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Five Different Levels of Investors │ The Wealthy Investor Level

Updated on January 21, 2015

I have discovered in a decade of study, the wealthy and powerful in the world and in my own country Papua New Guinea, that most if not all, wealthy man or woman in the world became wealthy investing most or at least some of their money into revenue generating assets.

In the world of investment, different types of people play the game of money. Knowing that money is just an idea, financially intelligent who tend to be the wealthy and successful investors approach the game of investment and money with a different mindset than the poor and broke.

The winners in the game of investment aren't necessary the ones that don’t lose. Instead they are the ones that play at a different level. Their level is one that involves commitment to self-education, and being able to change investment strategies when necessary to minimize their losses and maximize their gains and remain in the game for as long as they wish.

Here we will look five types or levels of investors found in the world of investment.

Five Different Levels of Investors


This is the level majority of people in the world fall under. It is the simplest and the most easiest level to be in because it requires no thinking. In this level, the 90% of the global population will be in no matter what the economic situation would be in their respective countries. Simply said, they have nothing to invest. There are many people who make a lot of money who fall into this category. They earn a lot—and spend more than they earn.

In this level, many don’t know the power and importance of the words. They don’t read books on wealth creation, business, finance, investment, leadership etc. They don’t even bother to watch motivation videos nor attend wealth creation seminars. Because of their ignorance, they buy into liabilities or things that get money out of their pocket rather than buying into revenue generating assets that can bring money into their pocket.

In my business seminars, I meet individuals who tell me they don’t just don’t have enough to invest even though they want to be rich. Few questions thrown to them and I discover they earn enough. Some even earn more than enough to invest. Only if they read one of Jim Rohn’s book for the “Save 10% of What You Earn Principle”.

Because of lack of commitment to their own personal education which I perfectly describe as high degree IGNORANCE, they get infected by the Excuse Syndrome.

I tell you some of the highly educated people, even those with masters and PhDs in their fields of expertise lack financial intelligence. They are nothing but simply financially illiterate, living from paycheck to paycheck.

The best documented and widely read by millions of people around the world is the story between two dads of a self-made millionaire. One dad was highly educated with a PhD and one was poorly educated but owned a business. The dad with PhD denied his financial problem and blamed the government and anybody he could think of for his self-inflicted financial problem. He worked hard, remained broke and died a poor man. He is the Poor Dad. The poorly educated Dad whom the self-made millionaire called his Rich Dad acknowledged his financial problems and committed to educating himself on the game business and investment. The rich dad stayed committed to building his assets whilst the poor dad continues to build more liabilities, thinking those were his assets.


In this level, the person may have basic know-how on saving but distorted perception on investment. I have discovered that you will never become wealthy by saving money in the bank. Many people believe it is smart to save money. The problem is that today, “money” is no longer money. Today, people are saving counterfeit dollars, money that can be created at the speed of light.

In the bank, the half of what your money earns as interest is taxed. That means you take one step forward and one step back every your saving earn interest. No matter how much you save in the bank, your money is not protected from heavy taxation from the state.

The only way to make it up the level of the financially intelligent and successful investor is to save enough in the bank, get educated and start investing your money into other revenue generating assets either in business, real estate or paper assets. Again, education is key.

Just a few days ago, I was discussing a debt with a manager of a big money lending company in PNG. After talking about current local share prices, my new friend said who once worked with BSP Capital, one of the only two stock brokers in PNG, said to me “Bro why don’t you try buying dual listed stocks…Buy low in PNG and sell high in overseas markets and then convert dollars earned into PNG Kina”. Not a bad strategy. I started making some dollars from simple tip my new friend gave me. Note that I was able to do that because I saved enough money in my bank account. Or let me be specific, a brokerage account with a stockbroker that trades dual stock.

Warren Buffet, the billionaire investor said “when you don’t know what you are doing, than that is risk”. Let me repeat, this all may sound simple but it’s quit complex and requires specific skills. I didn’t acquire these skills overnight and I don’t expect you to just wake up in your bed and get into trading. You can losses more than you thought.

Today, savers are the biggest losers. The main reason it is the biggest is because most people are savers—Level-2 investors. Remember that savers, bondholders, and most people who save money in a retirement plan, are people who park their money, investing for the long term, while professional investors move their money. Professional investors invest their money in an asset, get their money back without selling the asset, and move their money on to buy more assets. That is why savers who park their money are the biggest losers.

You can read the full story on the best-selling book Self-made millionaire Robert Kiyosaki. The book is titled The Rich Dad poor Dad.


This is the investor that is too busy to learn about investing. Many investors at this level are highly educated people who are simply too busy with their careers, family, other interests, and vacations. Hence, they prefer to remain financially naïve and turn their money over to someone else to manage for them. They simply turn their money over to an “expert,” and then hope and pray their expert is really an expert.

If you are too busy, whose life are you being too busy to make better? If you own the corporation you work for than at least it makes some sense as you can call that your business and your business is a major investment asset according to my personal view. If you don’t own the corporation, then I am sad to say that you are but just a tool, a leverage a smart business owner uses to build his or wealth. Does this make you smile? I bet you don’t.

Soon after the financial crisis broke in 2007, many affluent people found out that their trusted expert was not an expert at all and, even worse, could not be trusted. In a matter of months, trillions of dollars of wealth vaporized as real estate and stock markets began to crash. Panicking, these investors called their trusted advisors and begged for salvation.

A few rich investors found out that their trusted advisors were extremely sophisticated con men, running elaborate Ponzi schemes. A Ponzi scheme is an investment scheme where investors are paid off with new investors’ money. The scheme works well as long as there are new investors adding new money to pay off the old investors. In the United States, Bernie Madoff became famous because he “made off” with billions in rich people’s money.

The problem with the Level-3 investor, the I’m-too-busy investor, is that the person learns nothing if they lose their money. They have no experience except a bad experience. All they can do is blame their advisor, the market, or the government. It is hard to learn from one’s mistakes if the person does not know what mistakes were made.


This is the do-it-yourself investors. Many retirees become Level-4 investors once their working days are over. Though this is the case in many developed countries, PNG is just coming to that stage.

This investor may buy and sell a few stocks, often from a discount broker. After all, why should they pay a stockbroker’s higher commissions when they can do their own research and make their own decisions?

If they invest in real estate, the do-it-yourselfer will find, fix, and manage their own properties. And if the person is a gold bug, they will buy and store their own gold and silver.

In most cases, the do-it-yourselfer has very little, if any, formal financial education. After all, if they can do it themselves, why should they learn anything?

If they do attend a course or two, it is often in a narrow subject area. For example, if they like stock trading, they will focus only on stock trading. The same is true for the small real estate investor.

As more people realize the need to invest, millions of them will become small Level-4 investors in all four categories. After the 2007 market crash, millions of people have become entrepreneurs starting small businesses, and many are investing in real estate while prices are low. Most, however, are trying their hand at stock trading and stock picking.

Obviously, those who also invest in their ongoing financial education, taking classes regularly and hiring a coach to enhance their performance, will outpace those who just do it on their own. With a sound financial education, a few of the Level-4 investors will climb to the next level, the Level-5 investor, the capitalist.


This is the richest-people-in-the-world level. The Level-5 investor, a capitalist, is a business owner who invest huge amount of his wealthy into high yielding assets. This level is also a do it yourself level. We call them sophisticated investors. Warren Buffet, George Soros, Donald Trump, Bill Gates, Robert Kiyosaki, Jamie McIntyre are just the few we can take as examples here. Often times, at this level, the investors do not have to be the smartest. They just have to have the smartest team. They use understand and use the leverage of team to minimize their losses and maximize their gains.

Level 5 Investors learn to use many leverage to their advantage. I have written a lot about Leverages. Even my Money Lending Business named Leverage Finance. Below are my hubs on Leverages that many of my readers find it useful. Hope you find them useful too.

The Leverage of The Mind

The Leverage if Your Plan

The Leverage of Action

The Leverage of Money

The Leverage of Paper Assets

The Leverage of Real Estate

Level 5 investors play the game intelligently. Most don’t invest with their own money. Sounds new to you? It will sound strange to you if you haven’t just spend little time to understand how these investment gurus play their game. At this level, you can make money without using any money. That is the power of leverage. Making more money with less effort. Isn’t this what everybody wants to do? The answer is yes. The difference between level 1-4 and level 5 investors is in the level of financial intelligence.

So the question billion dollar question is: Who do Level-5 investors get their money from? The answer is: They get their money from Level-2 and Level-3 investors who save their money in banks and pension plans.


As the articles draws to close, my gut feeling tells me that you want to ask me this question. It may be related to something I said in the article.

I have the feeling that you want to know more about how the level 5 investors get money from the level 1 to 4 investors. It is sometimes call using Other People’s Money (OPM). Level 5 investors know how to legally use OPM to grow their wealth. How?

I have answered your question in a full hub. How To Use Others People’s Money To Grow Your Wealth.

If you found this hub useful, please comment below tell me how it helped you please do share with your family and friends whom you think deserve a financially independent life.


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    • profile image

      c.kurangkewe 18 months ago

      Hi Ian. This is very inspiring and informative.

      I Want to someday be the person who want to make money without using any money. Have to gain my financial Intelligence Level........

      I am following your hub.

      Thank you.

    • profile image

      r.stanley 2 years ago

      Hi Ian..very inspiring... Indeed...finally read your hub..I am not happy with my current state of affairs to do with money..I am following your hubs.. thank you.

    • b. Malin profile image

      b. Malin 4 years ago

      Hi Ian,

      Interesting Hub. I now look forward to Following your Hubs.