Larry Brauner

A Brief Historical Note

I’m old enough to remember when the norm in the America was to work 40 years for a corporation and retire at age 65 with Social Security benefits and a company pension. I grew up with such an expectation.

Technology and economics reshaped the workplace during the last part of the 20th century, and nowadays people will necessarily change jobs a number of times during their careers and receive little or no employer help along the way meeting their long term financial objectives.

Employment relationships are severed with little reluctance by either party. Employees have become a commodity. Both job security and employee loyalty are very much relics of the past.

It is certainly difficult to assert that business is risky but that jobs are risk free, especially during troubled financial times like these. People in all sectors of the economy are losing their jobs, and unemployment will get much worse before it gets any better.

Robert Kiyosaki Revisited

Robert Kiyosaki, author of Rich Dad, Poor Dad and Cashflow Quadrant, compares four different ways to generate income:

  1. Job - You work for an employer. You earn income by selling your limited time. You’re overtaxed by the government. You may however acquire valuable skills and receive access to affordable health insurance.
  2. Self-Employment - You own your job and must work very hard. You receive tax breaks but still earn your income by selling your limited time. You pay in full for your health insurance. You have some autonomy but must nevertheless satisfy your clients’ demands.
  3. Business - You own a system, and you leverage other people’s time and various resources at your disposal such as the Internet. You work hard, but you essentially earn your income by selling other people’s time. Since you’re not selling your limited time, your income potential is unlimited. Many types of business are very risky, but there are others that are not very risky at all. Businesses have many tax advantages.
  4. Investing - You own assets that are called investments. You earn income from these investments. Knowledgeable investors use insurance such as stock options to manage and eliminate the risk of investing. They also achieve the most favorable tax treatment for their income.

Where Theory and Practice Intersect

It doesn’t take a rocket scientist to understand that business and investing income are much superior to job and self-employment income — all other things being equal — and having a business and investing mindset is a wonderful personal asset.

Yet there’s a catch.

Most people are not in a position initially to rely either on business or investing to provide the income that they need for life’s basics. Some people may not have the wherewithal now or ever to make a business or investing work for them.

Jobs or self-employment provide immediate income for food, clothing and shelter. In that sense they can be a good thing.

If you have a job and the right mindset, you can use the base of income afforded by your job as a springboard to future business and investing. You’ll seek ways to develop new business, and you’ll use part of your paycheck and business proceeds to buy income producing assets.

Your progress might be slow at first, but it will accelerate over time as your results are compounded.

My Change of Heart

I used to put down jobs saying that J.O.B. stood for “just over broke”. While there’s much truth in that, I believe today that I was stuck in all-or-nothing thinking.

So don’t you think job or business. Think job and business, or whatever makes sense.

Your comments and input are invited.

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