This book is a timeless classic. I can hear Robert Kiyosaki’s voice in my head saying, “Money in your asset class puts money into your pocket”
It teaches you the most basic fundamentals in personal finance and does so in a debunking the rules of a “well-lived, respected life.”
Growing up, Robert K. had two dads. His own dad was well-educated member of the government who had worked his way up, but he shied away from the subject of “money.” He grew up next to another dad, who taught him how to leverage money to his advantage.
This book reads easily. He speaks in in his own voice, giving practical advice reflecting from his own journey. He admits to a few things that he “likes” money, he had to work very hard for it, and that it was not always roses and peaches.
The book essentially breaks down the cash flow analysis the income statement (income and expenses) and balance sheet (assets and liabilities). Examples of assets are real estate, stocks, bonds, notes, and IP that flow cash into income with rental income, dividend, interest, and royalties. Liabilities are those that take money out of a pocket, like a car that needs repair, mortgage with mortgage payments, hence expenses.
Gambling is not knowing what you’re doing. Finance basics are made up of the following:
- Accounting: Financial literacy to identify strengths and weaknesses of businesses, urn earned income into passive & portfolio income
- Investing : Creative strategies and formulas to get money working. Ex. How to buy real estate foreclosures, derivative trading, The 16 Percent Solution, commodity option trading, etc.
- real estate
- IP (idea, patent, license, franchise, information, music)
- Investments (stocks, bonds, notes)
- 현물 자산 투자 (귀중품, 예술품, 시계, 와인, 자동차)
- Markets: Is this investment cheaper due to supply vs. demand in the market? Check your pulse on your emotions (fear vs.greed) and the economics (is this an under-valued asset?)
- Law: Learn the tax advantages and protection mechanisms of a corporation entity, e.g., expenses that you can pay with pre-tax company dollars
Key Takeaways are the following.
- Emotion drives our decision-making. Fear and greed drives our thinking. Fear of running out of money motivates us to work hard, and greed and desire drives us to start buying things with money. Learn to use emotions to think and be an “observer” of emotions not be consumed by it.
- Money is not real. They are contracts, agreements, and exchange of mediums, e.g., services, information, etc. I chose to think about this concept to not think about money in nominal terms, but to think about it as a medium of exchange of goods. More we capitalize on our assets, more we can earn.
- Focus on an asset class, but learn a little about everything – banking, brokerage, law, accounting, etc.
- Be disciplined. In the learning process, you will lose money. Keep studying, be willing to take the rocky road, and attend seminars, etc.
- Learn how to communicate effectively and succinctly
- Learn the three management skills – of people, cash flow, and systems
There are certainly valuable lessons from the book in teaching the fundamentals. For me the biggest lesson learned is to find an asset class I would be excited about. Perhaps it is my dogma or my millennial attitude, but I truly enjoy working for myself. One thing I definitely want to try is launching a business I am excited about and learn the mechanics in theory and in practice.
In the meanwhile, I will develop hobbies, try new things, and see what I can do the best.
As I progress through my career, I look forward to the learning.