This book, authored by Robert Kiyoshi, is a top-selling book and is likely familiar to you. He wasn’t necessarily the best writer, but his story-telling style tells he was a persuasive salesman. It was simple and grabs your attention. It challenges paradigms and although I disagree with some ideas, it offers an interesting perspective to consider.
He told the story of 2 dads, the hard-core capitalist and the socially responsible teacher. You get different views of both, and realistically I think the poor dad was what I would’ve looked up to be. I hated how the system primarily rewards the former, but I acknowledge that it is often the case. Although I did enjoy this book primarily because it challenges my prior perspectives, to be more motivated to play this capitalistic game and grow financially free.
Some takeaways from this book: - Thought: I do want financial freedom. Wealth to sustain myself and people I support, freedom to travel and experience, control my time. I don’t want to be complacent/dependent over salaries, retirement plans, and other perks. - Thought: I don’t think money is important, but I don’t want that to be an excuse not to think and exercise my money-making/opportunity-seeking brain and produce value to the world. Don’t feel neither overly attached nor avoidance of money, don’t let it take over your emotions (fear/desire). - Thought: Don’t avoid fear. Failure should excite you. - Action: Learn financial literacy (accounting, income statements, balance sheets, cash flow, investing, understanding markets, marketing, writing good business plan, create jobs) - Action: Keep learning, but don’t overspecialize. Get out of your comfort zone. - Action: Give > receive. Trade knowledge and trade values.
This book brings out more questions than answers, questions begged to be reflected. Am I working on the right thing every morning? Was I too heads down that I closed down opportunities? Was I mind my own business, or did I work hard for someone else? How should I spend my money?
Summary
I can’t afford it. -> how can I afford it?
Make decisions fast, seize opportunities before anyone does.
A push from life = a learning opportunity: Rich dad pushes people around for them to truly react and listen. Life won’t lecture you. Life will keep pushing you around, each time being an awakening to learn something new. We learn things best by doing real things. So learn, instead of letting life push you around or getting angry blaming your boss, job, or partner, or giving up to play it safe. Don’t let the fear of losing kill the excitement to win; direct your anger/love/passion/desire/curiosity to learn.
If things must change, first I must change: It’s the only thing you have control over, and it’s easier than trying to change everyone else in the world. Stop thinking everyone else as the problem, because that means you have to change them.
Work for free, and the mind will show you other ways of making money. Seek for opportunity, not money.
The Trap: High salary often just means higher tax and increased spending. Careful not to blow up on expenses since it’s the path of least resistance. Working for money is attractively easy (especially when fear is the primary emotion - of not paying bills, fired, starting over, broke). Fear encourage hard work, and greed encourage spending. Money without financial intelligence is money soon gone, as it takes over their life and emotion. You’d need the ability to think in spite of being emotionally charged.
Let money work for you - Spend on assets (things that eventually pay back money, regardless of work), not liabilities. Gain tax benefits. - Cash flow tells a story of how someone handles money. Keep money flowing the right way, and have assets cover your liabilities/expenses. - Liabilities: mortgage, property tax, car, furnitures, baby (trap). Money continues to blow out of the expense column, and you can’t take advantage of the good deals/opportunities when they come. If you want to increase expenses, increase cash flow from assets first. - Assets: stock, companies, bond, real-estate, IOUs notes, royalties, precious metals, tax-lien certificate (expect >16% yield over 2-7 years). - Acquire assets you love, so that you’d take care of it.
Be proactive to look out for opportunities - Be bold, knowing is just half way there. You need courage to act on it, time will fly. - A terrible economy (ie. bankruptcy courthouse, foreclosures) is perfect condition for investors. Investments come and go, markets go up and down, economies improve and crash. Opportunities are handed to you everyday of your life. A bad thing that happened might mean a good thing happened elsewhere. Look for it than worrying about the bad side. - Money is simply a trade/agreement, you can learned processes to make lots of them. - Raise money instead of depending on the bank (think in investments beyond 5% interests). - You have to understand the investment. Don’t do it if it’s too complex. But don’t just play safe, the hot deals are speculative and reserved for those who understand. The more you understand, the more opportunities comes your way, and the more you can discern a good/bad deal to improve your odds. Learn how to put the pieces together yourself (or with someone), rather than buying things off-the shelves. Learn to manage risk (know what you don’t) rather than avoiding risk. Always have a plan on when to take your money out. - Ie. get commissions over finding opportunities for someone else (knowledge is money) - Texas attitude (story of Almano - die till the last man): Proudly win, and brag your losses. Except you don’t brag going broke over small change. Seek the big deals. Don’t bury failures. Know how to take a loss, and turn it into inspiration that’ll make us smarter/stronger. For winners, loosing inspires them. Failing someone gives them opportunity to get stronger. Optimists over cynics, the ‘What if?’ never ends. - Stop and talk to people. Identify patterns over time. (ie. new retailers in neighbourhood, moving truck drivers, etc) - Profit is made when you buy, not when you sell. Don’t wait for your chances to sell. - Look for demand first, then find the retailers to get bulk/deals. - Surround yourself with specialists (attorney, broker, accountants, investors). Hire people more intelligent than you. Make sure they themselves owns and sells investments. Management: Manage working with people smarter than you.
Taxes work assuming government can manage money efficiently. However, since there’re no incentives to keep/grow the money, governments tend to keep spending fiscally. You had to learn how tax works to legally play the system well and be braver, it’s expensive to not know the law. You don’t want to give power to the taxman or your employee (they’ll push you around). You want to control your money directly. Make a corporation and earn the tax benefit/protections (you spend pre-tax dollars and when sued the wealthy owns nothing other than the corporation).
Widen your skills, don’t specialize - He joined Xerox to learn marketing, sales, and overcoming fear of rejection. Take on different roles. Sit with bankers/lawyers/brokers/accountants/property managers. Study international trade, people, business styles, cultures in emerging nations. Join marine corps to learn to manage and lead. Taking over a business requires you to learn the different departments. Communication skills like writing, speaking, negotiating is crucial. - Seek work to learn, more than to earn. These skills are priceless. - If you decide to specialize, make sure to seek labor union, since your skills has limited value / transferability outside the industry. - Focus on selling/delivering hamburgers, than perfecting the skills to make better burger. - Get connections and bring smart people together as a team. - Learn lots of formulas fast and put it into action (ie. take classes on different investments, derivative traders, commodity option traders, chaologists). In today’s fast world, it’s not how much you know, but how fast you learn. Find someone who done it, take them out for lunch, ask the tips and tricks of the trade
Busy people are often the laziest. Keeping themselves busy to avoid things they’re lazy to fix. The cure is a little ‘greed’. We’re often raised to suppress desire of greed (ie. we can’t afford this), so you guilt yourself as an excuse to stop the pursuit. Guilt is worse than greed, as it robs/deny your soul. Greed is ok, you’ll learn if you ask yourself how you plan to attain it.
Pay yourself first, to get more pressure to pay the bullies.
Choose your heroes: you learn best by pretending to be the best. Look up to a genius and emulate them. Heroes inspire and make things look convincingly easy.
Investing is about giving the things you want, so you can get more. (help others sell to get sales, help connect and you’ll connect with more)
Stop and assess what’s not working
Negotiate / make offers / counter-offers - sellers will sell more than its worth. You have power to determine the right price for you. Who knows, they’d be happy someone was interested. It’s fun and only a game, like dating. (ie. make offer that include contingencies like ‘subject-to my business partner’)
Shout out a failure. When you fail, does it excite/frighten you?