Some great points from the book "Rich Dad, Poor Dad" by Robert Kiyosaki:

- “Study hard, get good grades and you will find a high-paying job”, my parents used to say. This advice may have worked in the past, but may be disastrous for those of us born into a rapidly changing world
- There is no job security anymore, you can’t rely on Social Security or company pensions for retirement

The Typical Path Of An Average-Educated, Hard-Working Person:
- The child excels, gets good grades and is accepted into college
- The child graduates, maybe goes on to graduate school and then looks for a safe job
- The child begins to make money, credit cards start to arrive and the shopping begins
- The child meets people, dates, and sometimes gets married
- Life is wonderful now, because both men and women work
- They feel successful, future is bright, they buy a house, a car, a television, take vacations and have children
- The happy bundle arrives. The demand for cash is enormous
- The happy couple decides that their careers are vitally important and work harder, maybe they take a second job
- Incomes go up, but so does the tax bracket they’re in and the real estate taxes on their new large home. They get their large paycheck and wonder where all the money went
- Children reach 5 or 6, and the need to save for college increases as well as the need to save for retirement
- That happy couple, born 35 years ago, is now trapped in the Rat Race. They work for the owners of their company, for the government paying taxes, and for the bank paying off a mortgage and credit cards
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The only way to get out of the Rat Race is to improve your proficiency at investing

Two Dads
- Educated dad advised his son to work for a corporation.  Rich dad advised to own the corporation
- Educated dad encouraged son to be smart.  Rich dad encouraged him to know how to hire smart people
- Educated dad said, “the reason I’m not rich is because I have you kids”.  Rich dad said, “the reason I must be rich is because I have you kids”
- One said, “when it comes to money, play it safe, don’t take risks”.  The other said, “learn to manage risk”.
One believed, “our home is our largest investment and our greatest asset”.  The other believed, “my house is a liability, and if your house is your largest investment, you’re in trouble”
I don’t work for money!”, were words the rich dad repeated over and over, “money works for me!”

Financial Literacy
- Rule 1:  Know the difference between an asset and a liability
- The rich acquire assets and the poor and middle class acquire liabilities
- Assets put money in your pockets.  Liabilities take money out of your pockets
- Poor dad thought his house was an asset, Rich dad thought it was a liability.  A bigger home means bigger expenses
- Concentrate your efforts on only buying income-generating assets
- Focus on keeping liabilities and expenses down
- Soon, the asset base will be so deep that you can afford to look at more speculative investments
- Real assets fall into several categories:
  • Businesses that do not require your presence.  You own them, but they are managed by other people.  If you have to work there, it’s not a business, it becomes a job
  • Stocks, bonds, mutual funds
  • Income generating real estate
  • Royalties from intellectual property
  • Anything else that has value, produces income or appreciates and has a ready market

- Risk is always diminished if you love what the investment is, understand it and know the game
- Once a dollar goes into your asset column, never let it come out.  It becomes an employee that works 24 hours a day and can work for generations
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As your cash flow grow, you can buy some luxuries.  Rich people buy luxuries last, while the poor and middle class tend to buy luxuries first because they want to look rich.  They look rich, but in reality they just get deeper in debt.

Overcoming Obstacles
- Fear

  • Overcoming the fear of loosing money.  I have never met a rich person who has never lost money.  But I have met a lot of poor people who have never lost a dime... investing, that is.
  • If you hate risk...start early.  If you start young, it’s easy to be rich.  One of the wonders of the world is the power of compound interest
  • For winners, loosing inspires them.  For losers, losing defeats them
  • Most people are so afraid of losing money that they lose.  They play not to lose, they don’t play to win
  • Playing it safe and going “balanced” on your investment portfolio is not the way successful investors play.  If you have little money and you want to be rich, you must first be “focused”, not “balanced”

- Cynicism

  • All of us have doubts.  “I’m not good enough”.  “What if the economy crashes right after I invest?”  “If it’s such a good idea, how come someone else hasn’t done it?”.  We fail to move forward
  • Cynics criticize, and winners analyze
  • Just do what Colonel Sanders did: at the age of 66, he lost his business and began to live on Social Security.  He went around the country selling his recipe for fried chicken.  He was turned down 1,009 times before someone said “yes”.  And he went on to become a multimillionaire at an age when most people are quitting

- Laziness

  • Busy people are often the most lazy.  We have all heard stories of a businessman who works long hours and weekends to earn money.  One day he comes home and his wife has left with the kids.  He knew they had problems, but rather than work to make the relationship strong, he stayed busy at work.  Dismayed, his performance at work slips and he loses his job
  • I often meet people who are too busy to take care of their wealth and their health.  They’re busy, and they stay busy as a way of avoiding something they do not want to face.  If they aren’t busy at work or with the kids, they’re often busy watching TV, fishing, playing golf or shopping
  • That’s the most common form of laziness.  Laziness by staying busy
  • The cure is a little greed.  We were raised thinking of greed or desire as bad.  Yet, we all have inside of us this yearning to have nice things, new things, or exciting things
  • Rich dad forbade the words “I can’t afford it”.  Instead, he asked, “How can you afford it?” and that included college, which we paid for ourselves.  It was not the goal but the process of attaining the goal that he wanted us to learn.

- Arrogance

  • Many people use arrogance to hide away their own ignorance.
  • When you know you are ignorant in a subject, start educating yourself by finding an expert in the field or find a book on the subject

Getting Started
- You Need a Reason Greater than Reality

  • If you ask most people if they would like to be rich or financially free, they would say “yes” But then reality sets in.  The road seems too long with too many hills to climb
  • A young woman who had dreams of winning an Olympic medal got up every morning at 4am to swim for 3 hours before going to school.  When asked what compelled her with such ambition and sacrifice, she said, “I do it for myself and the people I love”
  • A reason or a purpose is a combination of “wants” and “don’t wants”
  • The “don’t wants”:  I don’t want to work all my life.  I don’t want what my parents aspired for.  I don’t like being an employee.  I hated that my dad always missed my football games
  • The “wants”: I want to be free and travel the world and live the lifestyle I love.
  • Without a strong reason or purpose, anything in life is hard

Choose Daily

  • Many people choose not to be rich, so they invent sayings that go, “I’m not interested in the money”.  Or,”I don’t have to worry, I’m still young” Or “When I make some money, then I’ll think about my future”.  Or “My husband/wife handles the finances”
  • Invest first in education.  You can watch MTV all day, or read golf magazines, or go to a class on financial planning

- Choose Friends Carefully

  • Do not choose friends by their financial statements.  Have friends who have taken the vow of poverty as well as friends who earn millions every year.  The point is to learn from all of them
  • Friends with money talk about money.  They do not brag.  They’re interested in the subject
  • The reason you want to have rich friends who are close to the inside is because that is where the money is made.  It’s made on information.  You want to hear about the next boom, get in and get out before the next bust

- Master a Formula and Then Learn a New One

- Pay Yourself First

  • It makes no sense to invest, make money and blow it.  It’s the lack of self-discipline that causes most lottery winners to go broke soon after winning millions.  It is the lack of self-discipline that causes people who get a raise to immediately go out and buy a new car or take a cruise
  • It is the lack of self-discipline that is the No.1 delineating factor between the rich, the poor and the middle class
  • I don’t like consumer debt.  I actually have liabilities that are higher than 99% of the population, but I don’t pay for them; tenants do.  So rule #1 in paying yourself first is don’t get into debt in the first place
  • Secondly, when I occassionaly come up short, I still pay myself first, I let the creditors and even the government scream.  I like it when they get tough.  They inspire me to go out and create more money.
  • A common bad habit is innocently called “Dipping into savings”.  The rich know that savings are only used to create more money, not to pay bills

- Pay Your Brokers Well

  • The power of good advice.  I have expensive attorneys, accountants, real estate brokers and stockbrokers
  • A good broker should provide you with information as well as take the time to educate you
  • Many poor and middle class people insist on tipping restaurant help 15-20% even for bad service and complain about paying a broker 3-7%.
  • When I interview any paid professional, I first find out how much property or stocks they personally own and what percentage they pay in taxes

- Be an Indian Giver

  • When the first white settlers came to America, if a settler was cold, the Indian would give the person a blanket.  Mistaking it for a gift, the settler was often offended when the Indian asked for it back
  • The sophisticated investor’s first question is “How fast do I get my money back?”  They also want to know what they get for free
  • Once your asset has appreciated and you can take your initial money out, you can stop worrying about the fluctuations of the market
  • True, I have lost money on many ocassions.  But I only play with money I can afford to lose