7 Levels of Investors

In the book "Cashflow Quadrant," author Robert T. Kiyosaki writes about the so-called seven levels of investors. Kiyosaki credits investor and author John Burley for six of the levels. Kiyosaki believes that most investors initially fall under one of the categories, but you can change levels by learning how to make money through experience and knowledge gained.

"Cashflow Quadrant"

Kiyosaki's "Cashflow Quadrant" discusses the four ways of making money. You can work for someone else and be an employee, or be self-employed but continue to rely on income from other people. Either way, you are making a wage for the work that you do. Alternatively, you can be a business owner and delegate tasks to your employees, so that you don't do all of the work yourself. The last quadrant is filled with investors, who earn money by using money. Kiyosaki explains that you are wealthy when you can supply your needs without working, which describes how some investors live.

Levels 0 through 3

Kiyosaki and Burley describe the levels in progressive terms, if your goal is to become someone who invests your money and receives a livable residual income. Those at Level 0 are people who don't have any money to invest, while those in Level 1 borrow funds to pay for necessary items. Level 2 investors put money aside into low-risk investments, such as a bank account. Level 3 consists of three types of people: those who aren't interested in investing, the ones who are cynically cautious with their money, and those who gamble with investments.

Levels 4 through 6

The last three levels are investors who are more serious and educated about where to put their money. Level 4 consists of people who have mapped out their long-term goals with financial vehicles. You must be at this level at some point before advancing to the next two. The investors in Level 5 are savvy about the strategies they use, and have more money to risk in aggressive investments. Kiyosaki and Burley refer to the final level of investors as "Capitalists." This is an elite group that can leverage other people and their money to create opportunities for everyone.


Applying the definitions for the various levels of investors to yourself will help you determine where you are in respect to your financial goals. You may relate to more than one level, but analyzing each will show you strengths and weaknesses. Taking courses or finding a mentor who is at your desired level can help you succeed.