Robert Kiyosaki's book Rich Dad Poor Dad was released in 1997, but continues to be popular among those interested in finance and discovering the world of investing.
According to the plot of the book, the author has two fathers, one is real, but not particularly rich, the other, whom the author also calls father, is in fact the father of his friend.
This second father is financially successful and, according to the book's plot, gives his "son" lessons that will be useful to him in the future.
So what financial lessons can you learn from this book?
Wealth begins with thinking
The main difference between the fathers is their mentality. His rich dad believed that the root of all evil is the lack of money, and that this is what causes most of the problems in the world. Whereas his poor dad believed that the love of money is evil.
His poor dad always told him that he would never get rich even though he was well educated and that he didn't care about money, while his rich dad always said that money is power.
So first you have to change your thinking, and instead of using phrases like, "I can't buy this," you have to use phrases like, "How can I buy this?" It seems like a small difference, but it actually determines a person's thinking, and this is the first step to wealth.
Make money work for you, not the other way around
Kiyosaki's rich dad explained to him at a young age a phenomenon he called the "rat race." It happens, he said, often in the middle class: everyone is driven by two emotions: fear and ambition.
Fearing to run out of money, they work non-stop. But when they start earning more money, ambition, the desire to show their success, gains strength, and these people start spending even more.
As a result, a person simply enters a new cycle. The solution to this problem is investing.
Don't buy liabilities thinking they are assets
The author's rich dad brought to his attention a simple fact: many people confuse liabilities with assets.
There are those who consider, for example, buying a car an investment. But as soon as you make such a purchase, your car immediately becomes used and loses value. And in the future, its price will continue to fall. And there is also the cost of maintenance.
For the author, assets are anything that has value, generates income or increases in value, and has a liquid market. Here are some examples of assets:
- A business that doesn't require your presence (otherwise it's just a job),
- Bank deposits,
- Investments in shares,
- Financial funds,
- Income generating property.
Luxury? Only for investment income
The secret is not how much you earn, but how much you save. The more a person invests their money and forms the habit of reinvesting, the faster their wealth will grow, because the effect of compound interest occurs.
And it is with this income, generated by a permanent portfolio of assets, that rich people buy luxury goods. They do not use their hard-earned money for this.
Look for tax advantages
Kiyosaki's father explained to him that the biggest tyrant was not his boss or his superior, but the tax inspector. "If you let him, the tax inspector will always take more from you."
Assets need to be protected, but not by tax evasion or anything illegal, but by using various benefits and legal structures, such as opening your own LLC. This mechanism also protects against possible litigation.
Take risks
There is no miracle in investing. Anyone who wants to get higher returns will necessarily have to take risks.
This is true of entrepreneurship as well. Rich dad said that financial wealth comes from technical knowledge and courage. Without courage, you cannot achieve great success.
Don't get stuck on formal and technical education
Kiyosaki learned from his rich father to know "a little bit of everything." Who can guarantee that your job, which you spent 5 years learning, will not suddenly cease to be in demand tomorrow? You need to open your mind and master such skills as leadership, marketing, sales, negotiations.
His poor father, with each year of his work, became more competent in his field, but at the same time, with each year his choice was reduced. In other words, he was in a financial trap.
Have a little ambition and leave laziness aside
Many people take the easy way out, which is to say: I will never have this. And they spend their lives just going with the flow, not thinking about tomorrow.
The solution is to have a little ambition and face harsh reality. It is better to sacrifice something today to have a more comfortable future. After all, the more time and effort you invest today, the more income you will receive tomorrow.
Avoid arrogance
"You have to avoid arrogance," the author says. For him, this feeling is nothing more than a way to hide ignorance. His rich dad said that every time he tried to do something without knowing about it, he lost money.
This applies to those who ignore their investor profile and the risk associated with investments: due to overconfidence in high returns or, even worse, due to a friend's recommendation, without seeking to learn more about the subject.
Invest in yourself
A person's greatest asset, says Kiyosaki, is his own mind. Any investment in education, courses and training will not be in vain.
It is not enough to simply invest money - you need to learn how to invest wisely, avoid pitfalls and get rid of bad habits.
Earlier I told you how a poor person can become rich.
