“Rich Dad, Poor Dad,” by Robert Kiyosaki is one of a handful of books that, after reading it, drastically changed my paradigm and also the course of my life.
Before reading the book I believed, like most people, that I would find wealth when I had earned enough income to be rich. This book taught me that wealth was not a function of how much money I made, but how free I was from having to make money. I learned that I could create wealth even from a tiny salary.
I took away three major concepts from this book:
1) The definition of an asset
2) The value of passive income
3) How to turn creativity into value
The definition of an asset
according to Kiyosaki is something that puts money into your pocket on a monthly basis as opposed to something that takes money out of your pocket. It’s a concept that seems like common sense, but after deeper analysis goes against conventional wisdom. For example, his definition of assets excludes a person’s home and car because they both cost money to maintain. Most people consider their home their biggest asset. After reading this book, instead of buying a big house to live in, I bought a big house to rent out, and moved into a small apartment at half the monthly cost of the house.
The value of passive income
. Before reading this book, I was dead set on owning my own business. While Kiyosaki encourages entrepreneurship, he draws a distinction between owning a business that requires time and energy to run and owning an asset that makes money with little or no maintenance. By collecting assets that produce passive income, a person can create time freedom. Time freedom is the holy grail of creative people because most creative pursuits have large barriers to entry and take years before returns are realized.
How to turn creativity into value.
One of the most fascinating things that I learned from this book is how wealthy people use creativity to find value in things that most people overlook. The classic example is a “fixer upper” property. If a person can find a house that no one wants and see it’s potential through creativity, they stand to make a handsome profit.
After I internalized this concept I realized that this type of creativity is what has always driven successful people. A successful stock picker can see the value in stocks when they are out of favor, a successful entrepreneur sees the value of a product or service before the rest of the market does, and a successful film-maker sees the value in telling a story that no one else has thought of.
As a compliment to this book, Kiyosaki has created a board game called “Cashflow.” Even though this game could be a lot less expensive, I have to admit that it has been priceless by allowing me to practice the concepts of the book without having to risk real money. I get a kick out of playing this game because it helps to reinforce the paradigm of how to be wealthy.
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A good review of a good book, i linked to it via my blog.
Rich Dad Poor Dad is a excellent book to get you started on the road to wealth. I highly recommend this book to anyone interested in learning about money management which the school systems and most parents don’t seem to teach. Knowledge is really a power!
i really liked the book…based on reality and practical life….and im giving presentation and choose this book for it…hope i explain it well in the class of MBA…
When I read Rich Dad, Poor Dad I really found it interesting on what an Asset really is. If you have a house that is not paid off, it is not really an asset. It really started to get me to think differently.
Some might criticize and some are supportive. As for me, if you really know what is your condition now, and want some improvement, this is surely very inspiring book. However, lack of step-by-step getting rich examples, right?
But, you know what, if people give you a hard task how to be rich, well, you have to look for an answer. they won’t feed you up every single spoon.
So Invest your Time & Money into what? Actually really depends on people. Looking back at Robert Kiyosaki background, you would be able to know what to invest, Real Estate? Writing Books?. However, if you don’t like the field, you would really hard to get it started. The real answer is still in your hand that is “Invest” something that you comfortable of, and make the “Money” work for you.
In terms of the definition between the Assets and Liabilities, his definition might seems confusing. But if you read some more materials from Robert Kiyosaki, he wants us to make the “MONEY” work for us. So during the monthly installment of housing loan, making people pay at least half of your monthly installment by renting out. Saving you 50% installment as well as saving you 50% of the interest indirectly. However, if you plan to pay 100% installment until the final stage. Then decide to rent it out at later age, you are actually working for money until the loan is settled first.
Look carefully, the value you are paying today is actually for future value. For example, a property worth USD200K now, might be worth USD500k in 20 years time, correct? But if you calculate your monthly installment now, you might be paying at least USD450k from now onwards in addition to the interest and other charges.
In summary, if you work for “MONEY”, you are actually BUYING.
if “MONEY” work for you, you are actually INVESTING, meaning you put a very little money inside, the rest of the time, the money is paying by itself, and pouring in while you asleep and doing nothing.
I found this from website saying:
“I am an engineer working in wireless technology. I buy the latest cell phones and PDAs when they become available. I buy a faster computer every year. Liabilities? No. Without using cutting edge technology on a regular basis, I would not have the successful career that I have. No toys, no knowledge, no promotion, no job, no income.”
Actually the meaning should be like this, making people pay for your upgrades, such as company that is willing to pay you all the expenses for learning new technologies. Getting a company sponsor your knowledge and appreciate your skills.
If you want to be successful to pay every single cents on your own, it is just like buying your house from your every single hard earning money.
Your asset = Hard earn money.
Robert Kiyosaki’s Asset = People pay for it continuously and more.
This is a great book worth to read not only for entrepreneurs but by ordinary persons like me, who wants liberate life from the bondage of poverty.
I like this part.
“When a person feels the need for money,” rich dad explained, an ‘E’ will automatically look for a job, an ‘S’ often will do something alone, a ‘B’ will create or buy a system that produces money, and an ‘I’ will look for an opportunity to invest in an asset that produces more money.”
“The reason it’s hard to change a pattern,” said rich dad, “is because money today is essential for life. In the Agrarian Age, money was not that important because the land could provide food, shelter, warmth and water without money. Once we moved into the cities during the Industrial Age, money signified life itself. Today, even water costs money.” Rich dad went on to explain that when you begin to move from, let’s say, the ‘E’ quadrant to the “B” quadrant, the part of you that is addicted to being an “E,” or afraid that life will end, begins to kick and fight back. It’s like a drowning person beginning to fight for air, or a starving man who will eat anything to survive. “It’s a battle that goes on inside of you that makes it so hard.”
“The part of you that still seeks security is in a war with that part of you that wants freedom. Only you can decide which one will win. You’ll either build that business or you’ll go back to holding a job-forever.”