How to get Rich (1) - Use Float

What is Float? Float is simply the money currently parked with you but not owned by you.

You can use the float to buy things you like, like the iphone5, the car, or the house. 

But most importantly, you can use float to buy investment products that generate return with the passage of time. The investment products can range from Malaysia Government Securities (MGS), high quality corporate bonds, equities listed on Kuala Lumpur Stock Exchange (KLSE), foreign currencies, fixed deposits, properties or commodities (Gold). 

However, when someone parks their money with you, they usually demand interest rate for it. This is called the cost of float. Utilizes float to  buy investment products can generate positive return if the cost of float is smaller than the rate of return from the investment product. For example, like Rich Dad Author's Robert Kiyosaki taught us, when you borrow a loan to buy a house, you definitely gain when the rental income per month exceeds the loan payment that you need to settle. Thus, rich people like Tan Sri Syed Mokhtar likes to borrow money to finance his business empire, as long as he can generate adequate return to cover his loan payment. 

Sometimes, it is possible to obtain float without costs. Even more, some people will pay money for you to hold it. For example, when big insurance company has an underwriting profit in particular year, the policy holders are paying insurance company premium that exceeds the total claim of the others in that year. Thus, insurance company not only gain by paying less for the claim out of the premium receives, but it also gain by utilizing the cost-less float to generate additional returns. This is the secret of how the world's richest people, Warren Buffet building his wealth, as quite a number of subsidiaries under Berkshire Hathaway such as General Re (reinsurance business), GEICO(auto insurance are insurance company. 

We, as the ordinary people, wont have an insurance company at our disposal. So where do we get float? 

One of the cost-less float that we can get is something we are familiar in our life, the credit card. By utilizing the interest-free period that the credit card company grant us, a disciplined consumer can deposit the money for the bills on bank as long as he can to gain interests. If you have your own business, the money that you supposed to pay your supplier, would be the cost-less float you can used, as long as delaying payment wont incurred additional charges by the supplier. And again, like i mentioned earlier, if the rental income from particular properties exceeds the loan payment per month required by the banks, you should borrow money to buy as many properties as you can like the Rich Dad's Author.