RICH DAD POOR DAD - ROBERT KIYOSAKI

"If you light a lamp for someone else, it will also brighten your path"

-For Buddha

Intelligent Investors

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Robert Kiyosaki, is the author of Rich dad, 

Poor dad. With this book, Robert has challenged the conventional way of looking at finance. He has wonderfully redefined the traditional way of looking at Assets and Liabilities.

This book is considered the best books for personal finance with no jargons or technical language.

Personally, this is one of my favourite books and I keep reading the highlights regularly. This book has encouraged me to start something on my own. I also managed to get a huge discount on my first real estate investment. I believe this book helps you and your loved ones too.

Now, without wasting any further time let us start our journey of getting better:

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Remember the mantra - 

“Go to school, study hard and get a good job.”

We still teach this mantra, even though it is outdated advice, based on the ideas our parent’s experience (at least a century old)

Nevertheless, we still believe in and follow the above mantra out of fear of dishonouring the expectations that have been drilled into us since our birth. 

Result: 

We may be avoiding poverty, but we are certainly not growing any wealthier.

When it comes to money, both Rich and the Poor – experiences two basic emotions:

Greed and Fear:

If we have money, we are likely to focus on all the new things it can buy (greed). If we don’t have it, we worry that we might never have enough (fear).

Financially ignorant people let these emotions drive their decision-making.

For example, let us say you just received a promotion and a hefty pay raise.

We could invest the extra money into something like stocks or bonds, which would earn you money over time, or you could gift yourself a new car or house.

If you are a financially ignorant person, this is where emotion takes control.

The fear of losing money is so powerful it prevents you from investing in stocks or other assets, even though such investments would bring you wealth in the long-term. 
At the same time, greed inspires you to spend your increased salary on a better lifestyle, for example by buying a bigger house or car.

However, this upgrade also means a bigger mortgage and higher utility bills, which effectively nullifies your raise.

This is how Fear and Greed prevents financially ignorant people from becoming wealthy in the long term.

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How can you counter these powerful emotions?

Simple, by building up your financial knowledge about investments, risk and debt will help you make rational decisions.

The world is full of talented and capable people, however, most of them are poor, why?  

Because they are missing the basic financial intelligence.

Unfortunately, our school systems are set up in a way that children are not taught about saving or investment, and as a result, they are clueless about the benefits of compounding interest – as it is evidenced by the fact that today, even the educated youths often max out their credit cards.

This lack of training in financial intelligence is a problem not only for today’s youth but also for highly educated adults, many of whom make poor decisions with their money. 
Since society has left us poorly equipped in terms of financial knowledge, it is up to us to educate ourselves.

You can start the journey toward personal wealth at any point in your life. 

Earlier the better. If you begin at 20, you are far more likely to become rich than if you begin at 30. 
Regardless of age, the best way to get started is by appraising your finances, setting yourself goals, and then acquiring the education necessary to reach them.

First, take an honest look at your current financial state.

With your current job, what kind of income can you realistically expect now and in the future, and what kind of expenses can you sustainably handle?

You may find, for example, that the new Mercedes you have been drooling over simply is not affordable.
After this, you will be able to set realistic financial goals. You could say, for example, that you want that Mercedes to be within your reach in five years’ time.

The next step is to then start building your financial intelligence.

Consider this as an investment into the greatest asset available to you: YOUR MIND.

You can do this in any number of ways, but one good approach is to shift focus:

"Work for what you learn, not what you Earn."

For example, you can improve your financial education in your spare time. Enrol in finance classes and seminars, read books/blogs, watch youtube videos, talk with experts

Financial self-education and a realistic appraisal of your finances are the building blocks of growing wealthy. To become wealthy, you must learn to take risks.

Taking risk means not always being balanced and safe with your money.

Instead of playing it safe, try investing your money in stocks or bonds. While these are considered riskier than saving in typical bank accounts, they have the chance of generating much more wealth – sometimes (as with stocks) in a very short period of time.

Or, if you do not want to commit yourself to the stock market, there are a variety of other investments that will help grow your wealth in the long run like Real estate, Fixed Deposits, Bonds, Gold etc

If you do not take the risk in the first place, you are guaranteed not to make any big returns.

That is why taking those bigger chances is necessary in order to start making a bigger income.

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The road to wealth is long, so you must keep yourself motivated.

It is easy to lose heart when you hit a hurdle such as seeing the price of a stock you invested in suddenly tumble. In order to achieve your financial goals, you will need to find ways to stay motivated even in the face of setbacks.

One method to boost motivation is to create a list of “wants” and “don’t wants”

For example: "I do not want to end up like my parents" and "I want to be free of my debts within three years."

Pull out these lists any time you need a reminder of why you must persevere on your journey to wealth.

Another good way to stay motivated is to spend money on yourself before paying        your bills.

Though somewhat contrary to common-sense, this way you will see exactly how much extra money you need each month to satisfy both of your objectives: 
Fulfilling desires like buying that vintage guitar you have had your eye on, than meeting your bill collectors’ demands.

Keep “paying” yourself first; the extra pressure of paying off your bills afterwards will inspire you to find creative ways to make enough money to satisfy both.

This method will also develop your financial self-discipline, which is a key trait of all financially successful people.

For outside inspiration, research the life stories of wealthy people like Warren Buffett or Donald Trump. Reading about how they overcame struggles to achieve victories will help keep you ambitious.

Put these tips into practice and you will be sure to find that staying motivated on the road to wealth is not that difficult.

Only invest in assets, which put money in your pocket; and avoid liabilities, which take money out.

QUITE SIMPLY, AN ASSET IS SOMETHING THAT MAKES YOU MONEY, WHILE A LIABILITY COSTS YOU MONEY. SO, TO BECOME WEALTHY YOU SHOULD MOSTLY INVEST IN ASSETS.

Assets include businesses, stocks, mutual funds, income-generating real estate, and anything else with a value that produces income, appreciates over time and can be sold readily.

When you invest in assets, your money becomes your employee working to create income for you. The more “employees” you commit, the better.

Unfortunately, many investors continually mistake certain liabilities for assets.           

For example, a house is often considered an asset, but it is actually one of the biggest liabilities you can have. Buying a house often means working your entire life to pay off a 30-year mortgage and property taxes.

This works against you in two ways:

First, you are guaranteed to have a massive expense taken away from your income every month for the next 360 months.

Second, those 360 payments could have been invested in potentially more lucrative assets, like stocks or real estate you rent to tenants.

Ensuring that you know the difference between an asset and a liability means you will be able to soundly judge what to invest your money in and what to avoid.

Your profession pays the bills, but your business is what will make you wealthy.

Your profession is what will help you pay the bills, buy groceries and cover other living costs.

Your business, on the other hand, will help grow your assets. Because a profession only covers your expenses, it is unlikely that this alone will make you wealthy.

To achieve wealth, you must build a business while working at your profession.

For example, consider a car salesman who invests each month’s leftover income into shares of good companies. By putting their extra income into their businesses, these people are also growing their assets and making steps toward wealth.

Your profession often funds your business initially; therefore, it is wise to keep your day job until your business starts to show sustainable growth.

When that starts to happen, your assets – and not your profession – become your main source of income.

And that, indeed, is the sign of true financial independence.

We are only likely to become rich or financially independent once we have both a strong financial IQ and a firm ambitious mindset to support it.

In the end, what you invest in your mind is what brings you success, because your mind is your most important asset in any financial situation.

I hope you loved reading this summary! 

Please Note: I have omitted many key points and examples from the book, if you have liked the summary I am sure you will love the book. Please go ahead and purchase the book and encourage the publishers.

BUY NOW

 

Summary of Summary:

If you want to see results, start right now.

Always be in control of your emotions

Do not only aim to increase your income, aim to have more assets

Asset: Brings you money. Liability: Takes your money. How many assets do you own?

For most people, their profession is their income. For Rich people, their assets are their income.

Track your monthly expense, by making a simple excel sheet. Chart your income, which includes any money coming your way each month, and compare it with your expenses, which include bills, rent, lifestyle expenses and taxes taken out of your paycheck, as well as any other costs.

Ensure you have an income greater than your expenses.

Dear Readers,

This blog is my personal attempt to help you.  If you find this article to be helpful, kindly share it with your near and dear ones.

I would be very glad to hear your feedback, in fact, it will motivate me to continue my journey of, Blog and Teach.

Thanks for reading, I hope you apply some or all the lessons learned and become better person consistently.

All the best!! 👍👍👍

Cheers 🍹

Intelligent Investor 

Hi,

This wonderful book has been summarized, by a very good friend. I have shared it as a guest blog. Here is a brief note about the writer:

Sushma Nayak:

She is a banking professional with 9 years of experience in handling multiple projects in financial crime compliance and banking operations.

She is an MBA from Xavier's Institute of Management and aspires to learn, evolve as a leader while sharing knowledge and happiness around. 

Linkedin Profile https://www.linkedin.com/in/sushma-nayak