Robert Kiyosaki Blog

Financial Education Portal inspired by Robert Kiyosaki

#

Lesson One From Rich Dad, Poor Dad Have Money Work for You

The main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money. . . but never learn to have money work for them. Robert Kiyosaki The #1 New York Times Bestseller “Rich Dad, Poor Dad is a story about the money lessons that Robert Kiyosaki learned from his two dads, his biological father, who was his poor dad, and his best friends father, who was his rich dad. Poor dad was a Ph.D. and held a very important government position, but he never had enough money at the end of the month and he died broke. Rich dad dropped out of school at the age of 13 and went on to become one of the wealthiest men in Hawaii. Rich Dad, Poor Dad is a must-read for anyone looking to develop a rich persons financial programming and mindset. The first important lesson this book teaches is the following: Dont work hard for money; instead, have money work hard for you. Kiyosaki explains in his book that there are three types of income: Earned income Passive income Portfolio income Poor dad taught his son Robert to go to school, study hard, and get good grades so that he could find a secure job that would pay him a good salary and give him excellent benefits. That is, he advised him to work for earned income, or to work for money. However, there are several problems with this strategy. First, income streams from a salary are linear: you only get paid once for your effort. If you stop showing up for work, you stop getting a paycheck. It’s like being on a treadmill. Second, earned income is confined to the amount of time that you work, and time is a limited resource. Therefore, theres a limit to how much earned income you can make. And third, earned income pays the most taxes. Passive income is income that does not require your direct involvement. You make a strong initial effort to get this type of income started, but then you do minimal work thereafter to keep it going. It can be income derived from royalties–for example, you write a book–, from patents–you invent something–, income derived from real estate, and so on. Brian Lee at geniustypes.com swears by bulk candy vending machines to create passive income. There are many ways to create passive income and the key is to be on the look-out for passive income producing opportunities. Portfolio income is generally derived from paper assets such as stocks, bonds and mutual...

Read More
Read More

What Makes Rich Gets Richer?

What makes rich gets richer? We notice that the rich keeps on getting richer while some of the poor gets poorer. Kiyosaki continued his teachings on his “Rich Dad Guide to Investing”. If you are not familiar, there’s this one rule originated by the Italian Economist Vilfredo Pareto in 1897 called “Pareto’s Principle or 80/20 Rule” also known as the Principle of Least Effort. In business, we can apply it and we can say: put most of our efforts on the 20% of things that bring in 80% of the income in our business. Kiyosaki agreed with the 80/20 Rule for overall success in all areas but not for money. He went on to say that when it comes to money, he believed in the 90/10 Rule. He noticed that 10% of people had 90% of the money. In the world of show business, 10% of the actors and actresses had 90% of the money. In the world of sports, 10% of the athletes made 90% of the money. The same 90/10 Rule applies to the world of investing. That is, 10% of the investors gained 90% of the wealth in the world. Would you want to be included in that 10% that owned 90% of the wealth? Kiyosaki differentiated between an average investor vs. rich investor or commonly known as the 90/10 investor with regards to their thinking. This is also what makes the rich even richer. Let’s look how rich investor thinks. Most investors say, “don’t take risks,” the rich investor takes risks. The world is full of risks and this is also applicable to the world of investing. We all know that a high return involves a high risk. And the higher the returns, the more profitable the investment is. The rich investor thinks about how to improve his skills so he can take more risks. While most investors lives in fear of stock market crashes, the rich investor looks forward to market crashes as an avenue or opportunity to make more money. Most investors try to minimize debt. The rich investor increases debt in their favor. I think this idea has something to do with good debt vs. bad debt. A bad debt is simply a burden because it will drain our finances. A good debt, on the other hand, helps us to manage our finances and somehow makes us even richer. A debt can be considered a good debt if the interest income from where that debt is invested is more than the interest expense of the debt availed. This is what you called in finance as DEBT LEVERAGING. Let’s look at some of...

Read More

Who Took My Money?

Another successful addition to the range of financial books written by Robert T. Kiyosaki together with Sharon L. Lechter, Who Took My Money is a worthy read. It is divided into 2 main parts. The 1st aims to address the importance of having a synergy of advisors as well as taking into account their different points of view. The 2nd is about the synergy of various assets and financial forces. Take a look at the content page below. Study it carefully, which part does it answer the question of Who Took My Money?  (Part 1) What should I invest in? 1. Ask a Salesperson 2. Ask a Cattle Rancher and Then Ask a Dairy Farmer 3. Ask Your Banker 4. Ask Your Insurance Agent 5. Ask The Tax Man 6. Ask a Journalist 7. Ask a Gambler 8. Ask Newton 9. Ask Father Time  (Part 2) Ask an Investor! 10. 4 Reasons Why Some People Can’t Become Power Investors 11. The Power of Power Investing 12. Gambling Rather Than Investing 13. How to Find Great Investments 14. How to Be a Great Investor 15. Winner or Loser? It is obvious that the book deals more with investments rather than money loss. In my opinion, Who Took My Money is just a provocative title aimed at boosting book sales. It is human psychology, books with cheeky titles fare better than books with boring titles. If this book were to be titled ‘Investments’, it would be competing with the numerous other books already titled this way. Misleading…because Kiyosaki does not spend many pages explaining where our money is disappearing to (taxes are your single largest expense). Criticisms aside, this book is developed in an unorthodox ‘interview style’, making it both intriguing and engaging at the same time. Rather than doing a whole summary of the book resulting in a diluted book review, I want to share something I learnt from the chapter ‘The Power of Power Investing’, which I feel is the most important chapter of the book. Why the Rich Get Richer!   Conventional attitudes and wisdom lead us to be working in the E and S quadrant. Usually individuals in this group will only have 1 source of income which is their paycheck and they cannot survive prolonged periods without it. Referring to the chart, they save, reduce debt, pay off mortgage, buy paper assets first and invest in a long term retirement plan. Turn your attention over the right side of the chart. Instead of operating from the E-S quad, the rich operate in the B-I quad. Instead of using their own money & time to invest, the...

Read More

Review of Robert Kiyosaki?s latest book

MillionDollarJourney.com has this to say about Robert Kiyosaki’s latest book:  For those of you who aren’t familiar with the Rich Dad series, it’s a financial education series which teaches you how to THINK like the rich, but it’s a little light on specific details on how to actually make extra money. Rich Dad’s Increase Your Financial IQ is no different.  The premise behind the book is about financial IQ and how to be like the rich.  Robert Kiyosaki believes that the rich get richer while the poor get poorer because of the differences in their IQ.  No, not regular IQ, but financial IQ.  Who is Robert Kiyosaki?  I think the biggest claim to fame for Mr. Kiyosaki is that he is the author and creator of the Rich Dad franchise.  Along with being a successful author, he is also a real estate mogul owning millions of dollars in real estate assets. The Topics Covered? Financial IQ #1: Make More Money (the more the better) Financial IQ #2: Protecting your money (pay less taxes) Financial IQ #3: Budgeting your money (budget for surplus) Financial IQ #4: Leveraging your money (the higher you returns, the better) Financial IQ #5: Improving your financial information (problem solving is the key to wealth) What I liked about the book? In Financial IQ #1, the author explains why the rich are rich and why the middle class and poor stay that way.  Kiyosaki explains that the rich use their money to build assets which creates an ever building passive income stream (unlimited potential).  The middle class, on the other hand, use their limited TIME to bring home income.   In Financial IQ #3, Kiyosaki explains to budget for a surplus.  Basically, this means to put your savings as a FIRST priority before everything else.  What he believes that if you are short on money to pay the bills after savings, you’ll need to go out and make more money. In Financial IQ #4, Kiyosaki explains that if you have control of your leveraged asset, then there is no risk involved.  That’s why he invests most of his money in real estate and very little in the stock market. Maybe there is a lot of truth in the old saying “invest in what you know”. I enjoyed the Financial IQ #5 chapter which explained the different parts of the brain and how each part affects decision making.  Kiyosaki emphasizes that the best way to learn is through “doing” and “making mistakes”.  I agree with this point as I have the tendency to get “analysis paralysis”.  What I didn’t like? Throughout the book, Kiyosaki has the message of NOT...

Read More
Page 3 of 3123