that the operating cash inflow created by the operating company is dozens of times higher than the income at the time of going to work, because most of the cash is paid to the employees for the normal business. Production and management, only a small part of the personal cash flow.

It’s just that at this point, most entrepreneurs are actually working for their employees in turn, and they are struggling for the cash flow of their employees.

The reality is that even if the cash flow created by entrepreneurship is not necessarily greater than that of senior white-collar workers, those who are enterprising are still willing to choose the path of entrepreneurship. Why?

Because life has something more important than cash flow.

3. What’s more valuable is how to spend money

Max Weber analyzed in his book “Protestant Ethic and Capitalism” why capitalism was the first to be produced and succeeded in Western Europe. It is derived from the influence of Protestantism on people.

These successful entrepreneurs who believe in the spirit of the Protestant ethics have a firm belief:I believe that I am a God’s chosen citizen. I work actively to prove this. “To earn money, engage in business and economic activities with religious enthusiasm.”

So, for these people, making money is not an end in itself, and property is not an individual. “People are only entrusted with the management of the property that God has given him. He must be entrusted like a servant in the fable. Every penny given to him has been accounted for.”

So huge wealthy people like John Rockefeller and Andrew Carnegie always treat their money with the same serious attitude as making money.

In the company’s third form, the income statement, most people are more concerned about income, but for entrepreneurs, the value of expenditure items is greater.

Revenue projects correspond to products and services, stakeholders only have customers and consumers; and the value of expenditure items is more extensive, production costs and costs are related to the interests of downstream suppliers, and wages are the value to employees. Taxation is the value that is provided to the country. Your R&D expenditure increases the country’s scientific and technological strength. Your public welfare expenditure has improved the mutual help system of the whole society…

The purpose of cash flow is to survive, and spending is the embodiment of maximizing the value of a company.

Similarly, a person’s wealth also comes from cash flow, but it is expenditure that reflects the value of this person.

There was a saying before, “Every penny you spend on American goods will eventually become a missile hitting your head.” This sentence is not good, but the logic is correct, so it is better. The expression is:

Every penny you spend is casting a vote for the world you want.

In theory, the money earned by a person in his lifetime is equal to the money spent, and our great probability does not become a real rich man, so,Severely spend every dollar, the meaning is no less than “how to make more money.”

4. Three tables of life

Readers who are familiar with finance should see it. The three sections above correspond to the three most important financial statements of the company: Cash flow statement, balance sheet and income statement.

In the management of life, you also need to grasp this “three tables”:

First of all, you need “cash flow” to achieve “live”, and you have to prove to the people around you that you are stable and financially reliable., a good husband who is trustworthy and a good wife. Good father, good girl, good friend, good partner, good boss…

Secondly, you need “asset and liability” to expand your life boundaries as much as possible, rational use of leverage to accelerate development, pool resources, and try to live more in a safe and controllable range. More likely.

Finally, the “profit statement” tells you that what you have is not the most important thing. What matters is that you “replace the world for safekeeping” and what you pay for the world, they form you. Most of the value of life.


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