BZ Book Review 02: <Rich Dad's Guideline to Investing> by Robert Kiyosaki
Key Takeaways
If you decided to be rich and adopted the mind-set of the rich, there is no reason you cannot achieve that. There is no cheating in getting rich quick scheme. You need to invest in financial education and literacy until reading financial statement, analyzing business opportunities and making money from it become your second nature.
90-10 rule: 10 percent of the people own 90 percent of the money. Rich people invest in ways that poor or middle class people do not or cannot. For more details, refer to article on Accredited Investors.
Earning a salary can seldom make you rich. We get taxed too much and employees inevitably have less money to invest. That is just how the US tax system is set up. While business owners invest first then pay their taxes.
Employee invest with after-tax income vs. Business Owner invest with pre-tax money then pay tax on whatever is left
Employee gets fired all the time vs. After firing employees company stock prices normally go up. Employers have less risk than employees
Rich people never mix Assets and Liabilities. Understand financial literacy can help you understand .a lot of choices rich people make.
Asset: Cash in - investment that bring in positive cash flow
Liability: Cash out - investment that you need to continuous pull money in
Terminologies good to know: cash-on-cash, debt to equity ratio, return on equity, leverage
Investor Evolution: Accreted Investor -> Qualified Investor -> Inside Investor -> Sophisticated Investor.
Accredited investor(AI): Someone with high salaries or established wealth, who met the legal requirement for the wildest possible choices of investment
Qualified investor: AI who are also financially educated, who know how to analyze financial statement and market movement.
Inside investor: Create assets instead of buying them. e.g. people who start a startup , real estate agency and make them valuable then either use it to generate income or sell it.
Sophisticated investor: Inside investors who leverage their experience building assets from inside to evaluate companies from the outside for investment purpose. Taking control of the corporate structure, investment, decision making and tax to maximize returns.
Once you have a business, you have options. You can reinvest it and generate some other assets; you can grow and then sell it; or you can take it public.
Learning to communicate and look the part will pay off in great ways.
Invest time in sales training program is a great way to train you to have a top-notch communication skills. Two things will come out of it: (1) know how to sell your product and service better (2) appear fearlessness in front of rejection
55% of impact of public speakers come from their body language. Looking the part can help you convince people and sometime it is enough to get you the job. Try to speak and carry yourself as the person you want to be.
The average approach sees you work for the money. The second approach sees your money work for you. Don’t be average.
Call To Action
Shift your mindset from “I cannot afford that” to “How can I afford it”
Steps
Change you mindset to the Rich
Invest in Financial Literacy until it is second nature
Invest in Communication skills and try to look the part in every aspect of life
Become a sophisticated investor
