Rich Dad Poor Dad

Rich Dad Poor Dad is about how Mr. Kiosaki was raised by a rich father and a poor one. Mr. Kiosaki’s poor father was highly educated with a Ph.D., while his rich dad didn’t even make it through high school. Mr. Kiosaki’s fathers sometimes gave him some advice when he was a child, but the advice of his two fathers where different from one another especially when it came to money. His poor father did not spend much time thinking about money, while his rich father says a lot about how to make money, they were hard-working, but his educated father didn’t not give importance about financial education. His rich father always discussed money and financial things with him. His rich dad always says to take risks with money . He advised him to work hard not to work at a company, but to own his real company.Mr. Kiosaki’s poor father believed in in taxing those who are rich or has higher income to help the poor and needy. His poor dad believed that the government was in charge for taking care for the poor people. While his rich dad believed strongly in self-confidence and opposed taxes.

At the age of 9, Kiosaki make a decision that he would stick to his rich father’s footsteps and and not pay attention to the lessons of his poor father. For the next 30 years of his existence, his rich father taught or tell Mr. Kiosaki everything that his rich father knew about finances and how to be rich. On his 30 years, he recognized six distinct lessons.

Chapter Two opens with the first lesson – the rich don’t work for money. Kiyosaki reflects on how as a child he was sent to a public school comprised of mostly upper-class youth. He was jealous of the material goods his classmates possessed, such as new baseball gloves and bicycles.

Mr. Kiosaki made a decision that he wants to start his own business and he ask Mike, his best friend, to be his partner to the business that he wants to start. They make a plan to make money out of their neighbors’ lead toothpaste tubes by melting them down and using a nickel as a template. Kiyosaki’s poor father catches them making fake nickels. His poor father congratulates them for their originality, but says that their operation is actually illegal and won’t work.

Mr. Kiosaki’s father told that they should talk or seek some piece of advice to Mike’s dad if they truly want to learn how to be rich. Mike’s father had a big reputation in town because of their business and talent with earning money Mike’s father suggest to help them to be rich if they agree to work at one of his super market for 10 cents an hour, three hours every Saturday. Mr. Kiyosaki works for four shifts and finds the work boring and the pay poorly low. So he decides that he will quit on working on the supermarket. He speak up with Mike’s dad and that he has not held up his end of the deal – he hasn’t taught him anything. Mr. Kiosaki accuses Mike’s dad for paying him a low salary and treating him unfair0ly. Mike’s dad explains to him that he has just taught him a lesson, a lesson that mirrors real life. Mr. Kiosaki said that Mike’s dad can’t accuse his employer for the economic troubles and that Mike’s dad should be responsible.

He summarizes his first lesson: “The poor and the middle class work for money. The rich have money work for them.”

Mike’s dad informs Kiyosaki that if he wants to keep learning from him, he will return to his work the next week and continue to work at the supermarket – for no pay. Kiyosaki is angry and puzzled, but then he returns to the supermarket next week.

After several weeks of working for no pay, Mike’s dad shows up at the end of one of their shifts. Then Mike’s dad to pay them 25 cents an hour, but Kiyosaki can tell that Mike’s dad is testing them. He then offers to pay them up to $5 an hour and although Kiyosaki is tempted but he refuse. Mike’s dad continues to teach them more about money. He advises them to lose their fear of not having money and their greed for large amounts of money. Mike’s dad advises them to look for opportunities everywhere, even if you’re working for free.

Several weeks later, Kiyosaki notices that the supermarket rejects old comic books if they don’t sell. Mr. Kiosaki asks if he can have the comic books but that he can’t resell the comic books. Kiyosaki and his friend devise a plan to create a comic book library and “rent” out comic books to kids in the neighborhood for a 10-cent fee. They have Mike’s sister to work as the librarian in the library and collect payment and to keep an eye on the comic books. Their business is successful and they earn $9.50/week without even being present in the library.

“The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets.” As time goes by, Mike takes over his dad’s business. He grows to be even more successful than his father.

Kiyosaki retires at 47. He stresses that it’s not how much money you make, but how much you keep, and goes on to point out with some many examples of once rich celebrities or businessmen who died poor. Kiosaki again repeats the importance of being financially literate – a point that his rich dad drilled into him as a child. Kiyosaki says that you must build a strong foundation of financial literacy to make your money work for you. There are several rules to help you accomplish this – Rule One is to “know the difference between an asset and a liability, and buy assets.” His rich dad stressed that this is the golden rule to getting rich – buy only assets, and you will be rich. Kiyosaki believes that more money is often not the answer to people’s problems. People facing serious debt have often established a financial pattern that is difficult to reverse, even if they acquire a large sum of money or increase their income. He describes a scenario in which two well-educated, recently married individuals move into together. After a while, they find the apartment is too cramped for kids and want to move into a home. As their incomes increase, their expenses also increase. They buy a dream house and find that now they must pay additional property taxes. They also accumulate credit card debt and mortgage debt, increasing their liabilities.

Kiyosaki points out that their spending habits are really the root of their problem. He notes that self-awareness is one of the most important characteristics to cultivate if you’re aspiring to be wealthy. He believes that no one is wealthy until their assets provide a cash flow equal to their monthly expenses. In summary, he restates that the rich gain their wealth through buying assets, while the poor only have expenses and the middle class buys liabilities which they perceive to be assets.

Kiyosaki tells a story about the founder of McDonald’s Ray Kroc,. One of his friends saw Kroc lecture at a university and met him at a bar with his classmates afterwards. Kroc asked them all what business they thought he was in. Amused, a student answered ; hamburger business. Kroc corrected him and replied that he was in the real estate business. McDonald’s is the largest owner of real estate in the world. Mike’s dad expose the third secret of the rich: “Mind your own business.” He goes on to describe the difference between a profession and a business. He uses the example of Kroc again, stating that Kroc’s profession is a salesman of hamburger franchises, but his business is real estate. Your business is what earns you income independent of your labor. Kiyosaki laments the fact that we live in a society where one becomes their profession (e.g. a mechanic or professor) only to work for someone else’s business without nurturing your own. He stresses the importance of choosing assets that you love. His personal passions include real estate and investing in start-up companies. You can keep your day job, but you must also spend time minding your own business (i.e. investing in assets). He also cautions against buying luxuries before you are rich. He suggests that you wait until your assets have yielded enough money to buy that Mercedes or new boat you’ve been eyeing.

Kiyosaki believes that the poor and the middle class romanticize the story of Robin Hood and feel that the rich should give to the poor in the form of taxes. He points out that in reality the rich are much affected by taxes. They avoid paying the full amount of taxes that they are obliged owe, while the middle class is taxed more and provides the most assistance to the poor. He goes on to recount the history of taxes as told by his rich dad. Mike’s dad explained that taxes didn’t always exist in North America and England. Often, a king or leader would request that all citizens help with costs for specific causes . It wasn’t until 1874 that England ruled that income tax would be a standing tax. Kiyosaki points out that both of these taxes were aimed at the rich, at those who held property. The lower and middle classes were duped into voting for taxes, believing they would only affect the rich. According to Kiyosaki, government became greedy and extended taxes to the poor and middle class to generate additional revenue. The money earned from taxes was then funneled to government workers and the rich in the form of government contracts for corporations.

Again, Kiyosaki points out how the rich use corporations to hold and make money. He explains that corporations are just a legal body created by a legal document. They afford the rich ways to avoid taxes. The rich will always find a way to relieve their tax burden, no matter how much the tax rate on higher income brackets increases.

He states that it is important to own your own business if you want to be rich. He recounts how he used to work for Xerox as a salesman by day and focus on starting his real estate business by night. He used income from his day job to fund his side business. He was able to escape the “rat race” at an early age because he started his own business and spent time developing a strong financial IQ.

Kiyosaki goes on to explain the major ways to develop an acute financial IQ, including understanding and mastering accounting, learning how to invest, understanding markets, and finally, understanding the law. He elaborates on this last point, explaining that knowledge of tax advantages and legal protection are key to becoming rich. He again suggests owning a corporation, citing the advantages of paying for expenses before taxes. In addition, corporations provide a degree of protection from individual law suits. When an individual tries to sue a wealthy person, they find that most of the wealthy person’s money is tied up in corporations and is therefore more protected from legal disputes.

There is always risk, so learn to manage risk instead of avoid it.”

Kiyosaki speaks of his experiences as a professor. During his time with students, he noticed that lack of self-confidence and perpetual self-doubt held his students back more than anything else. He relates an example of a recently divorced woman in one of his classes. He tasks his students with playing a round of CASHFLOW. The divorcee loses the game and by the end of the class, appears noticeably upset. She is angered by the suggestion that her performance in CASHFLOW mirrors her financial woes in real life. She later calls and demands a refund for the class, which Kiyosaki grants her.

Later, Kiyosaki learns through her friend that the divorcee actually does see some parallels between her own life and her performance in the game upon further reflection. She also begins to suspect that her ex-husband was hiding money from her for the last five years of their marriage.

After the story, Kiyosaki restates the importance of developing financial intelligence. He equates financial intelligence with “having more options.” Rather than waiting for the “right” opportunity to come along (i.e. job offer, promotion, etc.), you can create your own.

As a child, Kiyosaki was told by his rich father that “money is not real.” He explains that this is a major secret to becoming rich – accepting that money is not real. He maintains that your greatest asset is your mind. In the age of the internet, investment banking, and stock-trading, people make millions every day simply by having an idea – a patent, a trade, a strategic financial move.

Kiyosaki relates his experience living in Phoenix during a terrible economic downturn in the early 1990s. Financial advisers suggested that everyone save money away each month to prepare for terrible economic conditions. Kiyosaki did the opposite – he began investing aggressively in the stock market and in apartment houses. Due to the housing market slump, he was able to buy a $75,000 house for $20,000 and then resell it later at $60,000 with only five hours of work. He rolled the profits into his real estate company and was able to use the money to pay for company cars, trips, insurance, and dinners with clients – all pre-tax.

Kiyosaki suggests that it would take much longer to earn the same amount of money through the traditional method of saving money at a job. He asks the reader to imagine which is harder: working hard, paying 50 percent of your paycheck in taxes, and funneling what is left over into savings, or devoting some time to developing financial intelligence and focusing on investing in assets.

He elaborates further on specific examples of his success in generating revenue through real estate and the stock market. He explains that you must accept some risk in investing, but you can also use your financial intelligence to make informed decisions that minimize risk. You have to accept that sometimes your risks will lead to big gains and some will lead to big losses. He claims that winners are not afraid of losing. The secret is to learn to manage risk instead of hide from it.

There are two types of investors – those who buy packaged investments and “play it safe” and those who create investments and compile their own deals. The second type of investor is the one that is more likely to become rich.

In order to become the second “more professional” type of investor, you must cultivate three skills. You must be able to find opportunities that others have neglected. You must also learn how to raise money. Sometimes this will involve a degree of creativity. Most aspiring investors think to go to the bank first – Kiyosaki explains that you might have to consider other capital-raising alternatives to the bank. Lastly, you must learn how to organize smart people and choose your advisers wisely.

The world is filled with smart, talented, educated and gift people … I am constantly shocked at how little talented people earn.”

Kiyosaki tells a story of how he once met a young journalist in Singapore for an interview. She confides in him that she has always wanted to be a fiction writer and not a journalist, but that her novels never seem to have much success. Kiyosaki compliments her writing style and suggests that she go to school to learn how to sell. She is offended by the suggestion and declares that she’s not a salesperson, but a writer.

Kiyosaki notes how many talented people he’s met that don’t seem to earn money. He recalls an expression he once heard – most people “are one skill away from great wealth.” The only thing missing for the talented young journalist or many aspiring professionals is financial intelligence. He explains that part of his success at selling his first book – If You Want To Be Rich and Happy, Don’t Go To School? – was the fact that he understood marketing and chose a title that would catch people’s attention, if not anger them outright. The book received a lot of publicity and sold exceptionally well.

After Kiyosaki graduated from college, he got his first job at Standard Oil of California with a decent starting salary. His poor father was elated. However, Kiyosaki resigned from his position after only six months and decided to join the Marine Corps to learn how to fly. After this, his rich dad was elated. He recognized that Kiyosaki wanted above all to learn new things. Kiyosaki went to school to be a ship’s officer to learn about international trade and now wanted to travel to the South Pacific, knowing that he would eventually do business there.

His educated dad was completed bewildered. He disapproved of his decision to leave his well-paying, secure job.

Kiyosaki later resigned from his position in the Marine Corps and started working at Xerox because he heard they had a world-class sales-training program. He vowed to learn everything about sales and once he was successful, he would move on.

In 1977, Kiyosaki formed his own company, beginning the next phase of his career. His first product was a velcro and nylon wallet that he sold overseas.

Reflecting on his career, he advises young people to seek work based on what they will learn, not how much money they will make. He stresses the importance of assembling a usable skill set. He suggests that adults pick up a second job where they will acquire new skills to enhance their education and evolve as a businessperson.

The most important areas to focus on in terms of building specialized skills is sales and marketing. Sales and marketing are difficult subjects to master because they involve fear of rejection or failure.

Kiyosaki reflects further on being raised by two dads. He sees in himself a bit of both of his fathers – he embraces the tenets of capitalism and loves making money just like his rich dad, but also feels a degree of social responsibility for those who are underprivileged, reflecting his poor dad’s values.

“I like Texas and Texans … When Texans win, they win big. And when they lose, it’s spectacular.”

This chapter focuses on overcoming obstacles. Kiyosaki believes there are five main reasons why financially intelligent people may still not succeed in building assets: fear, cynicism, laziness, bad habits, and arrogance. He delves into each of these obstacles in detail.

First, he examines fear, primarily the fear of losing money. He states that he has never met a rich person who didn’t lose money.

He acknowledges that fear is understandable when it comes to taking financial risks. The best antidote to fear, however, is to start early and plan. He remembers that his rich father used to tell him how much he loved Texas and Texans because when they “win, they win big … And when they lose, it’s spectacular.” He counseled them to be inspired by their failures, rather than be devastated by them.

Kiyosaki explores the second impasse to freeing yourself from the rat race: cynicism. He believes that doubt holds many people back from moving forward in life. He tells a story about his friend, Richard, who wanted to invest in real estate. Kiyosaki helped him find what he thought was a great deal. Richard decided to take the deal, but Kiyosaki later found out he backed out because he was afraid he would end up losing money. The unit he decided not to purchase was later valued at $95,000 and only would have required a $5,000 investment from Richard.

He goes on to say that the list of items people “don’t want” to do often hold them back from great opportunities (e.g. “I don’t want to lose money by investing in the stock market” or “I don’t want to buy real estate because I don’t want to fix toilets”). Kiyosaki’s rich dad declared that “I don’t wants” actually “hold the key to your success.”

He then examines laziness. He cites greed as the cure for laziness. He reflects on how his rich dad never said “I can’t afford it,” but instead asked, “how can I afford it?” Meanwhile, his poor father continually remarked that he could not afford things. Kiyosaki instead urges readers to ask themselves constantly, “What’s in it for me?”

He then looks at bad habits. His rich dad always told him that he should pay himself first, rather than paying taxes or bills. He notes that Kiyosaki’s poor dad always paid his bills first and himself last. His rich dad explained that by paying himself first and his debts after, he is forced to find creative ways to make additional income to pay his bills. He is motivated by the pressure to pay his creditors, but not at the expense of himself.

Kiyosaki then examines the last obstacle to financial success: arrogance. He explains that many try and use arrogance to hide ignorance. He notes that there are many people in the finance and investment world who know very little about money. He stresses the importance of educating oneself rather than simply projecting an attitude of arrogance and mastery.

Chapter Nine focuses on how to get started acquiring assets and honing your financial genius. Kiyosaki focuses on ten steps to develop your inner financial genius. Step 1
“I need a reason greater than reality.” He asks the reader to find a reason “greater than reality.” It has to be a reason to motivate you, even when the odds seem stacked against you. He reflects that his own reasons are a combination of “wants” and “don’t wants.” He explains that he doesn’t want what his parents wanted – namely, job security and a nice house. He never wanted to be an employee. He doesn’t want to work hard and be taxed heavily. He does want to travel and live a lifestyle that he enjoys. These two categories – “wants” and “don’t wants” – are what drive him to strive to free himself from the “rat race.” Step 2

“I choose daily.” Choose daily and believe in the power of choice. He explains that with every dollar that we earn, we have the choice of where to use it and whether we want to be rich, poor, or middle class. According to Kiyosaki, most people choose not to be rich. He chose to be rich and makes that choice consistently every day. You can choose whether to watch TV or to spend your time and money on a class on financial literacy. He stresses the value of education in acquiring new skills and seeing new opportunities to become rich. Step 3

“Choose friends carefully.” Kiyosaki’s calls this step “the power of association.” He admits that he has pursued friendships with people because they were financially successful so that he could learn from them. He also acknowledges that he has learned a lot from his poor friends who don’t have money. Step 4

“Master a formula and then learn a new one.” Kiyosaki stresses the importance of learning quickly and varying your studies. He speaks of mastering “formulas” – learning how to do something (e.g. buy real estate) and then adjusting when the rules of the game change by learning a new formula. It is important to gain the ability to learn quickly, as the world is constantly changing and new opportunities present themselves all the time. Step 5

“Pay yourself first.” He echoes the advice of his mentor and stresses the importance of “paying yourself first.” He remembers times in his life when he chose to pay himself over paying bills. He did not suffer any consequences and living by this rule has helped him build a strong asset column. However, he is clear that he is not advocating being financially irresponsible, only that you should prioritize yourself first over the government or creditors. He suggests two rules for cultivating self-discipline. The first is not to get into large amounts of debt. The second rule is when you do get into debt, do not take money from your savings or investments. Instead, use the pressure to repay your debts as inspiration to drive you to make additional money. Step 6

“Pay your brokers well.” Kiyosaki’s rich dad always advised him to hire intelligent people and to compensate them fairly. They will help you become richer. He stresses the importance of thoroughly researching a broker before hiring them, as many brokers are simply salespeople without investment experience. When investigating a broker, he finds out how much investing they do themselves. If they own no property or stocks, he does not hire them. Step 7

“Be an ‘Indian Giver’.” Kiyosaki believes in the power of getting something for nothing. One of his first questions when examining an investment opportunity is, “How fast do I get my money back?” He uses an investment example to illustrate his point. His broker sometimes gives him a tip to move money into a company that is about to announce a new product, believing that their stock will go up temporarily. Kiyosaki will move money into the stock of that company for a short amount of time and later pull his initial amount back out. He still retains his original amount of money, but also owns a new asset that turned out to be free in the end. Step 8

“Assets buy luxury items.” Use assets to buy luxury items. Kiyosaki emphasizes the power of focus. He relates a story about his friend’s son who desperately wanted a car. His father gave him $3000 on one condition – he couldn’t use the money to buy a car. He would instead learn how to make enough money to buy a car by investing in the stock market. His son began reading the Wall Street Journal and watching CNBC to learn everything he could about his investments. After a while, he became much more interested in the stock market and growing his assets than buying a car. Kiyosaki uses his desire for luxury items to motivate him to find new ways to make money from his assets. He cautions against dependency on credit to consume. Step 9

“The need for heroes.” Kiyosaki was inspired by the careers of financial tycoons such as Warren Buffett and Donald Trump throughout his career. He channels their confidence, success, and experiences to guide his own successes. Step 10

“Teach and you shall receive.” The last step emphasizes the importance of giving. Kiyosaki believes in the law of reciprocity – if you give money, love, time, it will come back to you in another form.

Kiyosaki delves into a few more ways you can take action to begin your path to becoming rich. The first piece of advice he offers is to stop and examine your daily life. What is working? What’s not working? His second piece of advice is to seek out new ideas. Find a book on a new subject and read it. Learn new formulas. He then advises you to take action. Find someone who has been successful in an area in which you would like to be successful. Invite them for lunch and ask them for tips or ideas. He also stresses again the importance of taking classes and buying “how-to” tapes. Make lots of offers and chances are some of your offers will be accepted. He invites the reader to see doing business as a game. Well, it had to happen sometime. After stirring up a hornet’s nest the last time I discussed Robert Kiyosaki, it somewhat became inevitable that I would review his very well known personal finance book, Rich Dad, Poor Dad. This book has been inspirational to many people, but the book seems to have produced as many critics as champions. What about me?

As I write this review, I’m reading this book for the third time. I thought it might be insightful to immediately mention the first two times I read the book and my reactions following the reading. The first time I read the book, I felt inspired. I wanted to run out and start following some of the ideas in the book, but what I found is that you can’t just merely run down to the “courthouse steps,” spend five hours, and come away with $60,000 in cash, I became really disillusioned. I eventually ran into John T. Reed’s lengthy negative analysis of RDPD and was almost shocked at the level of criticism of the book, and with that criticism, I read the book a second time and concluded that the book was a waste of time. It was shortly after this second reading that I was requested by a reader to write up my thoughts on the author, who has written a large number of similar books.

So what kind of book would cause such a strong shift in opinion? Rich Dad, Poor Dad is basically what I would call a personal finance perspective told in the form of a parable, much like a book I reviewed earlier, The Wealthy Barber. But while The Wealthy Barber basically related the basics of personal money management in the parable along with examples that you could directly research and work out yourself, Rich Dad, Poor Dad is about a complete rethinking of how money works. For example, rather than seeing an asset as something with value, this book defines an asset as being something that generates cash flow. This means that according to this book, your home is not an asset. Now, I’m going to walk through this book as I read it for a third time, hopefully without the cynicism inherent in my last reading of the book. I’m also going to limit my observations to what is within the covers of the book (meaning I’m going to leave out any external perspectives on the author) and accepting the parable of the rich dad for what it is, a parable. My only interest is the following question: what useful personal finance information is contained within these covers? Six Lessons

The title Rich Dad, Poor Dad refers to the two main male influences that Robert had as a child. His own father, the figurative “poor dad,” worked at a steady job for a living, while the “rich dad” (the father of a friend) ran a multitude of businesses. Most of this book is told from the perspective of Robert learning from his “rich dad” about how to make money – and seeing how his “poor dad” made huge money mistakes. The first two thirds of the book covers six lessons taught to Robert by his rich dad. Lesson 1: The Rich Don’t Work For Money

This lesson has an ambiguous title that gives two separate meanings based on how you read it – actually, based on where you put the emphasis. If you read the title as the rich don’t work for money, that’s the wrong one. The rich in fact do work, and they work quite hard. The way the title should be read is that the rich don’t work for money. They work to learn things, and the things they learn can easily be applied to make money over and over again. I agree with this sentiment entirely – good ideas are always more valuable than good labor, because you can keep mining good ideas, while good labor is spent the second you do the work. Another part of this lesson I liked is that the “rich dad” is actually quite frugal. Although he has a lot of money in the bank, he drives a cheap car and doesn’t live in a mansion. Too many people equate rich with material things, so I enjoy it when it is shown that being rich often has very little connection to material possessions. Being rich means never having to worry about paying your bills – it doesn’t mean driving a Ferrari (well, at least not until you can pay cash for it and not break a sweat). Without a doubt, this was my favorite part of the entire book, even with the short, out of place rant about the gold standard (actually a misnomer, because the only way the book makes any sense in terms of time is if the rich dad is actually talking about the Bretton Woods system and not the true gold standard) and how the United States was doomed if they abandoned it. Lesson 2: Why Teach Financial Literacy?

This is the section of the book that causes a lot of controversy when discussed. In a nutshell, this chapter redefines the term asset. For most, an asset is something that has value. For example, your home is an asset because it is something you own that has value. Well, this section of the book redefines the word. To Robert Kiyosaki, an asset is something that generates income, while a liability is anything that has costs. In other words, by this definition, your primary residence is not an asset but a liability. It may have cash value, but it doesn’t generate income. Instead, assets are forms of passive income that you control, like a rental property or intellectual property. So what’s the overall lesson here? Basically, you become rich by accumulating assets, assets as defined by this book. This basically means that, in my case for example, my truck is not an asset but The Simple Dollar is an asset (it generates revenue on its own – I write because I enjoy it). Wealth comes from having enough assets that generate enough income so that all of your expenses are covered and there is enough left over to invest in more assets. Lesson 3: Mind Your Own Business

The point of this chapter is that a financially healthy individual should be spending their spare time not spending their paychecks, but investing as much of it as possible in assets (as defined by this book). This is another lesson I strongly agree with: pay off your debts and start investing as soon as you can into things that can generate revenue. This lesson was short and sweet. Lesson 4: The History of Taxes and the Power of Corporations This is the section of the book that made me start disbelieving in the overall ideas presented. First of all, after all this talk of following in the footsteps of the rather frugal “rich dad” example, Kiyosaki begins to describe a lifestyle of buying Porsches and the like. What? It doesn’t jibe at all with the earlier lessons at all. Even worse, the chapter misrepresents several fundamental facts about taxation that I’m quite aware of, because my father held a corporation and dealt with the taxes on it. First of all, if you start claiming stuff like Porsches as part of necessary company expenses, you are going to get audited.

There’s a big difference between forming a personal corporation and buying a company car for use with that corporation, but the IRS is very clear on being rational with spending just to avoid things like buying Porsches. You can justify a company jet as being needed for travel, but what necessity for business does a Porsche provide that another car does not? Kiyosaki mentions various tax dodges in this chapter, but almost all of them aren’t tax dodges at all, but merely tax delays. With almost all of them, you either have to hold an asset until you die or you’re going to be hit with a monstrous tax bill. If you ever need to liquidate out of a need for cash, playing these games will mean that the IRS will eat you alive. There are some advantages of keeping money in a corporate structure as an individual person, but they mostly relate to minimizing taxation on reasonable expenses related to money you earn independent of employment. It doesn’t mean that a corporation magically means you can start buying Porsches. Lesson 5: The Rich Invent Money

Here, the disbelief continues when the author relates a tale of a ridiculously good real estate deal made on the “courthouse steps” in which Kiyosaki claims to have made $40,000 in five hours. I’ve spent some time myself seeing what kinds of deals are available from sheriff’s sales and such and the truth is that the only time you’ll find a deal like that is if every real estate business in the area is asleep at the wheel – and that’s simply not happening in this era. That’s not to decry the overall lesson of this chapter; you can invent money. However, the easiest way to mint your own money in today’s arena is through creating your own intellectual property. With the internet, there are many ways to distribute and monetize your intellectual property: sell crafts you can make, create websites out of your own ideas, sell your music or performances. Lesson 6: Work to Learn – Don’t Work For Money

While I agree in general with the lesson, the tone here was extremely insulting towards people who choose to be employed, referring to them as “hamsters.” Using this logic, the majority of the millionaires in the United States (as described in The Millionaire Next Door) are “hamsters.” That’s ridiculous and insulting. Everyone should strive to learn as much as they can when they work, because it can transform your understanding of the world and perhaps build into methods of starting your own business and being self-employed. However, to look down at people who choose to be employed for a living as “hamsters” is ridiculous. Is Jack Welch a “hamster”? He was employed by General Electric for forty years.

“Rich Dad, Poor Dad” has been written by Robert T. Kiyosaki with Sharon L. Lechter. Mr. Kiyosaki is a fourth generation Japanese-American. After serving in the Marine Corps as a helicopter gunship pilot during the Vietnam War, he took a job with the Xerox Corporation as a salesman. This is when he started to invest in real estate and other commodities and eventually started a company that introduced nylon and Velcro wallets (designed for surfers) into the market. Mr. Kiyosaki now runs a business and investment education company, Cashflow Technologies, Inc. Ralph H. Kiyosaki, Robert’s biological father, was the former Superintendent of Education for the state of Hawaii. He was a highly educated man with a Ph.D. from Stanford University. He is referred to as “Poor Dad” in the book. The man referred to as “Rich Dad” is a neighbor who had never finished eight grade yet owned warehouses, a construction company, a chain of stores and three restaurants. While “Poor Dad” urged Robert to study hard so that he could earn money, the “Rich Dad” taught Robert how to invest money so that he would not be bound within the constraints of a nine-to-five job.

The book contains all the various lessons about money that Robert’s mentor, “Rich Dad” taught him. “Rich Dad” was rich and taught Robert how to get rich and stay that way. The contrast in attitudes of the rich and the middle-class towards money is further reinforced by the teachings of “Poor Dad,” who had typical middle-class notions about money. ”Poor dad” made just enough to pay his taxes and own a house, in spite of being highly educated and working for the Government. Mr. Kiyosaki says his main motive behind writing this book is to teach financial literacy to those of us who are not blessed enough to have a “Rich Dad” to show us how to invest our money properly. He argues that the present educational system renders us financially incompetent and, allows rich corporations and the Government to exploit us for money because of this lack of financial literacy. He offers many valuable insights into money management that he obtained from his “Rich Dad” and from his personal experience. The most significant concept in the book that I found to be an eye-opener was his differentiation between a “business” and a “profession.”

According to Mr. Kiyosaki, besides one’s day-to-day job (or “profession” as he calls it), every person must also have a “business”. A “business” is where one can invest one’s money, and which will in turn generate money even when one is not working. He also goes on to explain the history of taxes and how the rich manage to legally evade paying a fortune in taxes through the formation of corporations. His definition of “assets” and “liabilities” was a revelation to me, and a sad one at that, because I realized that most of the things that I considered my assets were actually liabilities in the long run. He also gives detailed examples on how to manage ones cash flow so that returns from the assets can be invested into procuring more assets. The book is very well written and, surprisingly for a book on the subject of finance, not at all dry or long-winded. Mr. Kiyosaki uses a lot of anecdotes to illustrate his ideas.

The constant comparison between the wealth management strategies of “Rich Dad” and “Poor Dad” serves to reinforce the need to change middle-class mindsets about money. Critics of the book say that the financial advice offered in this book is too general and not very accurate. Not being a financial genius myself, I wouldn’t be able to counter these claims. But, as a novice to the field of finance, I found this book very encouraging and motivational. It really made me sit back and take a close look at where all the money that I am working so hard for, was going. Even if I never become a millionaire or never actually use all the strategies outlined in the book, it was still a very interesting read. It has changed my outlook towards money forever.