Rich Dad and Poor Dad

 by Robert T Kiyosaki and Sharon L Lechther, 1998, TechPress Inc.  

INTRODUCTION

............what the rich teach their kids about money that the poor and middle class do not!!!.............Poor Dad said," I cannot afford!"...Rich Dad said " How can I afford that!"......'the different between poor and bankruptcy is : bankruptcy is only temporary and be poor is forever.".................."..I won't work for money but money work for me !" ................

Six lesson from Rich Dad and Poor Dad

Lesson 1: Rich won't work for money

...it is easier to change yourself than changing the others.....for most people the more money he earn, the more debt he will be in.....most people believe that work is for the money.....the biggest problem most people have is not to have the knowledge of Financial Planning......fear of losing money will make a person work hard........" wake up, work, pay the bills, then wake up again, work again, and pay the bills again...", the more money a person made, the more will the person spend, and this cycle will keep on repeating.  This is called " The Race of the Mice'. .......they fear of losing money, but then they never think, and quickly response to the norm, and let the happiness, desire, and greed control them....hence, in order to fulfill the desire, a lot of people work for money.....can a job solve your financial problem? Work for money is only an temporary solution for long term problem........picture this " the donkey is working hard to pull the cart, this is because there is a caret hanging above it's nose by the old man.  The old man know where he is heading to, but the donkey is only casing the caret.  The next day, the donkey still continue to case the caret, because the caret still hanging above his nose."......

Lesson 2: Why Teach Financial Literacy

......the important thing is not how much money you made, but how much money you can retain and for how long.......Rich Man posses the assets and what the poor have is the debts...."KISS - Keep It Simple and Stupid" when teaching your kids about money.....if you want to be rich, you must know how to read the number.....Assets will create money in your pocket but Debts will create a big hole in your pocket...a lot of people know how to make money, but don't know how to make the money work for them.....most people don't aware that the biggest problem is how they spend the money.....Rich Dad is making the Assets bubble big, but Poor Dad is making the Debt bubble big......Wealth is the power of how long it can keep the person live on, or let say if today you are out of job, how long you can survive...what rich dad did is bought the property, and rent out the property, and the cash flow from this investment is able to pay all his bills ; the more he invest in this kind of investment, the more cash inflow he have, and at once time the money that he made from his investment is bigger than from his job. At this times, even he stop working, he still can survive..........Rich will but an Assets, Poor will only paying the bill and the middle class having more debts to have their asset....

Lesson 3: Mind Your Own Business

.....most people is working for others people, first, work for the boss, second work for the government and lastly work for the bank....Rich concern is their Assets, but the poor worry about their Income.....you should buy some property, and not the Debts or thing that once you brought home, there is no more value....for a normal person, it is advice to reduce the expenses to the lowest level, reduce the loan and work hard, this will build a strong foundation for the rich......Assets are: Business which can run by itself, shares, Unit Trust, property which make cash inflow, license, and things that the value will appreciate...Rich Dad normally invest in the property more than 7 years before sell it....9 out of 10 newly setup company will be closed, unless you are sure you want to have your own business, otherwise, continue work hard and mind your career.....work hard in your job, and make sure you invest in your career....Rich Dad will invest in property that make money and only buy the 'nice to have' thing by using the profit from the investment....Rich Dad job is a businessman but his Career is to invest in property which can make money....

Lesson 4: The History of Taxes and the Power of Corporation

......"make use of the 'company', this is the secret the Rich making their way to the destination..."......Knowledge is Power, the more money you have the more knowledge you need, otherwise you will be control by the world not the other way round.....the biggest enemy is not your boss, but is the taxation, it try to make a cut from you cake even before you can enjoy it.......get to know the law, it can make you fully utilizes your right and can give you power....Financial IQ consist of : Accounting, Investment, Know the Market and Law.......The Rich people own the company : making money, expense and pay tax; Poor people work for the company : making money, pay tax and pay the bills.....

Lesson 5: Rich Man Investment

....you know that the a big business is just in front of you, but you never have money to play the games.....Rich Dad do not seeking help from Real Estate agent to buy the property, but go to see the lawyer who manage the bankruptcy property, sometimes a property which the market price is about 70 thousand, and you can get it at the only 20 thousands....Rich Dad invest in Property and Small size company share....Rich Dad learn from mistake.....Poor Dad afraid of failure and they never get rich......there are 2 types of investor: 1. Inactive Investor, they will go through an agent to do their investment. 2. Proactive Investor, who create opportunity for investment.....there are 3 thing to lern to be the proactive investor: 1.  how to see the opportunity that other people won't see, this guy bought a old house, which look like a ghost house, and tear it apart, then sell the land to the developer and making his fortune...2. how to increase your capital, not by borrowing from bank, Rich Dad bought a property, paid the deposit, within 90 days, he sold to another person and making his profit. .... 3. Make use of intelligence people, the Rich Dad hire the knowledgeable people to work for him.....Risk is everywhere, the issue is not avoid the risk but how to manage the Risk....

Lesson 6: Work to Learn, Don't Work for Money

....'it is the best selling books, but not the best author'.....Rich Dad was interviewed by an author in Singapore.  She was asking Rich Dad how to be like him to publish a good book.  Rich ask her to take up the sales and marketing class. Rich Dad also propose that she leave the current job with the press and go to work for advertising company to learn how to get the message through with few seconds and learn about the Public Relation......Rich Dad sad you need to learn a lot but not in-depth...Rich Dad went to the navy, he spent 3 years to learn how to lead and travel around world to understand the culture of different countries.  After that he spent another few years to learn the selling skill by joining one of the most established company.  He then setup his first business, if making the small zip bag and sell it to the far east....employee work hard to avoid the unemployment an employer try to give lowest wages to prevent workers leave the firm....Rich Dad advice don't work for money, but work to learn something new.....

Rich Dad - The Cashflow Quadrant

Cashflow Quadrant

Evaluate yourself, see which categories belong to you?

Type of Investors

1. Borrower

    Borrow money to invest.

2. Saving

    Only Fix Deposit.

3. (a) Don't Disturb Me

            Not willing to learn and will hire someone to invest on behalf.  

    (b) Dog-Men   

            Talk only.

    (c) Gambler

            Short-term investor.

4. Long Term Investment

    Looking at annual return of the investment. 

5. Experience Investor

    Who studies a lot about investment

6. Capitalist

    Who have a lot of fund and will take higher risk to invest for higher return.

Evaluate yourself, see which categories belong to you?