Understanding “Rich Dad Poor Dad”
To better understand all the books that I read, I found that taking notes is the only way to go. I thought I would take it a step further and just write a blog post.
I first came across “Rich Dad Poor Dad,” when I was at community college. My business professor at the college suggested it for additional reading and I leapt at the opportunity. Being a community college student, any opportunity sounded like a golden one!
Anyway, as I slowly started to decipher further the meaning of the book by Robert Kiyosaki there was a common theme that I came across “commitment.” Commitment int his book means taking the time to educate yourself about your financial security and prosperity. Often, the themes of capitalism and socialism are compared and contrasted through the symbolism behind the rich dad and the poor dad. Robert Kioysaki chronicles his time as a kid grasping what it means to be in control of your financial security.
While sifting through the different layers of advice that Kiyosaki offers, a few specific pieces of advice stood out that I took note of. Below are the bullet points of those key areas.
- Do not give into your emotions when making a purchase, take the time to think.
- Fear will prevent you from taking the risks that you need to in order to maximize your investment output. (Fear stops those from taking risks).
- Money is just a tool. When you invest in different assets you are theoretically hiring workers to help generate for you. Focus only on the idea/venture that you want to create and not the money.
- A job is only a short-term solution and will only allow you to pay your bills. The working class earn a salary, then pay taxes, and then spend their money. Instead what you should be doing is earning money and investing/spending it and then pay taxes. To accomplish this you should use the corporate finance model.
- If you have an idea, try and build it yourself without asking for money. Be very specific of who you want to invite on board.
- It is not about how much money you make it is about how much money you can keep after taxes.
- Know the difference between asset and a liability
- Real Estate
- Safety Net (Index Fund, ETF, Mutual Fund)
- Royalties from IP (Although Kiyosaki says this is an asset that can continually generate wealth. The process to set up IP to generate royalties is a bit tough)
- Notes (IOU)
- Active Portfolio trading (Forex, Index)
- Credit Cards
Another thing that Kiyosaki does very well is explain a few tips about real estate investing. When it comes to buying real estate and then selling up he explains how utilizing the IRS tax code 1031 is the way to go. Pursuing this tax code allows you to avoid any capital gains tax. Another key point that I picked up on was the fact that you will never know an opportunity for a lower price of property unless you pitch below the listed price!
I will not bore with more jabber about quips of Mr.Kiyosaki’s youth but I will say that the notes I wrote down are proving useful. In a very big-picture sort of way.
I hope to catch you on the next book that I am able to complete and comprehend to a certain extent.