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Thursday, October 29, 2009

Book Review: Rich Dad Poor Dad

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Robert Kiyosaki has built an impressive career around the principles he teaches in this short easy to read book. A best seller on the new York Times Best Seller List for over 6 years the financial lessons are compelling.

It is written in the manner of a parable, and Kiyosaki has been evasive when questioned about the actual existence in real life of the two central characters. The folksy story telling style that he uses is a lot more palatable and digestible than any dreary economics manifesto I’ve ever read.
What are the key points in the book?

The Rich Don’t Work For Money.
Instead of working for a pay cheque and living in fear and ignorance, they harness the power of money and have it work for them. The rich understand that money is an illusion. If everyone cashed in their assets tomorrow there just wouldn’t be enough to go around.

Financial Literacy.
You need to understand the difference between an asset and a liability. An asset is something that puts money in your pocket, and a liability is what takes money out of your pocket. Ask this question with regard to your current possessions. Is your car, your home, your computer, income producing or not?
Interestingly Kiyosaki notes that a business is only an asset, if someone else manages it. Otherwise it is simply a job.

Inability to Overcome 5 Obstacles.

• Fear
• Cynicism
• Laziness
• Bad habits
• Arrogance

Getting Started.
• Find a compelling ambition
• Choose carefully how you invest. Start with financial education.
• Pick your associates and peer groups carefully
• Master a strategy and then find a new one
• Create discipline and pay your self first
• Pay your advisors well
• Pay for your luxuries out of your asset column
• Find heroes or role models to inspire you
• Become a teacher of what you learn

Kiyosaki confronts conventional wisdom. He suggests that most people are blinkered and imprisoned by a financial slave mentality that people have in the pursuit of the paycheque. Opportunities abound and are missed by most people, because they haven’t been taught how to master their twin emotions of fear and greed.

The underlying theme is that knowledge is power and money is something to be mastered and not feared.

Kiyosaki ha s recently co-authored a book with the King of Capitalism, Donald Trump, suggesting his philosophies have the seal of approval from even the biggest of financial investors.

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