Rich Dad Poor Dad by Robert Kiyosaki
Rich Dad Poor Dad by Robert Kiyosaki is a book that has polarized opinion. Many swear by its teachings and many spend their time slating the book and trying to prove that the whole premise is flawed. There are very few people – apart from me – perching on the fence!
One of the underlying concepts discussed in “Rich Dad, Poor Dad: What the Rich Teach Their Kids About Money–That the Poor and the Middle Class Do Not!
This book certainly uncovers a few myths about money that you might be fairly shocked by. For example, when you buy a house, is it an asset or a liability? What? “Asset,” you say? Well, it depends. If you won the lottery, had a windfall of some kind or otherwise had a huge stash of lazy cash sitting around, you might have bought yourself a house outright. Well done, you have acquired an asset (sort of). If you are paying a mortgage, then sorry folks, but you are chained to a liability.
Kiyosaki defines, quite simplistically, that if you have an acquisition (doesn’t only apply to property), and it makes money for you, it is an asset. If you have to constantly pay out money because of it, then it’s a liability. Mortgage interest, in general, turns property into a liability, despite what we are all brainwashed to think about property being an evergreen investment. The real investments became mainstream as the recent debt-fuelled bubble expanded to ridiculous proportions, these investments being “buy-to-let” mortgages. In this model, you buy a house to rent out to tenants. The mortgage is paid in rent; the mortgage interest is paid in rent; and if you had a greedy streak, you added a little bit more on to make some income! This is an asset as it makes you money – not to mention getting a free house out of it.
So for me, this is one of the main lessons in Rich Dad Poor Dad. Its detractors say that the book is a pack of lies, is all made up, a fairytale about the author in his childhood growing up with a working class father. And whose best friend’s father was an entrepreneur, a businessman. Kiyosaki claims that it was lessons in wealth taught to him over the years by his friend’s father – his Rich Dad – which he explores in the book. Many claim that the facts, especially about the author’s background are made up; that rather than becoming wealthy, then writing a book about it, he actually wrote a book about general finance, packaged in a nice story, and became wealthy on the book sales. A case of effect and cause, rather than cause and effect!
Personally I don’t care. Are the arguments presented valid? Yeah, I think so. I also think Rich Dad Poor Dad is a useful book to read to get to grips with assets and liabilities, so you don’t end up kidding yourself that you are working hard, saving hard, and moving towards financial independence. Sadly for most of us, we’re not. We are living (in the West) in a fairly unusual time. British Prime Minister Gordon Brown said on many occasions over the last decade that there would be, “no return to…boom and bust“. Most people laugh at this now, thinking only about economic recession. I think Mr Brown was entirely correct, and that we have had no significant or even measurable boom in the last ten years! When people bought stuff, owned stuff, “invested” in property and “released equity” to buy a third car or a cruise, we all kidded ourselves that we were in a period of economic growth – a boom. But it wasn’t a boom, since all that perceived growth was based on a foundation of borrowing and debt. On the whole, the “investments” bought during this time were actually depreciating liabilities, with compound debt interest eating into any perceived value add.
Perhaps we all need to get a copy of Rich Dad Poor Dad into every classroom without delay, as the lessons within may have averted the crazy backward thinking that turned into one of the worst recessions in living memory.
Rich Dad Poor Dad by Robert Kiyosaki (LifeSiren score: 7/10).
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January 1st, 2010 at 9:48 am
The more money you pay for the “thing”, the more time taken to understand Rich Dad Poor Dad, it would definitely look like a scam to everybody, because you are not able to catch what the meaning of all this.
Do we all make RDPD concept to be an instant rich concept? Where do we invest our time and money then? Actually the answer is depend on us. Looking back at Robert Kiyosaki background, you would be able to know what to invest, Real Estate? Writing Books? However, I want to let you all know, if you are not familiar in the field, you would really hard to get it started. The real answer is still in your hand that is “Invest” something that you comfortable of, and make the “MONEY” work for you. This is the concept. Not necessarily into the Real Estate if you are not familiar with the term, transactions, the history of it.
In terms of the definition between the Assets and liabilities, his definition might seems confusing. But if you read some more materials, he wants us to make the “MONEY” work for us. Let see an example;
I found this from website saying:
“I am an engineer working in wireless technology. I buy the latest cell phones and PDAs when they become available. I buy a faster computer every year. Liabilities? No. Without using cutting edge technology on a regular basis, I would not have the successful career that I have. No toys, no knowledge, no promotion, no job, no income.”
Actually the meaning should be like this, making people pay for your upgrades, such as company that is willing to pay you all the expenses for learning new technologies. Getting a company sponsor your knowledge and appreciate your skills.
If you want to be successful to pay every single cents on your own, it is just like buying your house from your every single hard earning money.
Your asset = Hard earn money.
Robert Kiyosaki’s Asset = People pay for it continuously and more. That’s why you feel it is like a scam, because this Asset belongs to Robert Kiyosaki, not you. Robert Kiyosaki has proven this concept so far.
In summary, if you work for “MONEY”, you are actually BUYING.
If “MONEY” work for you, you are actually INVESTING, meaning you put a very little money inside, the rest of the time, the money is paying by itself, and pouring in while you asleep and doing nothing.
It’s the complicated part, if the adult interpret the concept wrongly, what would happen to the young ones if they don’t know what a working experience is really important to be part of a community to communicate with others, understand the needs, to produce the Demand & Supply in future, such as “Rich Dad Poor Dad” concept produces Demand for readers to read more and more.