No one likes making a mistake that causes them to lose. But that’s life. So it shouldn’t stop you from being a winner. Hell, major league baseball hitter’s can strike out seven out of ten times and still get into The Hall of Fame.

The key is learning from your mistakes. Recently I bought these spinners from an online wholesaler by mistake. I lost $100. I was none to happy about it. I thought I was purchasing fifty-three minnie drones, rather than spinners.

But I remembered a lesson I learned from Warren Buffett. He explained that many stock market investors hold on to losing stocks. Because in their minds, until they sell and officially take the loss, they don’t have to deal with the pain of losing money. It’s the same idea like when people stay in a bad  marriage or relationship. They won’t cut their losses and move on, even though the love in the relationship has died.

That lesson helped me get past my loss by just deciding to donate the spinners, which turned me back into a winner. How? We’ll first of all. Just the mere feeling of letting go and accepting the loss put me back in a winning state of mind. Then within an hour of the donation, I was sourcing inventory for my online store and found $200 worth of profits, while only investing about $25 and some change.

I used my pain from losing to power past my loss to get back in the winning circle. If I kept my losing attitude by acting like a victim, I don’t think I would have found these $200 worth of items for $25.00. It’s that simple…

In fact, we all know the popular saying, “give and you shall receive.” We’ll I gave which turned me into a winner by receiving even more, even though I initially lost. So I’m glad I kept playing the eCommerce game.

Cause Rich Dad say’s, “playing not to lose means you will never gain financial freedom.” So continuing to find a way to play the money game, is how to win when you lose.

Most of us are familiar with the saying, “knowledge is power.” But we also know this is not true. Because we know, in order to create the power we have to apply the knowledge in real life for the power to be generated.

This is why Robert Kiyosaki wrote the book Rich Dad Poor Dad and created the board-game, CASHFLOW 101. The book was the knowledge, and the game was a way to apply that knowledge through simulation, to eventually doing the real thing in life.

This is also the idea behind these blog posts. To provide you with financial freedom education, and then work with you to apply the knowledge to building a cash flowing eCommerce network of businesses.

But back to the importance of financial freedom education. Tell me. Have you ever changed the oil filter on your car? If you have, you know it’s important to have one, because if you don’t dirt and grime can get into the engine and damage it beyond repair. Not good.

Financial freedom education acts as a filter as well. It filters, good financial advice, from the bad financial advice. Without out it, just like needing an oil filter on your car, it can cause financial damage if you don’t have one when driving any type of an investment vehicle.

There have been many times when I was managing or driving an investment vehicle. And if I didn’t have the filter of financial freedom education to help me filter out the bad financial  information or advice, I would have been in big trouble.

In fact. It causes people to lose out on great investments as well. Cause they don’t have the filter of financial freedom education to understand what a great investment looks like.

So investing in our financial freedom education is critical if we want to create a brighter financial future. Something money alone can’t do for us.  Plus, having money without having the filter of financial freedom education is dangerous. You see examples of it all the time, with professional athletes who suddenly became rich. Then when they retire, they tragically became broke over some bad investment decision. Cause they invested without the filter of financial freedom education.

You wouldn’t dare build a house without building the foundation first, cause you know the house would eventually collapse after one or two bad storms. So we should never build our financial houses without first building our foundation of financial freedom education. Even though unfortunately, most have.

Rich Dad teaches us that without rules in our lives, chaos results. Just imagine if there were no speed limits on our highways, more deaths would result. We teach our children to be polite and respectful. To treat others they way they would want to be treated. All because we know that’ll make this often chaotic life a little easier for them.

Well when it comes to investing, it’s no different. We must have rules. I’m not a very religious person, but I consider myself very spiritual. And one of the famous sets of rules most of us are familiar with are The Ten Commandments. Starting with, “thou sha’ll not kill.”

In the case of investing money, the idea rule is when you invest it, do your best not to kill it. Truthfully, like The Ten Commandments, it’s more to be used as a guideline as oppose to steadfast rule, to keep us and your money safe.

There is a rule called the “Pareto principle,” known as the 80/20 rule. Which says that “eighty percent of what happens comes from only twenty-percent of one’s efforts. For example. If I invested in one hundred units of eCommerce inventory, only about twenty-percent of that inventory will create profits.

That being the case. I want to share with you my 20/80 secret rule when it comes to successfully investing in eCommerce inventory, or in any other type of investment. Always do your best to make sure you are only exposed to twenty-percent of the risk.

I mentioned in my last post, that my eCommerce advisor invests a whopping $400, 000 in inventory on credit, each and every month, but only makes a profit of about twenty-percent. Eighty-thousand to be exact. His investment strategy violates Pareto’s rule, exposing him to too much risk. Because only twenty-percent of the $400,00 is his profit. If he followed the rule. He would only be investing $80,000 which is twenty-percent of $400,000, and would be generating $320,000 per month in profits, which is eighty percent of the $400,000.

In my opinion that’s a very risky strategy to use. Here’s the main reason why. There’s little room left for error. Most businesses that rely heavily on debt like this get wiped out when the economy begins to slow. Because the economy only thrives when people feel optimistic and confident, cause that’s when we spend the most. So when we have no confidence, our spending tightens. Banks react to this by tightening their lending.

Therefore, it becomes hard for small businesses to borrow money via credit to purchase inventory to sell. So there profits begin to shrink,  adding the insult of conservative consumer spending to the injury of there poor profits from being unable to purchase enough inventory. Supply becomes more than the demand.

Now granted, to get while the getting’s good by making eighty grand per month can be a beautiful thing. But as you know, Rich Dad or myself are not about teaching you how to think like an average entrepreneur or investor. We teach you to think sophisticated.

So here’s my 20/80 secret rule. Turn the investment inventory odds in your favor. How much better would it be for my advisor, if he followed my 20/80 rule? By only investing $80,000 per month, to profit $320,000 per month? Obviously, a whole lot better.

Practicing my 20/80 rule would do three important things for you:

1. Accelerate your profits
2. Provide you with maximum reinvestment capital
3. Most importantly, expose you to as little risk as possible, so that you would survive and thrive in a good or bad economy.

Mind you, you would also be flush with cash to acquire great assets that come to the surface in a bad economy. I know, as the saying goes, “easier said than done.” I couldn’t agree more. So use this 20/80 rule as more of a guideline, as oppose to a hard-lined rule.

But it’s possible. Because in my eCommerce business, for every $200 I invest in inventory, it produces about $1,000 in net profits. Giving me great profit margins that protect me against unforeseen costs, which Amazon, eBay and others are infamous for.

Well there you have it, my 20/80 investment rule. If you have a dollar to purchase inventory. Only invest .20 of it to make a minimum of 80% profit and watch your profits soar. My average pure cash net profits are currently at $35 per item sold and climbing. That’s how a sophisticated investor approaches investing. Which requires a lot of research, study, discipline and patience.

This is why, Warren Buffett say’s, “if you can’t control your emotions, you can’t control your money.” Average investors live for the money. Sophisticated investors live for creating great investments.

But, I won’t lie to you. It takes a lot of creative thinking. Something I teach the people I work with to do. Work on doing more and more, with less and less. Not to be fooled and distracted by hearing big numbers. Because it’s never about how much money you make, it’s about how much of the money you keep.

My 20/80 rule is an elephant you have to eat, one bite at a time.

The purpose of my new Academy of CASHFLOW official Rich Dad Blog is not to tell you what to do with your money. I’m not an investment advisor. Even though I do sell and recommend certain investments that I feel can be helpful to my readers. Academy of CASHFLOW is a financial freedom education blog. So our main focus is financial freedom education.

The purpose of my CASHFLOW Coaching 3-Legged Stool Multiple Income Stream program is to expand your skills and thoughts about how to make money. If you expand your mental capacity to “work smarter, not harder” for money, you’ll have more control over your financial future.

As you know, our thoughts are the most powerful force we have. The purpose of my CASHFLOW Coaching 3-Legged Stool Multiple Income Stream program is to have your thoughts working for you, rather than working against you.

There are three types of in:

1. Earned
2. Portfolio
3. Passive

The poor and middle class work hard for earned income. The rich work for portfolio and passive income. Of the three, passive income is the best income because it’s taxed at the lowest levels.

Apply to be accepted as a candidate for my 3-Step CASHFLOW Training Challenge

One of the most important lessons that Rich Dad teaches is the importance of partners. It’s a lesson I often think of. Simply put, if you have good partners, gaining financial freedom is easier. If you have bad partners, gaining financial freedom is harder… sometimes painful… often very costly.

When I coach someone who is struggling financially, it’s often because they too have bad partners they are involved with. For example, the person who is struggling could be married to someone who is lazy, does not study, spends too much money on food, alcohol, sports, hobbies, or clothes. Or the person could be surrounded by friends who’ve got bad habits, or a negative attitude about money, even to the point of criticizing the person’s desire to improve themselves or their financial position. So a bad partner does not necessarily have to be a business partner.

One of the reasons I’ve achieved financial freedom – successfully – is simply because I’ve developed the ability to identify a bad partner.  When I’ve had good partners, the deals appear and things go well. We may have problems, but I don’t have to know all the answers if I have good and smart partners.

I’ve also experienced bad partners. They were not bad people, just bad partners for me. And truthfully some thought I would have been a bad partner… and in those cases I may have been. Whenever my partners or team members are not on the same page, play by the same set of rules, same ethics or morals, the business or investment will be weak and profits diminish, expenses go up, and stupid mistakes are made.