Rich dad always wanted his son and me to be investors on the inside rather than the outside. It is one very important way to reduce risk and increase returns. Someone with the financial education but not the financial resources of an accredited investor can still become an inside investor. This is where many people enter the world of invest- ing today. By building their own companies, inside investors are building assets that they can run, sell, or take public. In his book, What Works on Wall Street, James P. The Inside Investor 281 O'Shaughnessy analyzes the returns by market capitalization of various types of investments. It shows that the small stocks far outperform the other categories. A chart from his book is included for your reference on the next page. Almost all of the high returns are found in the small micro- cap stocks with market capitalizations below $25 million. The down side is that these stocks are too small for mutual funds to invest in and hard to find for the average investor. As O'Shaughnessy states, "tantalizingly out of reach of nearly everyone." There is very little trading volume in these stocks so the ask price and bid price are usually far apart. This is an example of how 10% of the investors gain control of 90% of the shares. If you can't find these stocks to invest in, then consider the next best thing. Build your own small cap stock company and enjoy the superior returns as the inside investor. How I Did It I found my financial freedom as an inside investor. Remember that I started small, buying real estate as a sophis- ticated investor. I learned how to use limited partnerships and corporations to maximize the tax savings and asset protec- tion. I then started several companies to gain additional expe- rience. With the financial education I learned from my rich dad, I built businesses as an inside investor. I did not become an accredited investor until I found success as a sophisticated investor. I have never considered myself a qualified investor. I do not know how to pick stocks and do not choose to buy stocks as an outsider. (Why would I? Being an insider is much lower risk as well as much more profitable!) I share this with you to give you hope. If I can learn to be- come an inside investor through building a company, then so can you. Remember that the more controls you possess over your investment, the less risky it is. The Investor Controls Possessed by the Inside Investor 1. The control over yourself 2. The control over income/expense and asset/liability ratios 3. The control over the management of the investment 4. The control over taxes 5. The control over when you buy and when you sell 6. The control over brokerage transactions 7. The control over the E-T-C (entity, timing, characteris- tic) 8. The control over the terms and conditions of the agreements 9. The control over access to information The Three E's Possessed by the Inside Investor 1.